Million-Dollar Tax Dodge


From George W. Bush to George Pataki, cutting taxes is the Republican credo, the bedrock upon which all GOP principles rest. But former state senator Guy Velella, a Republican tried and true and a staunch ally of both men, had his own approach to that goal—one he pursued with the help of the state’s top tax officials.

Telephone wiretaps installed on Velella’s office lines by Manhattan District Attorney Robert Morgenthau caught the senator on February 9, 2000, deep in conversation with the state commissioner of taxation and finance, Arthur Roth. The subject was the chronic tax debt—some $1.5 million—owed by Velella’s longtime friend and campaign contributor, Dick Gidron, the garrulous and influential Cadillac dealer whose social circle ran from mayors to mobsters.

Overseeing the collection of state taxes for the Pataki administration had been Roth’s chore since 1996, first as a deputy, and then as commissioner, and it was he who had made the call.

“What’s happening?” the senator greeted him brightly.

“Gidron,” said the commissioner, getting right to the point. “You know,” Roth continued, “we have a very long, sordid history with [this].”

“Oh, I know,” said Velella.

“And, I got to tell you, your name and my name are all over that file.”

“Yes,” acknowledged the senator.

“And we reviewed it today, and it isn’t, it isn’t a question of him just not filing a return,” said the finance commissioner. “Uh, we have reason to believe there are assets that he’s not forthright with. Uh, he’s made promises he doesn’t keep. We can’t get information . . . [and] a group of us met today to evaluate the case. Because we’re worried about the [state] controller coming in and pulling that file. And before he comes in and pulls the file and lowers the boom on us, we figured we got to, we have to do something here.”

Roth emphasized that he and his office had tried hard to help the senator and his friend.

“We’ve gone way beyond anything we would ever do for anybody else,” he said.

“Sure, I don’t doubt that,” said Velella.

“And, and you know,” added Roth, stammering a bit, “you know I did a lot of it out of respect for you.”

“Oh, I appreciate that,” responded the senator.

Gidron had called him earlier that day, Velella said, complaining that the tax officials were leaning on him again, demanding taxes due on a 1994 return.

It was much worse than that, said Roth.

“Believe me, it’s way beyond that one tax return,” he said. “We have a big, thick file that says, ‘I have not dealt with you in good faith, Mr. Tax Department.’ And he hasn’t.”

Gidron had been caught hiding income and dividends, Roth said. “You know he, he’s handling all of us, my friend,” the commissioner said. “I mean unfortunately he’s very good at it.”

To this, Velella let out a sigh so audible that investigators noted it on their transcript. “Yeah, well, he’s a salesman,” he said.

“Because where people get [reprieves of] a month or two,” said Roth, “he gets three years. . . . Oh, he’s terrific. If I had a bridge, I’d want him to sell it.”

Actually, Gidron had already sold something similar to the state—not a bridge, but a vacant auto dealership on Fordham Road near the Bronx Zoo, a property that Gidron badly wanted to unload.

According to indictments later filed against Velella, the senator used his influence to get the state to lease the site as an office for the Department of Motor Vehicles. Then, when officials said that Gidron’s outstanding tax liens made that arrangement untenable, Velella helped a developer buy the site and take over the lease.

Throughout 1997 and 1998, according to the charges, Velella pushed state officials to lift or reduce the tax liens against the dealer in order to facilitate the sale. The senator, according to Morgenthau’s charges, had his own reasons to want the closing to go through: The lawyer who was handling it later split his $35,000 fee with Velella’s law firm.

A onetime lion of the state senate with nearly 30 years in the legislature and the closest of links to the governor, Velella pled guilty to attempted bribery and resigned his office last month. He began serving a one-year sentence last week. His phone chat with the tax commissioner was just one of several instances revealed during the four-year investigation in which high state and city officials were heard cutting breaks for the senator’s clients and cronies.

Gidron, the former chairman of the Bronx Democratic Party, became collateral damage during the probe. A separate November 2002 indictment charged him with criminal tax evasion; ducking more than $1.5 million in taxes on the Cadillacs, Fords, and other cars he sold.

The auto dealer, who once urged a judge to go easy on a top Luchese crime family figure, didn’t let his problems get him down. He went ahead as scheduled with his annual Super Bowl party in January 2003. As the Post‘s Page Six reported, his guests included former mayor Dinkins, Manhattan Borough President C. Virginia Fields, and Congressman Charles Rangel. In November, Gidron pled guilty. He is now serving three years of home confinement in his mansion in Scarsdale.

Roth retired as state tax commissioner in 2003. He did not return messages left at his Albany home.