News & Politics

Wayne Barrett: Ed Towns, Watchdog? Has Congress Forgotten Ed’s Past?

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Poised to succeed the legendary Henry Waxman as chair of the House Oversight and Government Reform Committee, Brooklyn congressman Ed Towns was once the target himself of a federal probe.

While Towns was not indicted, his videotaped receipt of a cash payment in an undercover operation raises questions about his appropriateness to head the House’s premier investigations committee, particularly at a time when it may be called upon to probe the financial scandals that led to the current economic meltdown.

Brooklyn federal prosecutors and the New York City Department of
Investigation (DOI) caught Towns on videotape stuffing $1,300 in cash
into his pockets in an undercover sting in 1982, when he first ran for
Congress. Apparently, he was tipped off that the three Salini
Construction Company executives were actually cops, and he returned the
money a few days later and wasn’t indicted.

Towns’ taped
performance in Operation Labor Day, which resulted in 16 convictions
including a powerful city councilman, is reportedly available in
archives at DOI and the U.S. Attorney’s office in Brooklyn. Ed Gruskin,
who was then the city’s top undercover operative in corruption cases
and is now retired, told the Voice: “It was a makeable case.
You see Towns taking the cash. We told him we don’t care what you do
with it. It’s money for you. Buy yourself a boat. It’s not necessarily
a contribution.” Gruskin’s construction company, which was created by
DOI and actually built a community center next door to Towns’
congressional campaign office, “needed his help expediting a permit or
something and he promised to do that.”
 
Towns, who was then
Brooklyn’s deputy borough president, also allegedly promised to help
with federal contracts once he was elected to Congress, which was all
but certain at the time of his meeting in Room 308 at 50 Court Street
in downtown Brooklyn, where Salini was headquartered. Gruskin doesn’t
specifically recall that Towns promise, though he says it’s “very
plausible.” Two other law enforcement sources that also worked on the
case do remember allusions to federal contracts. “I’ll be your friend
in Washington,” was what one former DOI supervising attorney recalls
Towns telling Salini. “It was really a close question of whether or not
to indict him.”

The Voice published a story about Towns’ conduct in
November 1983 that relied on unnamed sources. While several of those
sources contacted by the Voice remain unwilling to talk for the record,
Gruskin and others did step forward.

Edmundo Roman, a Democratic
district leader and ally of Towns at the time, was indicted but
acquitted in the Labor Day cases. A practicing attorney in Brooklyn
now, Roman testified during his 1984 trial that he was told by none
other than the then Democratic boss of Brooklyn, Meade Esposito, to
stay away from Salini. Roman told the Voice last week that another
leading Democrat, Tom Catapano, who had been Esposito’s driver and was
running for assembly for the first time on a ticket with Roman, also
“warned me to stay away because they may be undercover agents.”

Esposito
and Catapano were closely allied with Towns at the time, and as
recently as 2006, Towns placed a tribute to Roman’s wife Elba in the
congressional record. Roman said he and his wife did not tip Towns off,
but it is highly unlikely that Towns, a far more important player in
Esposito’s party machine than Roman, wasn’t warned as well. Bill Banks,
who was Towns’ campaign manager, returned the cash, according to law
enforcement sources. Esposito is dead, and the Voice was unable to
locate Banks, who has moved to Atlanta. Catapano, who is also dead,
served five terms in the assembly until he was defeated by the current
assemblyman, Darryl Towns, the congressman’s son.

Andrew Fisher,
who was Towns’ campaign attorney in 1982, says now: “He mistakenly took
cash. He thought it was legal to take cash contributions, but when it
was pointed out to him by his counsel that it was inappropriate, he
showed them the door.” Fisher said that he attended another meeting
with Salini and that the company executives asked Towns to help them
get vacant city property “for a buck a lot,” and that he subsequently
told Towns: “These guys are either gangsters or cops and they’re too
stupid to be gangsters.” Fisher, whose family firm also advised
Esposito, said that Towns was not tipped off by party leaders about the
undercover operation.

In any event, the city’s taxi
commissioner at the time of the 1982 Towns meeting, Jay Turoff, a close
Esposito ally, was told by DOI about the undercover operation because
Gruskin’s company was being used at precisely the same time to ensnare
another high-level taxi commission official in an entirely separate
case. Esposito and Turoff, who denied in a Voice interview that he
relayed any information about Gruskin’s operation to Esposito, wound up
convicted in unrelated federal cases years later.

When the Voice
did its 1983 story, Towns offered a variety of explanations for his
return of the cash, which he acknowledged receiving. He said at first
that it exceeded the $1,000 corporate campaign contribution limit,
though, in fact, all corporate donations were illegal. Initially
refusing to say that he’d taken the donation in cash at all, he
ultimately issued a statement saying he returned it because it was
cash, a violation of federal law. He also conceded that Salini
representatives “attended several of his campaign fundraisers and had
continuing discussions” with him. Though Towns’ congressional office
was emailed a detailed description of this story, he declined to
respond to questions.

Towns and the councilman convicted in
the Salini probe, Luis Olmedo, were listed references for Jose Torres,
the Salini corporate secretary, who was appointed to a community
planning board Towns controlled in East New York. Towns’ boss, Borough
President Howard Golden, made the appointment 20 days after Torres
applied in the summer of 1982, pushing him ahead of a long waiting
list. The Torres appointment was listed as an “overt act” in Olmedo’s
conspiracy indictment.

A former federal law enforcement source
recalled that one of the undercovers, Sal Palmieri, told Towns at one
point during the meeting: “We’re partners, we’re friends.” This source
said Towns “didn’t say much,” but quietly acquiesced to that
description. This source said Towns never reported this as a returned
contribution on his campaign filings, which he was required to do, and
that federal prosecutors debated whether or not to indict him. This
source said the videotapes never added up to a bribe under federal
statutes, but that Towns did appear to reach the evidentiary standard
for receiving “an illegal gratuity.” Gruskin, dubbed “the man of a
thousand faces,” says now: “The prosecutors should have prosecuted. Why
didn’t it go forward?” Gruskin’s scorecard at DOI included 97 Housing
Authority employees busted for false elevator repair submissions; 20
city marshals, auctioneers and buyers; 9 consumer affairs inspectors
and 57 supermarket staff apprehended for taking bribes.

Towns,
who is expected to be named to take over the Oversight Committee in the
next few days, has been criticized by top Democrats for numerous absences at committee hearings, including all but one of the six
October recess hearings that Waxman held to probe the Fannie Mae,
Freddie Mac, Lehman Brothers and AIG collapses.

Research assistance by: Patrick B. Anderson, Ana Barbu, Sara Dover, and Jana Kasperkevic.

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