Also, Mr. Kerik was fined by COIB in 2002. See case # 2001-569 (2002), Conflict of Interest Board. Oh yes -
now it seems that the President is angry at Rudy, and maybe Rudy and Judy may not be moving to Washington DC as quickly as they thought.All the incidences below of questionable conduct by Kerik lead us to question the former Mayor, Rudy Guiliani. What was he doing or thinking?

WEB EXCLUSIVE
By Mark Hosenball
Newsweek, Dec. 11, 2004

LINK

Dec. 11 - It's hard to know what was the last straw. Ever since President Bush announced on Dec. 3 that Bernard Kerik was his choice to replace Tom Ridge as Secretary of Homeland Security, official circles in Washington and New York have been buzzing with stories about Kerik's potential liabilities. A hard-charging former New York City police commissioner, Kerik made many enemies and seemed to be dogged by minor scandals. He was a rags-to-riches story whose climb may have been a little too precipitous; in any case, his tangled personal life caught up with him.

On Friday night, Kerik abruptly informed the White House that we was withdrawing from the nominating process, citing potential problems with the immigration and tax status of a former nanny. "I am convinced that, for personal reasons, moving forward would not be in the best interests of your administration, the Department of Homeland Security or the American people," Kerik said in a letter to President Bush.

But there may have been other issues at play. Kerik, who recently made millions in the private sector, once filed for personal bankruptcy as a New York cop. And just five years ago he was in financial trouble over a condominium he owned in New Jersey. More serious trouble than anyone realized: NEWSWEEK has discovered that a New Jersey judge in 1998 had issued an arrest warrant as part of a convoluted series of lawsuits relating to unpaid bills on his condo. The magazine faxed documents, including the arrest warrant, over to the White House around 6:00 p.m. Friday, asking for comment. Neither Kerik nor the White House had any immediate response. At 8:30 p.m., Kerik had submitted his letter to the president.

Sources close to Kerik and the White House insist the arrest warrant was not the reason Kerik withdrew. The immediate cause was the nanny problem, the sources say, the same issue that took down Bill Clinton's nomination of Zoe Baird to be Attorney General in 1993. Kerik explained to the White House that while he was preparing documents for his Senate confirmation hearings, he uncovered information "that now leads me," he wrote, "to question the immigration status" of someone he had been employing as a housekeeper and nanny. For a period of time, Kerik reported, "required tax payments and related filings had not been made." According to a Kerik associate, having this kind of nanny problem would have been untenable for the head of the Homeland Security department, which oversees the government's immigration agencies.

The lawsuit relating to Kerik's apartment stems from his failure to pay maintenance fees. A court found that Kerik owed about $5,000 on the unit. When Kerik failed to comply with a subpoena related to the unpaid bill, a judge on Aug. 24, 1998 issued a warrant for Kerik's arrest. It is unclear whether the warrant was ever served or withdrawn. Court computer records indicate that the lawsuit remains open, but there was some confusion on Friday over the location of the full record.

Kerik was also coming under close scrutiny for his windfall profit from stock options in Taser International, a company that makes high-voltage stun guns. He netted more than $6 million on the options, without ever having invested any of his own money. Kerik joined the Taser board after leaving his police commissioner's job in 2002 . New York City was a purchaser of the stun guns, as was the Department of Homeland Security. Kerik sold the stock in early November, shortly before an Amnesty International report charged that there had been more than 70 Taser-related deaths since 2001.

Kerik's biggest booster for the job was former New York City Mayor Rudy Guiliani. Last night, an aide to Guiliani told NEWSWEEK that Kerik had made "the proper judgment" to withdraw.

With Kathryn Williams

THE NOMINEE'S PAST
Beyond the Disclosure About Kerik's Nanny, More Questions Were Lurking
By WILLIAM K. RASHBAUM and KEVIN FLYNN, NY TIMES, December 13, 2004

LINK

While serving as New York City correction commissioner in the late 1990's, Bernard B. Kerik spoke to the city's Trade Waste Commission on behalf of a close friend who was helping a company suspected of mob connections try to get a license from the city, according to a former commission executive.

The conversation was part of a web of relationships Mr. Kerik developed with officials of a New Jersey construction company long suspected by New York authorities of connections to organized crime. The company, Interstate Industrial Corporation, hired Mr. Kerik's close friend Lawrence Ray, the best man at Mr. Kerik's wedding, to help with its licensing problems. Mr. Ray said yesterday that he gave Mr. Kerik more than $7,000 in cash and other gifts while Mr. Kerik was commissioner of correction and the police. The gifts were first reported in The Daily News yesterday.

Interstate also hired Mr. Kerik's brother, Donald Kerik, after the conversation with the Trade Waste Commission executive, Raymond V. Casey, then head of enforcement at the agency, although there is no indication that the hiring was in return for the conversation. Both Mr. Kerik and one of the owners of Interstate, Frank DiTommaso, acknowledge that they were friends, but said there was no effort to inappropriately influence the licensing process.

Mr. DiTommaso said his company did not have ties to organized crime. But in January of this year, city regulators recommended denying the license, citing what they said were ties to organized crime over many years.

Mr. Kerik says he does not remember the conversation with Mr. Casey - a top official of a city agency set up to weed out the influence of organized crime from the hauling industry - and Mr. Casey says he cannot recall who initiated it. Nonetheless, the story of Mr. Kerik's relationship with Interstate was almost certain to be one of a mounting number of details from his past that would have been fodder for Senate committees deciding his suitability to be secretary of homeland security, the post to which he was nominated by President Bush last week.

Mr. Kerik withdrew from consideration on Friday evening and said his discovery that he had employed a nanny and housekeeper who appeared to have been in the country illegally was the sole reason. White House officials say that the nanny matter was not disclosed during their background investigation, and that none of the other matters that they were aware of were sufficient to disqualify Mr. Kerik.

But other questions surfaced after his nomination was announced: his ties to Interstate, his huge profits from companies doing business with the Homeland Security Department, accusations that he abused his authority in an investigation of employees working for a Saudi Arabian hospital 20 years ago, the effectiveness of his effort to improve the Iraqi police force.

The accretion of these questions - even if any one of them could be explained away in one form or another - could well have sunk him later, according to several Capitol Hill officials. Former Mayor Rudolph W. Giuliani, who recommended Mr. Kerik to the White House, now says that even if Mr. Kerik had survived the questions about Interstate at his confirmation hearings, they would have made his task much more difficult as secretary.

"I believe they would have been issues," Mr. Giuliani said yesterday. "I think he would have been able to give a sufficient answer. But I think he would have been under much closer scrutiny once he became secretary."

Much remains unanswered about Mr. Kerik's ties to Interstate, including how much he knew about the accusations that it was connected to organized crime, and who initiated the conversation with the Trade Waste Commission. Nonetheless, Mr. Kerik's involvement raises questions about his judgment as a law enforcement official in playing any role in a matter where a personal benefactor was involved.

Mr. Kerik said in an interview on Saturday that he did not try to influence the company's application for a license, but the lingering questions provide an insight into what he expected to face if the nanny issue had not cut short his nomination. Mr. Kerik and his lawyers were informed last week that both The Daily News and The Times were asking questions about his relationship with Interstate, and Mr. Giuliani said he believed that Mr. Kerik informed the White House of the issue last week. White House officials said yesterday that they could not confirm whether they knew about the Interstate issues, citing privacy rights.

According to a memorandum issued in January by the Business Integrity Commission, the successor to the Trade Waste Commission, Interstate paid more than $1 million in 1996 to buy a debris transfer station in Staten Island from a company controlled by a captain and a soldier in the Gambino crime family, and it then employed organized crime figures at the station and did business with trucking companies owned by crime figures. The memorandum, which recommended denying the company a transfer station license, said the owners of Interstate associated with crime figures and had a cavalier attitude about the integrity of their employees.

"There is ample evidence on which to conclude that Interstate Materials Corp. and its principals, Frank and Peter DiTommaso, lack the good character, honesty and integrity required of a transfer station permit holder," according to memorandum. Interstate Materials is an affiliate of Interstate Industrial, both owned by the DiTommasos. They have not been charged with any crime.

In recent testimony in an unrelated case in Federal District Court in Manhattan, an informant, Anthony Rotondo, has made more direct accusations about Interstate, saying that it has been tied to two crime families for years and that the company paid bribes in paper bags to the DeCavalcante crime family of New Jersey so as to be allowed to use cheaper, nonunion labor.

As the commission was looking into Interstate in 1999, Mr. Kerik spoke to Mr. Casey, then the agency's deputy commissioner for enforcement, about the man Interstate had hired to help with its licensing problems, Lawrence Ray. Mr. Casey said in an interview that Mr. Kerik had told him that he "thought Ray was a good, honest person with a security background that could help the commission alleviate the concerns with Interstate. And that Ray was someone we could work with."

The next year, Mr. Ray was indicted and later pleaded guilty to conspiracy to commit stock fraud in an unrelated federal case.

Mr. Casey said that after his conversation with Mr. Kerik, he assigned a commission detective to talk to Mr. Ray, along with a supervisor. Mr. Casey said he thought it was "weird" for the correction commissioner to speak up on behalf of an employee of a company under suspicion, but said he did not think Mr. Kerik intended to improperly influence the commission's decision.

In the interview Saturday, Mr. Kerik described himself as a friend of Frank DiTommaso, and said he did not recall having the conversation with Mr. Casey. He defended his relationship with Mr. DiTommaso.

"I do not know of wrongdoing or criminal activity on the part of Frank DiTommaso," Mr. Kerik said. One of Mr. Ray's lawyers, Thomas G. Roth, said that Mr. Kerik distanced himself from Mr. Ray after the stock-fraud indictment.

Mr. DiTommaso maintains that the company has no organized crime connections, and said that a decision earlier this year by the New Jersey Casino Control Commission to license his companies to do work on Atlantic City Casinos buttressed that assertion. However, the state's Division of Gaming Enforcement, which has contended that the company does have organized crime connections, has appealed the commission's decision.

On Oct. 1, 1999, Frank DiTommaso sent a letter to the Trade Waste Commission announcing that Donald Kerik had taken over the daily operation of Interstate Materials, which operated the transfer station. "Don is a fine individual and will continue to provide your agency with full cooperation as we at Interstate Materials Corp. have always done," Mr. DiTommaso wrote.

Mr. Kerik said he had no role in any of the hirings, but Mr. DiTommaso, in sworn testimony, said that he hired Mr. Ray, whom he knew and had been dissatisfied with from a previous business relationship, largely because Mr. Kerik had vouched for him. Mr. DiTommaso said he paid him $100,000 a year.

Mr. Kerik has not explained the gifts Mr. Ray has said he gave, which The Daily News said were not reported to the city's Conflicts of Interest Board. City officials are required to report gifts of more than $1,000.

Christopher Drew and Eric Lipton contributed reporting for this article

News finds Kerik in cash conflict
Got thousands, didn't report it
By RUSS BUETTNER, DAILY NEWS STAFF WRITER, December 13, 2004

LINK

Bernard Kerik speaks at stately New Jersey home.

Former New York City Police Commissioner Bernard Kerik accepted thousands of dollars in cash and gifts without making proper public disclosures, a Daily News investigation has revealed.
Kerik failed to report the gifts on financial disclosure forms he was required to file with the city as head of the both the NYPD and, before that, the Department of Correction.

The revelations come in the wake of Kerik's stunning announcement Friday night that he was withdrawing his nomination as President Bush's secretary of homeland security.

Kerik maintained yesterday that he pulled out on his own after discovering he may have failed to pay required taxes on behalf of a nanny whose immigration status was uncertain.

However, his announcement came after a week of intense media scrutiny into his business and private life.

As the White House scrambled yesterday to find a new nominee, a Bush spokeswoman blamed the mess on Kerik.

"He should have brought this to our attention sooner," spokeswoman Jeanie Mamo said.

But Kerik's friends came to the defense of NYPD's leader at the time of 9/11.

"It doesn't take away from Bernie's heroism. It doesn't take away from his decency," said ex-Mayor Rudy Giuliani. "He made a mistake. It cost him a job."

In a news conference outside his $1.2 million lakeside New Jersey home, Kerik insisted it was the nanny issue alone that led him to withdraw. "Based on that, and based on precedent, and really it was the most important that this was the right thing to do, I contacted the White House late [Friday] afternoon and told them I would like to withdraw my name," Kerik said.

However, The News probe calls into question his conduct while holding two of the city's most important public offices.

The probe revealed that for many years, one of Kerik's main benefactors was Lawrence Ray, the best man at Kerik's 1998 wedding, according to Ray, other sources and checks shown by Ray to The News.

Ray and another Kerik pal, restaurant owner Carmen Cabell, helped bankroll Kerik's 1998 wedding reception, contributing nearly $10,000.

Ray also gave Kerik nearly $2,000 to buy a bejeweled Tiffany badge that Kerik coveted when he was Correction commissioner.

And Ray said he gave Kerik $4,300 more to buy high-end Bellini furniture when Kerik allegedly griped that he couldn't afford to furnish a bedroom for a soon-to-be born daughter.

The city's Conflicts of Interest Board requires officials to report any gifts of $1,000 or more.

The board's definition of gifts includes cash, free travel, and wedding presents not given by relatives.

Intentionally failing to report gifts is a misdemeanor punishable by up to one year in prison and a fine of $1,000. The board also can impose civil fines of up to $10,000. The News has examined Kerik's disclosure forms and there is no record of any of the gifts for the period concerned.

At the time of the gifts, Ray was working for Interstate Industrial, then a major city contractor. City ethics rules bar officials from accepting gifts worth more than $50 from anyone doing business with the city. The company hired Ray based on a recommendation from Kerik, according to a sworn deposition by Interstate's owner Frank DiTomasso. New Jersey gaming regulators said Kerik had confirmed to them that he had vouched for Ray.

Kerik has run afoul of ethics rules before, having been fined $2,500 by the board for dispatching detectives to investigate his mother's death as part of the research for his best-selling memoir, "The Lost Son."

Thanks to the fame he achieved standing next to Giuliani after Sept. 11, 2001, Kerik now enjoys tremendous wealth. He recently turned a profit of$5.5 million by selling stock options earned during his 18 months on the board of Taser, a company that makes controversial stun guns.

But until his last year in public office, Kerik had money problems. He filed for bankruptcy in 1987 as a rookie city cop, when he earned $25,000 a year and had $11,782 in debt. By the time he became correction commissioner in January 1998, his only asset was a condo in New Jersey that had been in foreclosure throughout the 1990s, according to his financial disclosure forms and court records in New Jersey.

In connection with that case, he was cited for contempt by a New Jersey judge, according to Newsweek magazine.

Despite his finances, Kerik's November 1998 wedding was a grand affair. It was attended by Donna Hanover, then Mayor Giuliani's wife, Deputy Mayor Joseph Lhota, and state Supreme Court Justice Leslie Crocker Snyder.

The reception was held at The Chanticler, in Millburn, N.J., one of the Garden State's premier catering facilities. Kerik and his new wife, Hala, entertained 230 guests in the facility's Empress Room.

"This thing was top shelf," said one person who attended. "Martini bar, full spread, the works."

Ray wrote a check for $1,000 in July 1998 to cover the deposit. Cabell wrote a check for $6,688 to the Chanticler on the day of the wedding. Six weeks after the wedding, Cabell wrote another $2,000 check to the Chanticler.

"Bernie was a close friend of myself and Larry's that needed help," Cabell told The News. "I helped him in the planning, details and cost of the wedding."

Kerik still couldn't pay the remaining balance, and the Chanticler threatened to sue, Ray and Cabell said. Ray's attorney's handled correspondence with the Chanticler, until Ray and Cabell covered the remaining balance.

"Bernie told everybody those guys paid for it," said one official who attended.

The reception was not the first time that Ray covered Kerik's tab. After Kerik was named correction commissioner in January 1998, he pleaded with underlings to buy him a Tiffany badge like the one given to the police commissioner, department sources told The News.

"He just had to have one because the police commissioner always gets one," said a source who then worked at Correction Department headquarters.

In April 1998, Ray wrote a check out to Jorge Ocasio, then Kerik's chief of staff, for $1,895 with "Tiffany badge" written in the memo field.

Ray's wife, Teresa, issued the certified check to Bellini on Feb. 22, 2000, shortly before the March 3 birth of Kerik's daughter, Celine.

Ray, who acknowledged the gifts to The News after the paper showed him other evidence of the pattern, said he was flush at the time and Kerik always complained about surviving on his civil servant salary.

"He was always crying about money," Ray said. "Like before Celine was born, he was always saying he couldn't believe how much everything cost and they were out of money."

Ray also showed The News a check for $2,500 that his wife made out to "cash" on Aug. 29, 1999. The check was endorsed and cashed by Kerik.

In total, Ray and Cabell showed The News checks to the value of $18,400.

At the time, Ray's own finances were deteriorating.

A week after Kerik's daughter was born, Ray and 18 other men were indicted in a $40 million, mob-run, pump-and-dump stock swindle. Kerik repeatedly spoke to Ray's criminal defense attorney before the indictment, but he dropped his longtime benefactor when the case became public.

"We never saw Ray around Corrections again," said the headquarters source.

On Dec. 2, The News asked Kerik to discuss issues raised by the paper's six-month investigation. Kerik never responded.

MSNBC.com
White House pins blame on Kerik
Bush nominee had denied 'nanny problem,' officials say
By Jim VandeHei and Mike Allen, The Washington Post, Dec. 12, 2004

White House officials yesterday blamed Bernard B. Kerik for repeatedly failing to disclose potential legal problems to administration lawyers vetting his nomination to be homeland security secretary, as President Bush prepared to quickly name a replacement and try to put the controversy over the former New York police commissioner's background behind him.

Kerik, who withdrew his own nomination Friday and apologized yesterday for embarrassing Bush, was asked numerous times by White House lawyers if he had employed an illegal immigrant or failed to pay taxes on domestic help, the sources said.

Kerik was told he would humiliate his family, himself and the president if he lied on either account, the officials said. He responded with firm denials. After digging deeper, however, Kerik said he discovered last week that he might have a problem on both accounts and withdrew his name.

Red flags missed
In the vetting process, which was conducted by the office of White House counsel Alberto R. Gonzales, Kerik also never mentioned that a New Jersey judge had issued a warrant for his arrest in 1998 over a civil dispute over unpaid bills, the sources said. The existence of the dispute was first reported by Newsweek Friday night.

It is unclear why White House lawyers could not uncover a warrant that Newsweek discovered after a few days of research, although some are blaming Bush's insistence on speed and secrecy for failing to catch this and other potential red flags in Kerik's background.

White House officials said they believe Kerik could have survived a controversy over the warrant in a civil matter, despite having served as New York City police commissioner and being nominated to lead an agency with major law enforcement responsibilities.

Joseph Tacopina, Kerik's lawyer, said his client was not aware of the warrant, which stemmed from a dispute over about $5,000 in condominium fees. In an interview, Tacopina said there are no outstanding warrants for Kerik but he could not "confirm or deny" there once was one. A copy of the warrant was provided to The Washington Post by Newsweek.

Still, it is the nanny controversy, according to White House officials, that cost Kerik a high-profile job. "This is my responsibility, this is my mistake," Kerik said outside his home in Franklin Lakes, N.J., in an interview broadcast by CNN yesterday. "I didn't want this to be a distraction going forward."

Search quickly resumes
Bush plans to move quickly to name a replacement, although the few White House officials with knowledge of the shortlist would not speculate or respond to calls.

Other Republicans inside and out the White House said potential replacements include White House homeland security adviser Frances Fragos Townsend; White House deputy chief of staff for operations Joseph Hagin; Asa Hutchinson, undersecretary for transportation and border security at Homeland Security; and Environmental Protection Agency Administrator Mike Leavitt. An announcement is expected before Christmas.

Two sources said Bush is courting Sen. Joseph I. Lieberman (D-Conn.) for an administration job, but it is not clear whether homeland security could be the one.

Bush did not say anything about the matter yesterday, but he teased reporters by cupping his hand to his ear as he walked across the White House's South Lawn to his helicopter, as if to invite a question. Asked whether he was upset about Kerik, the president smiled and cupped his hand to his ear again, even though he appeared to have heard the question.

Advance vetting rare
A full FBI field check of a nominee is sometimes completed in advance of Cabinet picks. Often, as in Kerik's case, it is not. A former administration official familiar with the appointment process said that Bush's system has produced remarkably few problems but that "perceived or actual political pressure to get appointments done quickly" often makes it impossible to do as much vetting as White House lawyers would like.

"A candidate can be so eager for appointment that he shades the truth. A candidate cannot perceive that he has a problem, when he does. A candidate can simply forget or overlook something," the official said.

Bush, White House Chief of Staff Andrew H. Card Jr., senior adviser Karl Rove and Dina Powell, head of presidential personnel, are usually the only ones outside the counsel's office aware of the selections. Once the pick is made, the counsel's office vets the candidate, asking scores of questions about personal relationships and finances, professional dealings, and criminal or improper behavior.

Records are reviewed and potential problems investigated. If nothing problematic arises, Bush makes the announcement - often before the FBI has conducted a background check. The FBI check is completed before the Senate confirms each pick.

The efficacy of Bush's process is in the results, officials said: Kerik is the second nominee in two terms to be withdrawn. Bill Clinton, by comparison, had two attorney-general nominees forced out and six total in two terms.

Process defended
Current officials dismiss criticism, saying it is virtually impossible to stop candidates from withholding information or lying to White House investigators. White House press secretary Scott McClellan said Bush remains confident about the screening process.

"The vetting process is a thorough and extensive one," McClellan said. "It's a process that looks at all the issues related to the nominee's financial, professional and personal background. It was Commissioner Kerik himself who said this was a matter he should have brought to our attention sooner."

The White House officials quoted anonymously in this story are in a position to know details of the controversy, and refused to speak on the record because they are not authorized to discuss the secretive selection and vetting process. Kerik's version of events, which did not differ from the White House's, was provided by his lawyer; Rudolph W. Giuliani, the former New York mayor and business partner of Kerik's; and Kerik himself.

Giuliani, who recommended Kerik for the post, also called the White House yesterday and apologized.

The Homeland Security Department has sparked controversy for Bush since its inception. He initially opposed the department but succumbed to pressure from Democrats and Republicans in Congress to create it. Then Bush was criticized when some GOP allies questioned the patriotism of Democrats such as Sen. Max Cleland (Ga.) for refusing to embrace the president's version of the department.

Once it was up and running, the department served up two of the most ridiculed White House decisions of the first term: alerting the public to buy duct tape and plastic sheeting in case of a terrorist attack, and implementing a confusing color-coded terrorism alert system.

DHS in disarray
More than two years after its creation, the department is viewed by many Democrats and Republicans as too bureaucratic and in dire need of a shake-up and strong leadership. Kerik, a tough-talking former street cop, was viewed by Bush as the perfect panacea. Bush hailed the former police commissioner as tough enough to guard the nation from future attacks.

The two shared an emotional bond over the Sept. 11, 2001, terrorist attacks, which forced the two men to help comfort the nation, rebuild a city and launch a worldwide hunt for the perpetrators.

White House officials said senators, including several Democrats, confirmed that the nomination was on track, despite a host of questions about Kerik's quick riches after leaving public office and his responsibility for training the Iraqi police force on a mission for the administration.

The nanny problem put a quick end to the nomination, just as it did for Linda Chavez as Bush's first nominee for labor secretary, and three high-profile nominees for Clinton: Zoe Baird, his first choice as attorney general; Lani Guinier, who had been chosen to head the Justice Department's civil rights division; and Kimba M. Wood, a federal judge whose nomination as attorney general did not go forward.

Kerik told reporters yesterday that he discovered on Wednesday he had not paid taxes on a Mexican-born nanny and housekeeper who was probably working illegally in the country. Tacopina, his lawyer, said she worked for Kerik for about 18 months and had returned to Mexico six weeks ago, in keeping with a plan she had for several months. Tacopina called the nanny question was "the sole reason he withdrew."

Kerik insisted he was unaware of the problem until last week; White House officials privately said he was lying or showed terrible judgment.

Kerik told the reporters on his lawn that over the previous two days or so, he "came to realize that in addition to some of the tax issues that I thought I may have, there may have been a question with regard to her legal status in this country."

Staff writer John Mintz and researcher Karl Evanzz contributed to this report.

© 2004 The Washington Post Company

Kerik apologizes for withdrawing:
Nominee to head Homeland Securityfalls victim to 'nanny problem'
MSNBC staff and news service reports, Dec. 11, 2004

Homeland Security Pick Abruptly Withdraws His Name
Status of Kerik's Housekeeper in QuestionBy TERENCE HUNT, AP, December 10, 2004

LINK

WASHINGTON (Dec. 10) - In a surprise move, former New York Police Commissioner Bernard Kerik abruptly withdrew his nomination as President Bush's choice to be homeland security secretary Friday night, saying questions have arisen about the immigration status of a person he employed as a housekeeper and nanny.

Kerik is a former New York City police commissioner.

The decision caught the White House off guard and sent Bush in search of a new candidate to run the sprawling bureaucracy of more than 180,000 employees melded together from 22 disparate federal agencies in 2003 to guard the nation against terrorist attacks.

Kerik's nomination had been widely praised by Democrats and Republicans alike. A former military man, he became widely known for his role in helping direct the emergency response to the Sept. 11 terrorist strikes against the Twin Towers.

Kerik informed Bush of his decision to withdraw in a telephone call at 8:30 p.m. EST. "I am convinced that, for personal reasons, moving forward would not be in the best interests of your administration, the Department of Homeland Security or the American people,'' Kerik said in a letter to the president.

The White House said Bush accepted Kerik's decision.

Kerik is not the first prominent official to fall victim to the "nanny problem.'' Similar issues killed the nomination hopes of three candidates for top administration posts in the Clinton administration.

One administration official helping prepare Kerik for Senate confirmation, speaking on condition of anonymity, said Kerik's unexpected decision shocked senior leaders at the Homeland Security Department. This official said Kerik still had not filled out all his ethics filings - which would detail his sources of income and financial liabilities - and said the FBI background investigation of Kerik was still incomplete.

But the only moderately troubling information uncovered about Kerik so far had been news that Kerik had earned $6.2 million by exercising stock options he received from Taser International, which did lucrative business with the Homeland Security Department, this official said.

The White House had defended him against questions of conflict of interest involving his relationship with Taser. "We have full confidence in his integrity and we are confident that he will take the appropriate steps necessary to make sure that there are no conflicts there,'' White House press secretary Scott McClellan had said at his midday briefing.

In a statement separate from his resignation letter, Kerik said the problematic issue arose as he was completing documents required for Senate confirmation. "I uncovered information that now leads me to question the immigration status of a person who had been in my employ as a housekeeper and nanny. It has also been brought to my attention that for a period of time during such employment required tax payments and related filings had not been made.''

Kerik said he feared that the disclosure of the issue would generate intense scrutiny that would "only serve as a significant and unnecessary distraction to the vital efforts of the Department of Homeland Security.''

Kerik's first anti-terrorism work was as a paid private security worker in Saudi Arabia. He joined the New York Police Department in 1986, first walking a beat in Times Square. He eventually was tapped to lead the city's Corrections Department and was appointed commissioner in 2000.

It was in that position that the mustachioed law enforcement chief became known to the rest of the country, supervising the NYPD's response to the 2001 terror attacks, often at the side of then-Mayor Rudolph Giuliani. In 2003, he took on a temporary assignment in Iraq to help rebuild the country's police force. Most recently, he has been a consultant for Giuliani Partners, working to rebuild Baghdad's police force.

Kerik's "nanny problem'' recalls the controversies that faced several of former President Clinton's candidates to fill prominent positions. Attorney Zoe Baird, who was Clinton's first choice to be attorney general, was forced to withdraw her nomination after the disclosure she had not paid Social Security taxes for a housekeeper - an illegal immigrant - as required by law.

Lani Guinier, a Clinton classmate at Yale University Law School, was the president's choice to head the Justice Department's civil rights division until it was learned that she had not paid taxes for a domestic worker. Similarly, the nomination of federal judge Kimba Wood to be attorney general never went forward after the disclosure that she had hired an illegal immigrant as a baby sitter. She had paid the required Social Security taxes and broke no laws.

Associated Press writer Ted Bridis contributed to this report.

Misuse of Office: COIB v. Birdie Blake-Reid, NYC BOE Office of Parent Engagement; Bernard Kerik is fined

Security Post Would Put Kerik Atop Field That Enriched Him
By ERIC LIPTON, NY TIMES, December 10, 2004

WASHINGTON, Dec. 9 - Just five years ago, Bernard B. Kerik was facing lawsuits from a condominium association and bank over delinquent payments owed on a modest New Jersey condo he owned. Today, he is a multimillionaire as a result of a lucrative partnership with former Mayor Rudolph W. Giuliani and an even more profitable relationship with a stun-gun manufacturer.

If he is confirmed to the post of homeland security secretary, to which President Bush nominated him last week, he will oversee an enormous department that does business with some of the companies that helped make him wealthy.

The list of income sources that transformed Mr. Kerik, a former New York City police commissioner, into a wealthy man is a diverse one, including a best-selling autobiography, speeches around the United States and service on corporate boards. Mr. Kerik, who now lives in a large house in the decidedly more upscale New Jersey town of Franklin Lakes and drives a BMW sedan, even sold the right to make a feature film about his rags-to-riches life to Miramax, the film production company.

But it is the relationship Mr. Kerik has had since the spring of 2002 with Taser International, a Scottsdale, Ariz., manufacturer of stun guns, that has by far been the biggest source of his newfound wealth. That relationship has earned him more than $6.2 million in pretax profits through stock options he was granted and then sold, mostly in the last month. A White House spokesman said Mr. Kerik would resign from Taser's board and sell his remaining stock if confirmed.

Mr. Kerik benefited largely because the company's stock has surged extraordinarily. Stock options that were worth little when they were granted became extremely valuable, in part because of the sales pitch that Mr. Kerik made on the company's behalf to other police departments.

The sales driving Taser's growing profits are mostly to local and state governments. But while Mr. Kerik has served on the company's board, the company has made an aggressive push to enter markets either regulated or controlled by the federal government, most notably the Department of Homeland Security.

At one point, Mr. Kerik referred Taser executives, seeking more federal business, to a Customs and Border Protection official of the Homeland Security Department, according to the company president.

"Anyone in a federal law enforcement position is a potential customer," said Thomas Smith, president and co-founder of Taser International, who said he hired Mr. Kerik because of his prominence as the city's police commissioner. "And we are going to continue to go after that business."

Mr. Kerik declined, through a spokeswoman, to discuss his work for Taser. Although he is required for at least one year to recuse himself from decisions involving his former clients or partners, that will not prohibit the Homeland Security Department from doing business with those companies. A White House spokesman said Mr. Kerik would adhere to "the highest ethical standards" and ensure there are no conflicts of interest.

"In order to avoid even an appearance of a conflict, he will comply with all ethics laws and rules to avoid acts that might affect former clients or organizations where he served as a director," said the spokesman, Brian Besanceney.

Mr. Kerik had a close view of electroshock devices in the 1990's when he was commissioner of the New York City Department of Correction, which was looking for new tools to help it combat surging jail violence. After testing Taser guns as well as a stun shield sold by another company, the department chose the shield as better suited for prison use. But Mr. Kerik said the electroshock devices had impressed him as a way to subdue inmates without physically confronting them.

When he later became police commissioner, the Police Department initiated a pilot program testing new Taser models. The department eventually purchased about 260 of the stun guns.

In 2002, Taser International sought to significantly expand its sales to law enforcement agencies and it needed a high-profile former public official who could serve as a spokesman for its product, Mr. Smith said. Mr. Kerik, he added, was the perfect candidate, having served as both correction and police commissioner. Mr. Kerik's role working alongside Mayor Giuliani on Sept. 11, 2001, had also earned him a national reputation, particularly in law enforcement.

"We wanted someone who was recognizable to other chiefs around the country," Mr. Smith said in a telephone interview. "And that is what we got with Bernie."

After he joined Taser's board in May 2002, Mr. Kerik quickly became one of Taser's chief spokesmen before police officials.

"This trend is a dramatic change in law enforcement," Mr. Kerik wrote in an invitation sent to police chiefs nationally, referring to the use of stun guns. "And one expected to grow."

Mr. Kerik also defended Taser against criticism that its weapons had contributed to the deaths of suspects who have been fired upon by police. Amnesty International, the human rights organization, said there had been 74 Taser-related deaths in North America since 2001 and called for a suspension on the device's use until its safety was further investigated. An Air Force laboratory that conducted research on the guns said last month that it could not determine if they were safe, in contrast to statements from Taser that the lab had found its weapons generally safe and effective.

"Any chief of a major agency knows that there will be sudden, unexpected deaths in police custody no matter what tactics the police use," Mr. Kerik was quoted as saying in a press release issued by Taser in July. "Police agencies implement equipment like pepper spray and Taser devices in efforts to save as many of these people as possible."

The Taser publicity campaign has been an enormous success. More than 6,000 law enforcement agencies use Tasers, compared with a handful five years ago, and Taser International's sales have climbed to about $68 million this year from $6.9 million in 2001.

In Washington, Taser executives have sought ways to break into another potentially enormous market: domestic security and the military.

The company hired a lobbyist and met repeatedly with government officials to begin building a base for future federal business, which has represented only about 3 percent of the company's sales.

Language promoting Taser's interest was written into legislation that became law, including one bill advising that "members of a flight deck crew of a cargo aircraft should be armed with a firearm or Taser."

In November, the Transportation Security Administration approved the use of Taser stun guns aboard aircraft for the first time, giving Korean Air permission to use them on flights to the United States.

Executives at Taser also approached the Customs and Border Protection division of the Homeland Security Department to try to encourage it to buy Tasers for its officers. Mr. Kerik did try to help with that pitch, referring the company to a Customs official from New York that he knew, Mr. Smith said. The agency, which has thousands of armed officers, is now evaluating the Taser, a spokesman said.

When Mr. Kerik was a New York City police officer in the 1980's, he was so tight on funds that he filed for personal bankruptcy. But after he stepped down as police commissioner in 2002, he joined Mr. Giuliani's rapidly growing consulting firm, which primarily advises and promotes the products of security companies, several of which do business or are seeking to do business with the Homeland Security Department.

Officials at the firm, Giuliani Partners, would not say how much he made there.

But one contract alone, promoting the domestic security uses of the cellular phone company Nextel, earned Giuliani Partners at least $15 million, a piece of which would have been shared with Mr. Kerik.

Mr. Smith, the president of Taser, said he had become quite friendly with Mr. Kerik over the years, joining him at cigar bars and steakhouses in New York, as well as inviting Mr. Kerik to his home in Arizona.

"I certainly don't expect any preferential treatment from Bernie, and I would not expect he would give it either," Mr. Smith said.

Mr. Kerik will have to be approved by the Senate before he takes control of Homeland Security. Several members of the Senate Committee on Government Affairs, which must pass on his nomination, declined to comment when asked about Mr. Kerik's work in the private sector. But staff members indicated that questions about this work were not likely to disrupt his nomination.

For now, Mr. Kerik remains on the Taser board and remains an employee at Giuliani Partners, but his work at both companies has been suspended and he will resign if confirmed. Any remaining stock he owns at Taser or ownership at Giuliani Partners will also be cashed out, company officials said.

January 16, 2005
Investigators Studying Correction Officials' Overtime on '98 Day Kerik Was Wed
By THOMAS J. LUECK, NY TIMES

LINK

The payroll records of New York City correction officials who put in for overtime the day when Bernard B. Kerik, then the correction commissioner, married in 1998 have been turned over to the Department of Investigation, according to a city official who has been briefed on the review and spoke on the condition of anonymity.

The Daily News reported yesterday that the department is investigating whether correction officers were paid overtime to work in a security detail at Mr. Kerik's wedding on Nov. 1, 1998.

Mr. Kerik, who was later police commissioner, withdrew his name last month from nomination by President Bush as secretary of homeland security.

The News's article cited interviews and records it had obtained for the Correction Department after filing a Freedom of Information request. Emily Gest, a spokeswoman for the Department of Investigation, declined to comment yesterday.

Thomas Antenen, a spokesman for the correction agency, said yesterday that the newspaper had been provided the payroll records of 32 officers from the agency's Emergency Services Unit who requested overtime for work they performed on the day of Mr. Kerik's wedding.

The correction commissioner traditionally has a security detail, which is part of the agency's Emergency Services Unit. The unit is otherwise used to respond to unusual incidents like jail disturbances.

The records released to The News indicated that the 32 officers filed for 240 hours of overtime, Mr. Antenen said. But for most of the officers, he said, more detailed records listing what their assignment had been could not be found.

Last night, Mr. Kerik's lawyer, Joseph Tacopina, said, "There were no New York City employees working on the clock at that wedding.

"And even if there were, I don't know what the story is," he said. "Every commissioner has a security detail. At this wedding, you would expect there to be a detail. He chose not to have it."

The article quoted Andy Afxentious, the general manager of the Chanticler catering hall in Short Hills, N.J., where the wedding reception was held, as saying 15 to 20 security people attended and were served food, for which Mr. Kerik was billed. Mr. Afxentious also said two detectives from the Department of Investigation had visited the Chanticler, and were given access to a file on Mr. Kerik's wedding, The News reported.

Reached by phone last night, Mr. Afxentious said officers had inquired about the wedding, but he declined to say when, or what agency they represented. He also confirmed that security personnel attended the wedding festivities, but he did not know if they had any affiliation with the city.