Rudy’s Bus Pal Admits Paying Mob


Nowhere was the post-Rudy letdown more severe last week than on Staten Island. Back in 1993, it was this little borough that showered Giuliani with enough votes and love to first put him over the top as mayor. It went on to provide many of his most loyal stalwarts.

Among the disappointed was Staten Island transportation mogul Domenic Gatto, the king of the city’s school-bus operators. Gatto topped out in donations to Giuliani’s presidential bid ($3,000), just as he did back in 1999 ($2,000) when Giuliani thought he wanted to be a U.S. senator. For Giuliani’s re-election drive in 1997, Gatto provided a gleaming white school bus. The bus had a specially designed open platform at the rear so politicians could stand there and wave. It drove around the borough toting a huge banner with Giuliani’s picture, alongside a couple of local pols, under a headline: “Reelect the Winning Team.” Not to miss an advertising opportunity, Gatto put a nice plug for his own company on the back. “Atlantic Express,” it read. “Your children’s safety is our business.”

At the time, Gatto was trying to land a city franchise—and accompanying subsidies—to let him run express buses from Staten Island to Manhattan. Under the city charter, such deals must be approved by the City Council. To Giuliani’s people, this was another example of the old way of thinking. They promptly went ahead and cut the contracts with Gatto’s company on their own.

When Giuliani appeared at a town-hall meeting in Staten Island in June 2001, several dozen members of a union representing MTA bus drivers showed up to tell him they thought the mayor was a little out of line on this matter. When union leader Larry Hanley got the mic, he told Giuliani that this backdoor contract was something out of Boss Tweed’s playbook.

Oh, the outrage! On YouTube, you can watch the mayor’s reaction. “Immature idiots!” he yells. “You all look too irresponsible to be bus drivers.” Police detectives try to haul Hanley out of his seat. The drivers rise and walk out in protest. Giuliani can be heard yelling at their backs: “I know the kindergarten does a lot better than these morons.”

With Giuliani’s exit from the presidential race, we now bid farewell to such scenes. That scolding he longed to give to those other Romper Room pests over at the United Nations? Sadly, it’s not to be. President Giuliani in the Rose Garden clucking over “really, really stupid questions” from the White House press corps? He is denied that joy as well.

Supporters like Gatto must now soldier on without him, and already the going has gotten tough.

For decades, the talk was that the Mafia had a hammerlock on the city’s school-bus business. This seemed unlikely, however, since Giuliani, the veteran mob-buster, never cast a withering glance in the industry’s direction. Fishmongers on Fulton Street? Yes, the place was rotten with gangland influence. The mayor promptly stamped it out. Ditto for the goons hauling private waste.

But those who conveyed the city’s most precious cargo to and from school? If they were a problem, you never heard about it from Giuliani. Instead, Gatto, holding the largest school-bus contracts, was seen with all the right people. He hired the lobbying firm of Ray Harding, the mayor’s political mentor, to help with a zoning matter. Problem solved. He sought Giuliani’s support for the special express-bus contracts. Contracts signed and delivered.

Gatto’s Atlantic Express company blossomed. Today, it earns more than $200 million shepherding city schoolkids around town. It has the city’s only privately owned express bus lines. It transports the elderly and the disabled under other contracts. And that’s just New York. The company shuttles kids to school in seven states, from California to New Jersey. It posted $428 million in revenues last year.

After Rudy Giuliani’s rigorous vetting of mob-tied businesses here, could a company that still supped with the Mafia possibly achieve such success?

Amazingly, the answer seems to be . . . yes.

Last month in Manhattan federal court, prosecutors informed a judge that Gatto was one of several bus operators who for years had made secret payments—up to $50,000 a year— to the mob. The statements came during the guilty plea of Salvatore Battaglia, a Genovese crime-family figure and ex-leader of Local 1181 of the Amalgamated Transit Union, which represents most of the city’s school-bus drivers.

Battaglia’s local is separate and distinct from the MTA workers who gave Giuliani such a tough time back in 2001. In fact, as near as anyone could tell, Battaglia’s union never had a major gripe with the Giuliani-era City Hall. The ex-mayor was never heard calling them “morons.” Then again, they never loused up one of his town-hall meetings.

They were busy elsewhere: According to a federal investigation still underway, Battaglia and a handful of bus operators succeeded in carving up the city’s school-bus industry like a fat turkey.

Prosecutors at Battaglia’s session in front of Judge Andrew Peck last month were careful to couch Gatto’s participation in this racket as that of an extortion victim. He had made the payoffs because “he feared for the personal safety of himself and his family,” Assistant United States Attorney Benjamin Gruenstein told the court.

Gatto’s attorney, Peter Silverman, seconded that opinion. “He was extorted,” said the lawyer. “These were serious people he was dealing with.”

If so, Gatto stayed scared for a very long time. After he received immunity from prosecution last year, Gatto admitted that he made his first mob payoffs for the right to be in the school-bus business in 1974. He did so, a report from a March 2007 meeting between Gatto, the FBI, and prosecutors states, at the direction of his father, whom he described as “a low-level organized crime figure.” Gatto was 24 years old at the time, a recently returned Vietnam veteran, and a dutiful son. “Gatto Jr. did not argue with his father and did what he was told,” wrote the agents who interviewed him.

Gatto said his dad took him to a candy store on Avenue X in Brooklyn’s Gravesend section. There, the facts of this life were explained to him by a gangster named “Fat Larry” Paladino and a Local 1181 official named Julius “Spike” Bernstein. Fat Larry, Gatto’s dad explained, was the mob conduit to Spike. The mob tax imposed on the young bus entrepreneur back then was a relative bargain: $250 a week.

Gatto got along well enough with this crowd that he was made a trustee of the union’s benefit funds, a duty that entailed frequent visits to the local’s Queens headquarters. On one of those visits in 1986, another union official, John Ambrosio, noted Gatto’s growing success. “You got to do better for us,” Ambrosio told him. His tax then rose to $400 weekly, Gatto said.

During this period, drivers at one of Gatto’s largest firms, the Staten Island Bus Company, somehow remained unorganized. They weren’t happy about it. After Local 1181 declined to sign them up, drivers sought out other unions. According to a 1993 National Labor Relations Board decision, this greatly upset the bus owner. In a 1990 incident, Gatto spit on one pro-union driver, an ex-cop, and ripped his shirt off before firing him and four others, the decision stated. As penance, the board ordered Gatto to rehire the fired drivers and refrain from physically assaulting them.

In his briefing last year with the feds, Gatto said that unspecified labor problems prompted him to seek a 1995 sit-down with the mobsters at Local 1181. The meeting resulted in a kind of global settlement whereby Gatto agreed to pay an additional $150,000, with $15,000 handed over each Christmas, and another $15,000 at the end of the school year.

The tributes continued. A couple of years ago, when Gatto won four new school-bus routes on Staten Island, he said he forked over another $8,000 for the privilege. As late as June 2006, months after Battaglia and Bernstein had both been arrested and it would appear the feds were finally riding to the rescue, Gatto continued to meet secretly with the gangsters, according to the FBI report. One meeting with Spike Bernstein—then out on bail—took place in the bathroom of a Queens restaurant; another was at the Hilton hotel in Staten Island. There, the bus magnate handed over another $20,000. He did so, Gatto told the feds, in hopes the mobsters would finally leave him alone.

Gatto was spared the ordeal of testifying about all this after Battaglia’s last-minute guilty plea. He declined to discuss it further. “It is a painful chapter in his life,” said attorney Silverman. “He doesn’t want to relive it.”

Understandably. But had Gatto ever reached out to the authorities to complain about this ruthless Mafia extortion—even as the fearless Giuliani ruled City Hall?

“I don’t know,” said Silverman