HEVESI IS ONE GUILTY GONER
By FREDRIC U. DICKER

December 23, 2006 -- ALBANY - Disgraced state Comptroller Alan Hevesi yesterday got a new title: crook, liar and felon.

A somber Hevesi pleaded guilty to a felony count of defrauding the state, resigned from office, and admitted he had never intended to reimburse the taxpayers for personal errands state workers did for his wife - which were revealed as far more extensive than had been known.

The stunning plea ends an investigation by Albany County District Attorney David Soares, who had been presenting evidence against the Queens native to a grand jury, and snuffs out the 35-year political career of one of the highest-profile Democrats in New York.

Hevesi will serve no jail time, but will pay a $5,000 fine, and he agreed not to file any appeal. He also signed papers agreeing not to take office on Jan. 1, when the second term to which he was overwhelmingly elected last month would have begun.

In court, Hevesi confessed that he used a state employee to provide services for his wife, Carol, that "could not be properly characterized as security" during 2005 and 2006.

"For this time, I did not plan to reimburse the state," he told Albany County Court Judge Stephen Herrick, changing his numerous previous claims that he had intended to repay but simply forgot.

Hevesi, 66, admitted to defrauding the government, a felony that carries a maximum penalty of 11/3 to four years in prison. He must submit DNA for the state's data bank.

Herrick questioned Hevesi at length to make sure he understood the plea-bargain arrangement that had been hammered out over several days.

When the questioning was over, Herrick asked Hevesi, "How do you plead?"

"I plead guilty, sir," responded Hevesi, who entered the plea in order to escape what was expected to be a multiple felony indictment from the Albany grand jury.

Joel Cohen, one of Hevesi's lawyers, told reporters his client decided to plead guilty after meeting with family members last Saturday.

A probe by the office of state Attorney General and Gov.-elect Eliot Spitzer had found that Hevesi owed the state $206,294 for the cost of the state workers, an amount Hevesi has already paid.

Hevesi and his wife last year earned more than $335,000 from his comptroller's salary and their public pensions, but he said he had to remortgage his Queens home to pay off the debt.

Hevesi, who was accompanied to court by his two sons, made a brief statement after the sentencing apologizing to the people of the state.

"I want to apologize to the people of New York who have given me the opportunity to serve them," Hevesi said.

"I want to apologize to the 2,400 professionals who work for the comptroller's office, and I want to apologize to my family who have been so strong and loving during this process."

Herrick set Feb. 9 for the sentencing.

Soares, in a "supporting deposition" to the court, outlined a far more extensive pattern of abuse of office engaged in by Hevesi than had been previously known.

Investigators found that Nicholas Acquafredda, a $61,000-a-year comptroller's office employee who had been assigned virtually full time as a chauffeur and personal aide to Hevesi's wife, would take her shopping at Bloomingdale's, and wait in a car to pick her up.

There were also outings to other stores and regular trips to and from the Hevesi homes in Forest Hills, Queens, and Somers, Westchester County.

Investigators also found that Acquafredda made stops to "pick up dishes" at the home of Mrs. Hevesi's sister, watered her house plants, moved her furniture, hung her curtains, hauled her trash and moved furniture around her house.

Previous reports from the Ethics Commission and Spitzer's office had found that Acquafredda and three other state workers had served as a luncheon companion, physical therapist, and general gofer for Mrs. Hevesi.

Spitzer called Hevesi's plea "a sad but necessary action."

He also said for the first time that he planned to play a role in choosing Hevesi's successor, the legal role that lies with the Democratic-dominated Legislature.

In a statement, Spitzer called for the selection of someone with "significant experience in financial matters" and the skills of "an outstanding administrator."

Spitzer also called for the selection of "a person of unquestioned integrity who will act independently in the interests of the taxpayers."

Hevesi's Republican opponent in the November election and the man who first disclosed the comptroller's misuse of office, Christopher Callaghan, said the guilty plea "engendered in me no sense of satisfaction or victory, only sadness.

"However, this conclusion illustrates what should have been obvious to all: A person who cannot recognize the ethical limits for himself is not qualified to enforce them for others," Callaghan said.

While Hevesi's post is now legally vacant, his responsibilities as the state's chief fiscal officer rest with Thomas Sanzillo, the first deputy comptroller.

Hevesi had previously designated Sanzillo as the person who would act if he was unable to carry out his responsibilities.

Gov. Pataki said he may appoint an interim comptroller until a permanent replacement for Hevesi can be found.

Pataki said he will work with Spitzer, the governor-elect, in that effort.

Pataki cited the volatility of the stock market and concerns a vacancy might cause among pensioners, state workers and investors as reasons for naming someone to head the office.

The Legislature will decide early in the new year on a replacement to carry out a full four-year term as comptroller.

Among those believed to be under consideration are city Comptroller William Thompson; Democratic Assemblymen Tom DiNapoli of Nassau County and Richard Brodsky of Westchester; former Buffalo-area U.S. Attorney Denise O'Donnell; and investment banker William Mulrow, who lost the Democratic primary for comptroller to Hevesi in 2002.

fredric.dicker@nypost.com

HEVESI DUCKS JAIL
By FREDRIC U. DICKER, NY POST
LINK

December 22, 2006 -- ALBANY - Sealing his political doom, state Comptroller Alan Hevesi reached an agreement yesterday under which he'll plead guilty to one felony charge of misappropriating state resources, a conviction that will automatically remove him from his job.

In addition, Democrat Hevesi will agree not to begin a new four-year term on Jan. 1, leaving it to the Democratic-dominated Legislature to pick his replacement, sources said.

It's all part of a deal to end the Chauffeurgate scandal, in which Hevesi used four state workers as drivers and personal aides for his wife.

Albany County District Attorney David Soares, who rejected efforts by Hevesi's lawyers to accept a guilty plea to a lesser, misdemeanor charge, will recommend as part of the plea bargain that Hevesi not serve any time in prison.

Hevesi is expected to plead guilty in Albany County Court to a relatively low-level Class E felony, which could carry a punishment of up to four years in prison.

Without the plea deal, Hevesi faced multiple felony charges from a grand jury that was prepared to hand up an extensive indictment today, a source said.

While Judge Stephen Herrick will decide on the final sentence, sources said Soares' recommendation for no prison time - combined with Hevesi's clean record and longstanding public service - was certain to leave the comptroller a free man.

Hevesi, who won easy re-election in November, has been under a cloud of criminality in the wake of the state Ethics Commission's October finding that he repeatedly broke state law over a 31/2-year period by using state workers as aides to his ailing wife.

A report from the office of state Attorney General and Gov.-elect Eliot Spitzer put the value of those services at more than $200,000.

The 212-member Legislature will pick Hevesi's replacement early next month at a special meeting at which the Assembly and Senate will vote as one, with the Democrats in the majority. A source close to Spitzer, meanwhile, said the soon-to-be governor will likely seek the appointment of a "total outsider, someone with real money-management skills." City Comptroller William Thompson insisted to reporters that he had "absolutely no interest in the state comptroller's position."

Spitzer refused to comment pending a formal announcement from Hevesi.

Additional reporting by David Seifman, Carl Campanile and Tom Topousis

fredric.dicker@nypost.com

New York State
Ethics Commission
In the Matter of Alan G. Hevesi,
Comptroller of the State of New York

Notice of Reasonable Cause
TABLE OF CONTENTS

JURISDICTION OF THE COMMISSION
POWERS AND DUTIES OF THE OFFICE OF THE STATE COMPTROLLER
FACTS

I. The Commission's Informal Advisory Opinion to the New York State Comptroller
II. The Commission's Investigation
A. Background
B. Mr. Hevesi's use of a City employee to provide transportation to Mrs. Hevesi
1. The Comptroller's request to the City Corporation Counsel for approval to provide transportation to Mrs. Hevesi
2. Acquafredda provides transportation to Mrs. Hevesi
3. The Comptroller's 2001 reimbursement to the City of New York
C. Mr. Hevesi's use of a State employee to provide transportation to Mrs. Hevesi
1. The Comptroller's request for an advisory opinion from the Commission
2. The New York State Police find a "Low Threat Risk" to Mrs. Hevesi
3. The Comptroller's security team
4. Acquafredda, as a State employee, provides transportation to Mrs. Hevesi
5. The time Acquafredda spends with Mrs. Hevesi increases
6. Acquafredda is transferred to OSC's Executive Offices
7. The Comptroller's 2006 reimbursement to the State of New York
D. The Comptroller's testimony relating to the Commission's Advisory Opinion
CONCLUSION

STATE OF NEW YORK
STATE ETHICS COMMISSION
IN THE MATTER OF ALAN G. HEVESI,
COMPTROLLER OF THE STATE OF NEW YORK
NOTICE OF REASONABLE CAUSE

JURISDICTION OF THE COMMISSION
The Commission is authorized by Executive Law §94(12)(a) to commence inquiries into possible violations of Public Officers Law §§73, 73-a, or 74. Pursuant to Executive Law §94(16)(d), the Commission is authorized to conduct any investigation necessary to carry out the provisions of §94. Pursuant to this power and duty, the Commission may administer oaths or affirmations, subpoena witnesses, compel their attendance and require the production of any books or records which it may deem relevant or material.

In cases where the Commission finds a violation of §73 or §73-a, the Commission is empowered to conduct a hearing and make a final determination of wrongdoing. In cases involving violations of Public Officers Law §74, the Commission's role is limited to determining whether there is reasonable cause to believe that a violation of the Code of Ethics has occurred.

Executive Law §94(12)(b) provides that if the Commission determines that there is reasonable cause to believe that a violation has occurred, it shall send a notice of reasonable cause: (i) to the reporting person; (ii) to the complainant if any; and (iii) in the case of a statewide elected official, to the Temporary President of the Senate and the Speaker of the Assembly.

Public Officers Law §74 contains the Code of Ethics for State officers and employees. Subdivision 2 sets forth the rule with respect to conflicts of interest; it provides, in pertinent part:

No officer or employee of a state agency . . . should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.

Public Officers Law §74(3) sets forth standards which include the following:

d. No officer or employee of a state agency . . . should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others.

h. An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.

Public Officers Law §74(4) states, with regard to violations of §74, that:

In addition to any penalty contained in any other provision of law any such officer, member or employee who shall knowingly and intentionally violate any of the provisions of this section may be fined, suspended or removed from office or employment in the manner provided by law.

POWERS AND DUTIES OF THE OFFICE OF THE STATE COMPTROLLER

The New York State Constitution establishes certain "department heads," including the head of the Department of Audit and Control who shall be the Comptroller (NY Const, art V, §4). (1) The State Constitution provides that the Comptroller shall be required: (1) to audit all vouchers before payment and all official accounts; (2) to audit the accrual and collection of all revenues and receipts; and (3) to prescribe such methods of accounting as are necessary for the performance of the foregoing duties (NY Const, art V, §1). It further provides that the Legislature shall define the powers and duties of the Comptroller and may also assign to him or her certain other enumerated duties, but may not assign any administrative duties except as may be incidental to the performance of constitutional functions (NY Const, art V, §1; see, State Finance Law §§8, 111; see also, Executive Law § 40).

The State Comptroller is New York State's chief fiscal officer, and is charged with auditing government operations and operating the Statewide Retirement Systems. Responsibilities of the Comptroller include:

Managing the State's assets and issuing General Obligation debt;
Conducting management and financial audits of State agencies and public benefit corporations;
Issuing reports on State finances;
Overseeing the fiscal affairs of local governments, including New York City;
Reviewing State contracts, payrolls and payments before issuance;
Maintaining the State's accounting system and issuing monthly cash financial statements;
Overseeing the Justice Court and Abandoned Property Programs; and
Operating the retirement systems for State and local retirees.

FACTS

I. THE COMMISSION'S INFORMAL ADVISORY OPINION TO THE NEW YORK STATE COMPTROLLER

On May 14, 2003, Alan G. Hevesi, the State Comptroller, submitted a request to the Commission for an informal advisory opinion seeking guidance concerning the application of the Public Officers Law to his proposal to provide security and transportation to his wife in certain circumstances. The Comptroller advised the Commission that while he was City Comptroller "he requested and received clearance" from then City Corporation Counsel Michael D. Hess to provide his wife, Carol Hevesi, with "occasional security and transportation" (E: 12). (2) Citing his "apprehension" concerning "numerous threats over the years," the Comptroller stated that he had "an appreciable concern" for his wife's security.

The Comptroller wrote:

I would like to arrange to have a member of my security detail and appropriate transportation made available for Carol's well being and protection when she is meeting me for official events, and on those occasions when she must travel without a companion and the need for security is apparent in the judgment of those on my staff assigned to make these determinations.

In those instances where the advisability of security is not apparent, I will of course be prepared to reimburse this Agency for any personnel and transportation costs incurred (E: 12).

On May 30, 2003, the Commission responded by issuing an informal advisory opinion to the Comptroller, which cited Public Officers Law §§74(2) and (3)(d), (f) and (h), the provisions of the ethics law applicable to his inquiry (E: 13). The opinion noted that, while "[g]enerally, questions concerning specific issues involving the security and transportation needs of statewide elected officials are best addressed by the agency," the Commission had previously addressed matters involving the inappropriate use of State resources in situations involving political campaigns and outside activities. Turning to his specific question, the Commission advised that "when independent law enforcement personnel determine through a risk assessment process that security and transportation for Mrs. Hevesi is warranted, Public Officers Law §74 is not violated because the independent assessment vitiates any concern that you are using your State position for some unwarranted benefit." The Commission cautioned:

However, in those situations when legitimate security concerns are not found to be present, or when the function is unrelated to your official business, you should refrain or reimburse the State for any costs incurred for the use of State resources to avoid the appearance that you are using your position as Comptroller for some unwarranted benefit for your wife [Public Officers Law §74(3)(d)], or that you are otherwise engaged in acts in violation of the public trust [Public Officers Law §74(3)(h)] (E: 13).

The Commission advised the Comptroller that its informal opinion was advisory, based upon the facts provided in his request letter, and that if he wished to clarify or supply further facts to the Commission concerning the issue, it would be prepared to respond. Until September 2006, the Comptroller had no further communications, written or oral, with the Commission related to Mrs. Hevesi's transportation and security.

II. THE COMMISSION'S INVESTIGATION

A. Background

On September 21, 2006, the Office of the State Comptroller's ("OSC") toll-free hotline, which is used to report allegations of fraud, corruption or abuse of taxpayer money, received a telephone call from J. Christopher Callaghan, Hevesi's opponent in the 2006 election for the office of State Comptroller. In that call, Callaghan reported that a State employee's "sole assignment" was to drive Mrs. Hevesi (E: 18, at Tab G). The media reported on this the allegation over the next several days.

On September 23, 2006, the Commission decided to begin a preliminary review of the matter, and two days later, on September 25, 2006, the Comptroller requested that the Commission review his actions regarding the use of a "single employee" to provide security and transportation to his wife (E: 7). The Comptroller stated that in addition to the past threats cited in his 2003 request, he had received threats in July 2006 stemming from his refusal to approve a $47 million contract with a vendor with ties to organized crime. Based on the advice of his own security staff, the Comptroller stated that he believed that the use of Nicholas Acquafredda to assist his wife with the "rigors of her daily life and providing her with the sense of security she has required" was "appropriate" and "comported both with the informal opinion . . . as well as the applicable sections of New York State's Public Officers Law" (E: 7).

The Comptroller expressed his regret that he had not, on a continuing basis, made periodic reimbursements to the State for those periods of times where security was not apparent, and stated that he was sending a check in the sum of $82,688.82 to the New York State Commissioner of Taxation and Finance (E: 7; E: 20). The Comptroller explained that this amount was based upon the percentage of time Acquafredda spent with Mrs. Hevesi from 2003 through 2006 compared with his annual salary, plus benefits and interest, and included those times when the need for security was apparent (E: 7). According to the OSC, Acquafredda spent the following percentage of his work time with Mrs. Hevesi: 5% in 2003; 20% in 2004; and 40% in both 2005 and 2006 (E: 7).

On September 29, 2006, pursuant to Executive Law §94(12)(a), the Commission sent the Comptroller a letter advising him that it would conduct a thorough review to determine whether assigning an OSC employee to perform duties involving the security and transportation for his wife constituted a violation of Public Officers Law §§73, 73-a and/or 74 (E: 14). The Comptroller was given fifteen days to submit a response setting forth any information relating to these activities, and was given an opportunity to be heard at the Commission's Albany office in accordance with §94(12)(a). (3)

The Commission's letter to the Comptroller also advised him that these circumstances might require him to amend his annual statements of financial disclosure for the years 2001 through and including 2005 because question 13 of the annual statement requires reporting of "any income in EXCESS of $1,000 from EACH SOURCE for the reporting individual and such individual's spouse for the taxable year last occurring prior to the date of the filing" (see Public Officers Law §73-a[3] [emphasis in original]). On October 17, 2006, the Comptroller amended question 13 of his annual statements of financial disclosure for the years 2003 through 2005 to include income to himself, which he described as " 'in kind' services of Nicholas Acquafredda." Executive Law §94(11) permits a filer to cure any deficiency, without penalty, within fifteen days of receiving notification.

In connection with this investigation, Staff has taken sworn testimony of 12 witnesses and has reviewed almost 2000 pages of documents obtained from those involved.

B. Mr. Hevesi's use of a City employee to provide transportation to Mrs. Hevesi

Mr. Hevesi served as the New York City Comptroller from 1994 through 2001. During this time, Diana Hoffman, Myrna Santiago, Douglas Gladstone, Nicholas Acquafredda, Robert Brackman, Roberta Rubin, and Jack Chartier served in the New York City Comptroller's Office ("NYCCO") in various capacities (Acquafredda: 9; Rubin: 104-105; Gladstone: 188-189; Santiago: 235-236; Hoffman: 379; Brackman: 741-742; Hevesi: 501-502; Chartier: 655-656).

1. The Comptroller's request to the City Corporation Counsel for approval to provide transportation to Mrs. Hevesi

In 1998, Mr. Hevesi asked New York City's then Corporation Counsel Michael Hess whether it was permissible to provide a driver and security for his wife (Hevesi: 514; Brackman: 744-745). The Comptroller received a letter from Hess dated September 28, 1998, stating:

I have reviewed the question of the periodic utilization of a New York City car and driver for your wife. It is my understanding that she has been officially certified by the federal government as a disabled person.

It has come to my attention that you and your family have been the subject of picketing and demonstrations relating to various subjects. In light of those demonstrations and the security concerns related to them, and recognizing your wife's serious health problems, I think it is appropriate for her to be picked up by the Comptroller's staff and a City car to join you in public activities and, on an occasional basis, for health related appointments (Hevesi: 517; E: 15). (4)

In his testimony before the Commission, the Comptroller acknowledged that the letter could mean that he was not authorized to use a City driver to transport Mrs. Hevesi to all health-related appointments, but said that he "never understood what 'occasional' was." The Comptroller stated, "[i]f my wife had appointments on Monday and Thursday, which one does she not get coverage for because of 'occasional'?" (Hevesi: 519-520). He never sought clarification of the letter; he "just assigned staff and had her covered" because he "was concerned about her being covered" (Hevesi: 520), and because he received "no objection" from the City (Hevesi: 524; Rubin: 107).

2. Acquafredda provides transportation to Mrs. Hevesi

Acquafredda was hired by the NYCCO in 1995 as a driver and was responsible for transporting supplies and taking fleet vehicles for maintenance repairs (Acquafredda: 12-14; E: 2). In early 2000, Acquafredda joined the Citizen Action Center ("CAC"), a part of the NYCCO, handling constituent issues, where he reported to Douglas Gladstone, who reported to Myrna Santiago, the Executive Director of the CAC (Hoffman: 383-384; Gladstone: 191; Santiago: 237).

Sometime after his employment commenced, Acquafredda's job duties changed to include driving Mrs. Hevesi to medical and other appointments because "there came an interest on [the Comptroller's] part . . . that [Mrs. Hevesi] be provided with assistance, driving, and security" (Hevesi: 505). In 1997 or 1998, Acquafredda remembers Diana Hoffman, who handled the Comptroller's schedule, telling him that "[w]e're going to need you to pick up Mrs. Hevesi at the house and bring her to an appointment and then bring her back" (Acquafredda: 16; Hoffman: 384-386). He felt "honored" to do this, and subsequently, Hoffman periodically asked him to transport Mrs. Hevesi (Acquafredda: 16-17, 20; Hoffman: 387). Acquafredda provided transportation for Mrs. Hevesi between once or twice per week or once every other month (Acquafredda: 17; Hoffman: 388). He drove from Manhattan to Queens in a City-owned car and then used Mrs. Hevesi's car to transport her (Acquafredda: 25; Hoffman: 388-389).

Acquafredda did not record the time spent driving Mrs. Hevesi, nor was he asked to keep such records (Acquafredda: 20-21, 29; Hevesi: 532).

3. The Comptroller's 2001 reimbursement to the City of New York

On February 14, 2001, shortly after the issue of Acquafredda's provision of services for Mrs. Hevesi became the subject of a Freedom of Information Law request to the NYCCO by the New York Post, the Comptroller reimbursed the City the sum of $6,439 (Hevesi: 526-527; 535-536; E:15). The Comptroller asked Roberta Rubin to "work out a calculation" for reimbursement to the City (Hevesi: 528-529; Rubin: 107-109). Rubin did not rely on any documents reflecting the time Acquafredda actually spent with Mrs. Hevesi; rather, she estimated the number of hours he spent driving and multiplied that figure by Acquafredda's hourly wage (Rubin: 107-109, 138). Acquafredda was not asked to supply any information to assist in calculating the amount of the reimbursement, and Hoffman told him that his service to Mrs. Hevesi was "discontinued now" (Acquafredda: 26-29).

On the subject of reimbursement, the Comptroller testified before the Commission that:

Maybe that was a mistake long-term because it's sort of an admission that I shouldn't have done it and admitted it. There was no compulsion on the part of the City for me to do that. It was voluntary. But it was in the middle of a campaign (Hevesi: 526-527).

On May 4, 2001, the New York Post reported that the Comptroller had used Acquafredda, a City employee, to drive Mrs. Hevesi (E: 1).

C. Mr. Hevesi's use of a State employee to provide transportation to Mrs. Hevesi

In 2003, after Hevesi became the State Comptroller, several of the same individuals who worked for him in the NYCCO, and who were aware of what happened in 2001, joined him at the OSC: namely, Acquafredda, Hoffman, Santiago, Gladstone, Brackman, Rubin and Chartier (Acquafredda: 32; Gladstone: 196; Hoffman: 406-408; Hevesi: 544, 550-553; Chartier: 688-691; Brackman: 742-743, 749-750; E: 16).

1. The Comptroller's request for an advisory opinion from the Commission

In May 2003, the Comptroller, with the assistance of Brackman, the Deputy Comptroller, drafted a letter to the Commission seeking an advisory opinion as to whether the State's ethics laws permitted him to use a State employee to provide occasional transportation and security for his wife (Hevesi: 590-594; Chartier: 720; Brackman: 751-752; E: 12).

The Comptroller's request letter did not inform the Commission that Acquafredda had driven Mrs. Hevesi while Mr. Hevesi was the Comptroller at the NYCCO, or that Mr. Hevesi had reimbursed the City $6,439 for Acquafredda's services on behalf of Mrs. Hevesi. The Comptroller "didn't feel that it was relevant" to supply that information to the Commission (Hevesi: 597, 607-608; Brackman: 758).

At the time when the Comptroller asked the Commission for permission "to arrange to have a member of [his] security detail" provided to his wife, another driver, David Burke, was already assigned to drive Mrs. Hevesi (Hevesi: 594; Chartier: 720-721, 727-728; E: 12). In his May 2003 request to the Commission the Comptroller did not disclose that Burke already was driving Mrs. Hevesi.

Moreover, in his request to the Commission, the Comptroller represented that there was a "single driver " (E: 7). However, on October 11, 2006, the afternoon before the Comptroller was scheduled to testify, the Commission received a response from the Office of Counsel for the OSC, and learned, for the first time, that another State employee had been used to provide transportation to Mrs. Hevesi at various points in time (E: 18). When he testified the next day, the Comptroller admitted that Burke "played that role" at the time of his original request (Hevesi: 594), but that he did not recall "until notified a day or so ago" that Burke provided transportation for a "couple of months . . . two days a week," in which a State car had been used (Hevesi: 574; E: 52, pg. 3).

2. The New York State Police find a "Low Threat Risk" to Mrs. Hevesi

In the May 30, 2003 informal Advisory Opinion, the Commission advised the Comptroller to seek a risk assessment for Mrs. Hevesi from independent law enforcement personnel (E: 13). In July 2003, the Comptroller asked the New York City Police Department ("NYPD") to conduct a "threat assessment" for Carol Hevesi. NYPD referred the request to the New York State Police ("NYSP") (Brackman: 763-765). The assessment was assigned to Investigator Ihor Stadnyk in the Executive Services Unit Security Detail in Albany. (5) Stadnyk specializes in evaluating threats against public officials (Stadnyk: 798).

Thereafter, Stadnyk and Brackman met to discuss the assessment. Brackman did not want a site survey of the Comptroller's residence performed, as one had already been done and "they didn't feel there was a threat based on the residence" (Stadnyk: 802). Stadnyk requested documentation of threats received, and although Brackman indicated documents would be forthcoming, none was ever supplied (Stadnyk: 803, 818-19; Brackman: 766-767). Stadnyk then contacted the NYPD to ascertain the existence of any documented threats against the Comptroller or his wife. None was ever provided (Stadnyk: 803). Stadnyk identified one individual alleged to have made a threat against the Comptroller, and upon contacting the Secret Service, was advised that the individual presented a low threat level, which did not require monitoring (Stadnyk: 805-806).

Stadnyk also came across the media reports of Mrs. Hevesi's having used a City driver while Mr. Hevesi was the City Comptroller, and recognized the similarity to the current request (Stadnyk: 807). Stadnyk understood that Mrs. Hevesi's medical and physical condition affected her daily activities. (6) He concluded, however, that her condition did not alter his assessment that there was no appreciable threat to her from others (Stadnyk: 812-814).

On July 23, 2003, after meeting with Stadnyk, but before the assessment was completed, Brackman penned the following note to Stadnyk:

Officer Stadnyk - Per our discussion, enclosed please find the correspondence I referenced that sets out our concerns with Mrs. Hevesi - A letter from the State Police at the end of your review to the effect that there exists a legitimate & articulated need for the kind of "soft" protection Mrs. Hevesi warrants - Thanks for your assistance (E: 23).

Before the Commission, Brackman testified, "I suppose it would suggest to some that I was asking Officer Stadnyk for a letter to that effect, but I don't know that that is what I meant when I wrote it . . ." (Brackman: 769). For his part, Stadnyk believed that "they were looking for a letter that validated their security concerns for Mrs. Hevesi, which is at odds with normal procedure to do a threat assessment" (Stadnyk: 811).

On August 19, 2003, Superintendent James W. McMahon wrote to the Comptroller that, after a careful review of the information provided by Brackman, the NYSP had determined that Mrs. Hevesi faced a "Low Threat Risk," based on the absence of any threats to her and her relatively low public profile (E: 11). The NYSP concluded that "there does not appear to be a nexus between your high public office and Mrs. Hevesi's safety." Superintendent McMahon added that the assessment was based on the information provided to date, and that if circumstances should change in the future, the assessment should be re-evaluated to reflect any additional information (Brackman: 770; E: 11).

On September 11, 2003, Brackman wrote to then-Acting Superintendent Wayne Bennett, thanking the NYSP for conducting the threat assessment. The letter stated that "internal arrangements" would be made to "ensure that [Mrs. Hevesi] receives a commensurate degree of protection, relying on our current in-house security staff and their expertise in making these determinations," and quoting the Commission's informal opinion that said, " '[g]enerally, questions concerning specific issues involving the security and transportation needs of statewide elected officials are best addressed by the agency' " (Brackman: 772; E: 24). At no point did the Comptroller return to the NYSP or the Commission with additional or new information or seek further guidance from the Commission (Hevesi: 611; Brackman: 774-775).

3. The Comptroller's security team

The Comptroller's security team included Tony Johnson, the senior member, and five other retired members of either the NYPD or Albany Police Department (Johnson: 310-311; Fiore: 261-262). Acquafredda was not part of the Comptroller's security team and never communicated with them on security issues (Acquafredda: 59; Rubin: 141).

The Comptroller and his security detail now claim that some threat to Mrs. Hevesi existed during the relevant time period. Johnson stated that he believed that this threat arose from the Comptroller's policies with respect to the Sudan, South Africa, Israel and Northern Ireland (Johnson: 320-322). Johnson testified that the Comptroller's security team conducted their own threat assessment of Mrs. Hevesi, but no records of OSC support Johnson's testimony (Johnson: 327-328). In addition, Johnson did not learn until October 10, 2006, when he testified before the Commission, of the letter from Superintendent McMahon to the Comptroller concluding that Mrs. Hevesi faced a "Low Threat Risk" (Johnson: 317-318). According to Johnson, Acquafredda and Burke were part of the Comptroller's security team from February 2003 until June 2006, despite their lack of law enforcement credentials (Johnson: 311, 354-355).

Notably, during the period February 2003 until June 2006, the security team received no threats to Mrs. Hevesi (Fiore: 280; Johnson: 322-323). There were incidents directed at the Comptroller: a license plate was stolen from the Comptroller's car, and the windshield on his car was smashed while it was parked outside his Queen's residence. There were other incidents involving the Comptroller which invoked angry responses, such as his June 1, 2006 commencement address at Queens College in which he made a critical statement about President Bush, and his role beginning in July 2006 in a back pay dispute concerning the State's corrections officers. Those incidents, however, did not produce any threats to Mrs. Hevesi. By July 2006, Mrs. Hevesi had entered a nursing home because of her health issues (Fiore: 268-271, 279-282; Johnson: 343-347; Hevesi: 521, 625-628).

Despite this record, the Comptroller himself believed that there was a security risk to Mrs. Hevesi and disagreed with the NYSP assessment (Hevesi: 612-613). The Comptroller testified that he viewed Mrs. Hevesi's health needs as related to her security needs and relied on his own personnel in assessing the risk to her (Hevesi: 607, 611-612). Although Mrs. Hevesi was never threatened, the Comptroller believed that a "threat to me . . . is a threat to the family as well," especially due to his wife's "vulnerable state" (Hevesi: 599-600). For the Comptroller, security meant preventing her from falling down a flight of stairs, preventing "someone trying to try to get to me through her" (Hevesi: 521), and giving her "peace of mind; that there's someone there in an emergency if she needs help, if the car breaks down, if she gets jostled, the whole range" (Hevesi: 522).

The Comptroller never told Acquafredda about any threats to Mrs. Hevesi (Acquafredda: 55-56).

4. Acquafredda, as a State employee, provides transportation to Mrs. Hevesi.

Acquafredda, Santiago and Gladstone worked in OSC's Division of Intergovernmental Affairs, a new unit, which was modeled after the NYCCO's CAC, and located at Maiden Lane in Manhattan (Acquafredda: 41; Gladstone: 197; Hoffman: 406-408; Santiago: 465-466, 470; Hevesi: 554-555). Acquafredda started on March 6, 2003, as an Assistant Director in this unit at a salary of approximately $45,000, which increased incrementally to $61,000 in 2006 (Acquafredda: 41; Hevesi: 552-554; E: 3, 6 and 18, at Tab K). (7) Acquafredda's job description included following up with constituents to ensure that problems were properly handled (E: 18, at Tab E). Altogether about eight people worked in the division, which was headed by Santiago (Acquafredda: 41; Santiago: 474).

When he was "called upon to drive Mrs. Hevesi," Acquafredda's duties changed (Hoffman: 409; Acquafredda: 42; Hevesi: 558). (8) Executive Assistant Comptroller Hoffman remembers the Comptroller telling her that Acquafredda was needed to pick up the Comptroller's wife. Recalling the events at the NYCCO in 2001, Hoffman asked the Comptroller, "Do we want to do this again?" (Hoffman: 412). She testified that the Comptroller heard her concern but did not answer; there was no further discussion, and she carried out his request (Hoffman: 412-413). (9) In his testimony, the Comptroller did not remember this exchange, but had no reason to doubt Hoffman's recollection or honesty (Hevesi: 559, 561-564).

Acquafredda then received "sporadic" calls from Hoffman to drive Mrs. Hevesi, about once or twice per month (Acquafredda: 43-44). In the beginning, Hoffman received the request directly from the Comptroller and relayed the information to Acquafredda. Later, Acquafredda received the request directly from Mrs. Hevesi "because they had built up a little bit of a relationship" (Hoffman: 416-417; Hevesi: 567-568). Acquafredda used the Hevesi family Buick to transport Mrs. Hevesi, and she would reimburse him for any gas (Acquafredda: 89-90). The trips were to personal appointments, and because of her health Acquafredda "very, very rarely" provided transportation to Mrs. Hevesi to official events (Acquafredda: 64, 88).

In November 2003, Gladstone became Acquafredda's supervisor, and traveled from his Albany office to visit the Maiden Lane office in Manhattan once a week; he spoke with Acquafredda daily (Acquafredda: 68-69; Gladstone: 198, 200, 218-220; Santiago: 480). (10) Santiago had told Gladstone that Acquafredda would, once again, be driving Mrs. Hevesi (Gladstone: 203-204, 208). Gladstone testified that he was "sort of taken aback" and "surprised" by this arrangement, but did not raise a concern because the decision came from above him (Gladstone: 204-206, 221). Acquafredda would telephone Gladstone to say that he would be out of the office because he had a "special assignment," meaning he had transportation duties for Mrs. Hevesi, and sometimes for Chartier (Acquafredda: 71; Gladstone: 207, 217, 221; Santiago: 476-477).

5. The time Acquafredda spends with Mrs. Hevesi increases

Over time, Gladstone noticed that Acquafredda was not handling his Intergovernmental Affairs cases in a timely manner, contributing to a "backlog," so Gladstone reassigned the cases (Gladstone: 200-201; 216-217). The Comptroller and Santiago also knew that Acquafredda "was spending more and more time on special assignment" (Santiago: 482; Hevesi: 569).

Santiago was "not sure at what point [Acquafredda] actually ceased" doing constituent work (Santiago: 482). Gladstone estimated that from December 2003 to October of 2004, Acquafredda spent one day per week, or 20% of his time driving Mrs. Hevesi, but admitted that he could not be certain and that Acquafredda's time sheets did not reflect the time spent with Mrs. Hevesi (Gladstone: 209-210, 220; E: 3 at pgs. 56-77).

In November of 2004, Samuel Nicolas became Acquafredda's supervisor. Gladstone told Nicolas that Acquafredda had "special assignments" with Mrs. Hevesi (Acquafredda: 71-72; Gladstone: 222-223). (11) Nicolas acknowledged that Acquafredda spent time at the OSC Executive Offices at 633 Third Avenue in Manhattan and that he would see Acquafredda "come and go" (Nicolas: 156). Nicolas thought that Acquafredda spent 60 to 70% of his time in the Maiden Lane office in 2004 (Nicolas: 162). Acquafredda thought the time he spent with Mrs. Hevesi increased in 2004, but could not specify to what extent (Acquafredda: 51). He "guess[ed]" that he spent about 10 to 15% of his time with Mrs. Hevesi (Acquafredda: 52). None of Acquafredda's supervisors challenged the appropriateness of his driving assignments for Mrs. Hevesi (Acquafredda: 88-89).

6. Acquafredda is transferred to OSC's Executive Offices

In February 2005, the Comptroller became personally involved in changing Acquafredda's job title from Administrative Assistant to Confidential Aide (Hevesi: 580-581; E: 18, at Tab C). Another OSC employee in a Confidential Aide title was switched with Acquafredda. An OSC e-mail indicates that the switch occurred because the Comptroller "wants this done right away" (E: 18, at Tab C). In his testimony the Comptroller did not recall why he had made the transfer (Hevesi: 580-581). Acquafredda's work station was subsequently transferred from the Maiden Lane office to 633 Third Avenue, the Executive Office, where the Comptroller's security team had space (Acquafredda: 73; Hoffman: 422-423; Nicolas: 179; Santiago: 493-494).

After February 2005, Acquafredda "didn't really work for Citizen Action. He really dealt with Mrs. Hevesi more often" (Hoffman: 422). That was especially true beginning in July 2005, when Mrs. Hevesi underwent knee surgery, and her medical appointments "increased incredibly" (Hoffman: 419). Acquafredda then began attending to Mrs. Hevesi at the Comptroller's cottage in the Town of Somers, in northern Westchester County (Rubin: 142; Hevesi: 589). At times, Acquafredda spent five days per week with Mrs. Hevesi and for weeks at a time, would not be present at the Executive Office (Hoffman: 420-421, 425). In December 2005, Acquafredda received a Management Confidential Merit Award for the sum of $1,000 for the "excellent" work he was doing at the OSC (E: 18, at Tab B). (12) For the period January 12, 2006 through September 6, 2006, Hoffman signed Acquafredda's time sheets for him because "he wasn't there in the office to sign it" (Hoffman: 448-457; Acquafredda: 80-81; E: 3, pgs. 5-22).

During the time he was assigned to Mrs. Hevesi, Acquafredda never sat in on meetings with the security team. He would "run into them" and occasionally visit them, but he never communicated with them on security-related issues involving Mrs. Hevesi and was never provided information regarding potential threats to her or the Comptroller (Acquafredda: 44, 45-48, 55, 58, 94). Acquafredda testified that if he needed help, he assumed that he would dial 911 (Acquafredda: 50). He saw his role as one of taking care of Mrs. Hevesi and giving her a sense of security (Acquafredda: 96-97; Hoffman: 428; Chartier: 708). He stopped driving Mrs. Hevesi in July 2006 when she entered a nursing home (Hevesi: 627-628).

7. The Comptroller's 2006 reimbursement to the State of New York

From 2003 through 2006, no records were kept that would reflect the time that Acquafredda spent with Mrs. Hevesi (Acquafredda: 52, 64; Hoffman: 442; Hevesi: 632). Nor was Acquafredda asked to keep such records (Acquafredda: 20-21, 29). According to OSC guidelines for all State agencies, all employees are required to maintain daily time records and "[w]hen an employee's duty assignments require him to work at locations away from his official office, he is still required to maintain complete and accurate time - attendance and accrual records." (E: 17). In his testimony, the Comptroller expressed his disappointment that he failed to meet those requirements and that the work of the OSC was thereby "tainted" (Hevesi: 639).

After the allegation that Acquafredda was driving Mrs. Hevesi was reported in the media, the Comptroller asked Rubin, his Deputy Chief of Staff, to calculate the reimbursement to the State, as she had done for the City in 2001 (Rubin: 110; Hevesi: 637; Brackman: 780). Rubin was not aware of the Comptroller making any reimbursements to the State prior to September 26, 2006, when the use of a State employee to drive Mrs. Hevesi became an issue in the media (Rubin: 144-145). Rubin asked Santiago to estimate or "come up with some numbers of how much time [Acquafredda] actually spends doing this, driving Mrs. Hevesi" (Santiago: 487; Rubin: 110, 112-113). Santiago could not do that, and offered to check the database and print out a report of cases, which would indicate who, including Acquafredda, had logged them in. Santiago testified that Rubin responded, "No, no. Don't do anything. I don't want you to do that" (Santiago: 487-488).

Rubin spoke with Acquafredda, who estimated that he spent 5% of his time with Mrs. Hevesi in 2003, 15-20% in 2004, 30-40% in 2005 and 40% in 2006 (Acquafredda: 98-99). Rubin then obtained Acquafredda's earnings statements for those years (Rubin: 111, 121; E: 5). None of Acquafredda's direct supervisors was asked for their input in calculating Acquafredda's time (Gladstone: 211; Nicolas: 181). Using Acquafredda's percentages, Rubin estimated Acquafredda's earnings attributable to the time that he spent with Mrs. Hevesi and then added benefits at the Internal Revenue Service interest rate of 5% (Rubin: 113-114).

In his testimony the Comptroller acknowledged that he was not familiar with the methodology Rubin had used to calculate the reimbursement figure. He said that "if the number is too low or too high," the Commission should advise him so that he could adjust it (Hevesi: 637).

D. The Comptroller's testimony relating to the Commission's Advisory Opinion

The Comptroller's understanding of the Commission's May 30, 2003 Advisory Opinion is reflected in the following testimony:

Mr. Sleight: . . . When you received the Commission's May 30th opinion on the subject, Mr. Hevesi, you didn't take that opinion to mean that you could have a state employee be purely a chauffeur for your wife when she was traveling to her personal appointments and medical appointments?

Mr. Hevesi: That's right.

Mr. Sleight: You didn't conclude that from reading the opinion; is that right?

Mr. Hevesi: That is correct; I did not (Hevesi: 605). (13)

On the subject of reimbursement, the Comptroller stated that he:

. . . had not addressed that portion of [the Commission's] advisory dealing with a reimbursement of non-security services provided by security. And for that, I have no excuse. I should have done that and I have not done that (Hevesi: 629-630).

CONCLUSION

The Commission must examine the conduct of Mr. Hevesi in light of Public Officers Law §74(3)(d) and (h).

The relevant facts are not in dispute. The record demonstrates that Mr. Hevesi, as both City Comptroller and State Comptroller, used a government employee under his supervision to provide transportation for his wife. In each instance, he did not make reimbursement until the issue became a matter of public concern. As he acknowledges, no records exist at OSC upon which an accurate accounting for those services can be made. Because Mr. Hevesi's recent $82,688.82 reimbursement is based in its entirety on the recollection and rough estimates of Acquafredda, the Commission cannot endorse this estimate. In fact, the Commission believes that this estimate understates the cost of all State services provided to Mrs. Hevesi. Moreover, the OSC's failure to keep any record that would allow for proper reimbursement suggests that Mr. Hevesi did not intend to reimburse the State.

The record in this case does not support Mr. Hevesi's assertion that there was a nexus between his role as Comptroller and any threats to Mrs. Hevesi's safety. There were no threats of any kind to Mrs. Hevesi, and any threats to Mr. Hevesi, to the extent they existed, did not warrant special protection for Mrs. Hevesi.

In its Advisory Opinion, the Commission directed Mr. Hevesi to obtain an independent assessment of the threat to Mrs. Hevesi, which he did from the State Police, who determined that the existence of such a threat was "low." Given the clear directive in the Advisory Opinion, Mr. Hevesi was not entitled to substitute his judgment, or that of his staff, for the judgment of independent security personnel.

Moreover, Mr. Hevesi's security claim appears pretextual. Mrs. Hevesi had very real health issues; she did not face any appreciable security risks. Acquafredda had no security background or training and had no significant communication with those assigned to provide security at the OSC. He was simply a driver and companion for Mrs. Hevesi.

From May through August 2003, when the Commission and the State Police were reviewing his request for security for his wife, Mr. Hevesi had already assigned to her a driver. That fact was not disclosed to the Commission. The $6,439 reimbursement that he had made to the City of New York under similar circumstances was also not disclosed. Although Mr. Hevesi takes the position that such information was "not relevant" to the advisory opinion process, the Commission disagrees. In order to render proper service to State employees, the Commission must be informed of all relevant facts bearing on the ethics issue under review.

There is no question that Mrs. Hevesi suffers from debilitating illnesses, and that those closest to her have genuine concerns for her welfare. But State employees may not use public resources to care for their loved ones. Surely, the State's Comptroller may not do so. As the New York State Court of Appeals has noted, the provisions of §74 of the Public Officers Law "are not merely innocuous platitudes or beneficent bromides" (Nicholas v Kahn, 47 NY2d 24, 32 [1979] (citing Public Officers Law §74[4]). The Code of Ethics in Section 74 mandates standards of conduct that all those charged with the public trust must follow.

The Commission concludes that there is reasonable cause to believe that Mr. Hevesi knowingly and intentionally used his position as New York State Comptroller to secure unwarranted privileges for himself and his wife, and in doing so, pursued a course of conduct that raises suspicion among the public that he likely engaged in acts that violated the public trust.

Pursuant to Executive Law §94(12)(b), the Commission hereby sends to the Temporary President of the Senate and the Speaker of the Assembly this Notice of Reasonable Cause alleging that Comptroller Alan G. Hevesi violated Public Officers Law §74(3)(d) and (h).

Dated: October 23, 2006

All Concur:
Paul Shechtman, Chair
Robert J. Giuffra, Jr.
Carl H. Loewenson, Jr.
Lynn Millane

Commissioner Susan Shepard took no part in the consideration of this matter.

1.The State Constitution provides that the Comptroller, as well as the Attorney General, shall be chosen at the same general election as the Governor and shall hold office for the same term; it further provides that no election of a Comptroller shall be had except at the time of electing a Governor (NY Const, art V, §1).

2. All page references, unless otherwise indicated, are to the consecutively paginated volume entitled "Record," which include the transcripts of the testimony. All references preceded by "E" are to the exhibits; and all references preceded by "A" are to additional items submitted to the Commission.

3. On October 3, 2006, the Commission received a complaint from Callaghan asking the Commission to investigate this matter (A: 1).

4. The Commission did not receive Mr. Hess' letter until it was provided by the Comptroller's counsel on October 12, 2006.

5. The Executive Services Unit is responsible for the protection of the Governor, the Lieutenant Governor and their families.

6. Mrs. Hevesi has a history of serious, long-standing and debilitating physical ailments, which have caused her "deep depression" (Hevesi: 507-508).

7. Chartier extended the job offer to Acquafredda (Acquafredda: 41). State Board of Election records indicate that Acquafredda made a $250 campaign contribution to Hevesi on March 5, 2003, the day before he started working for the OSC (E: 21).

8. Hoffman could not recall when this change occurred, but Acquafredda thought it was in June 2003 (Acquafredda: 42-43; Hoffman: 410-411).

9. Hoffman acknowledged that it was inappropriate to use a State employee to drive the spouse of an elected official to medical appointments. She did not intervene because "Mrs. Hevesi is a very sick woman" (Hoffman: 434).

10. Gladstone had been Acquafredda's supervisor at the NYCCO and was aware that Acquafredda provided transportation to Mrs. Hevesi (Gladstone: 191-192, 203-204).

11. Nicolas testified that he was never "officially" made aware that Acquafredda had responsibility for driving Mrs. Hevesi, although he knew about it (Nicolas: 160-162, 165-166, 170). From October 7, 2004 through January 11, 2006 Nicolas served as Acquafredda's supervisor, and certified all but four of his time sheets (Acquafredda: 71-72; Nicolas: 156-159; E: 3, pgs. 23-55).

12. The Comptroller stated in a supplemental submission dated October 16, 2006, that Acquafredda was one of 150 staff members, chosen by senior staff, to be recognized for their service (A: 2).

13. Brackman shared a similar view of the Advisory Opinion (Brackman: 791).

Chauffeurgate in New York

GOPER IN REBELLION VS. BRUNO
By FREDRIC U. DICKER State Editor, NY POST
LINK

December 22, 2006 -- ALBANY - Embattled Joseph Bruno came under fire for the first time yesterday from a fellow Republican, who called on him to step aside as state Senate majority leader during a just-revealed criminal investigation.

Orange County Sen. John Bonacic said Bruno shouldn't lead the Senate while he is under investigation by federal authorities for his private business dealings.

"He's been damaged and this ongoing investigation will impair his ability to lead," Bonacic told the Times Herald-Record of Middletown. "He should step down as majority leader, even if it's temporarily, until the cloud is removed."

Bonacic is widely seen as a political ally of Sen. Dean Skelos (R-Nassau), who Bruno aides have long suspected has been plotting to oust their boss.

Other Republican senators have expressed strong public support in recent days for Bruno continuing as their leader, although several have privately expressed concern about the FBI probe.

Bruno set off shock waves in state political circles Tuesday when he revealed that federal investigators had subpoenaed records relating to his private business activities as part of an ongoing public corruption probe.

Also yesterday, newly selected state Republican Chairman Joseph Mondello issued a statement backing Bruno as "a man of integrity and one of the hardest-working public servants in this state."

GOP leader admits outside business dealings are under investigation; says he did no wrong
By TOM PRECIOUS, News Albany Bureau, 12/20/2006

Joseph Bruno didn't tell Republicans of the probe before his re-election as majority leader.

ALBANY - The Federal Bureau of Investigation is looking into the outside business dealings of the State Legislature's top Republican.
Senate Majority Leader Joseph Bruno on Tuesday confirmed he is the target of a probe, but insisted he has done nothing wrong and was revealing the FBI inquiry to head off "illegal leaks" made by "one of the offices here." He did not elaborate.

Bruno, who lives on sprawling farmland in Rensselaer County, said the FBI first began asking questions about his business interests last spring. "We haven't done anything wrong," he said. Indicating the potential serious nature of the matter, the probe has included the issuance of subpoenas.

"I'm not sure what the inquiries are, but I know that they have inquired," Bruno added during a hastily called news conference. He said he previously had been told he was not a target of the probe.

Bruno has just been re-elected by his fellow Republicans to be the powerful head of the State Senate for another two years.

He bristled when asked if he informed his members of the probe before they voted for him again. "I'm not aware of anything other than an inquiry, so what is there to be aware of," he said.

The FBI probe was news to at least one veteran Republican lawmaker. "We heard some rumors," said Sen. Dale Volker, R-Depew, who added that the GOP conference was not told of the inquiry before it re-elected Bruno, 77, to the majority leader post, which he has held since 1994.

But Volker strongly defended Bruno. "Unfortunately, in today's world when you become a leader, you can expect this is going to happen somewhere along the line," he said.

"There's no question he's a straight guy. He would never do anything deliberately wrong. Yes, he's very close to his friends, but that doesn't mean that's wrong," Volker added.

Paul Holstein, a spokesman at the FBI Albany field office, declined comment. The U.S. attorney's office there could not be reached for comment.

A spokesman for Gov. George E. Pataki also declined comment.

Bruno's financial disclosure form filed with the Legislative Ethics Committee shows a number of outside interests in which Bruno earns income above his $79,500 state salary and a $41,500 stipend he receives for his Senate job. Bruno, an avid horse fan, is the sole proprietor of Mountain View Farm, a thoroughbred horse-breeding company. He also is a consultant for Winthrop Corp., a Connecticut firm, and holds a trust in a real estate development company. The only business interest Bruno mentioned Tuesday evening that might be under FBI review was Capital Business Consultants, LLC.

The firm is listed at his home address, according to a filing made with the New York Department of State. Bruno declined to identify the firm's clients or reveal any of his outside income. He said the firm is involved in business strategy and business development. He did not elaborate.

"There have never been conflicts in anything I've done," he said. He said the inquiry is into the past five to six years of his outside dealings.

Bruno talked of his beliefs about keeping to his private-sector roots. "My life has been in business, and I always said I would earn my living outside the Legislature so that I wasn't dependent on this income," he said. Bruno noted most legislators receive an income outside the Legislature.

"It's a part-time business," he said of the Legislature. The state constitution, he noted, declares the Legislature a part-time body. He said his private interests were cleared with the Legislative Ethics Committee.

Bruno, former owner of a telecommunications firm, has helped steer hundreds of millions of dollars in economic development work in the Albany area since becoming majority leader. With Pataki leaving, Bruno will be the top state Republican Jan. 1.

Asked if the inquiry is looking into his role with any state contracts or legislation, Bruno said, "I don't know."

The majority leader summoned reporters to a Capitol office late Tuesday afternoon. "When it was brought to my attention that the inquiry had been leaked to the media, I wanted to be up front and assure that I have nothing to hide and avoid speculation, distortions or unfounded rumors," said Bruno. He said he has hired a lawyer.

Word of the inquiry comes after recent state budget documents, made public after a lawsuit by media interests, showed a company in Bruno's district received $500,000 over the past two years. Evident Technologies got the money at Bruno's request.

Albany-area businessman Jared Abbruzzese has ties to the firm and is being looked at by the state Lobbying Commission for providing Bruno with travel on his private jet. Abbruzzese also was connected with a conglomerate seeking to operate the state's three major thoroughbred tracks; Bruno will help decide that issue next year.

e-mail: tprecious@buffnews.com

Feds are mining Joe's biz
BY JOE MAHONEY in Albany and CORKY SIEMASZKO in New York
DAILY NEWS STAFF WRITERS
Thursday, December 21st, 2006
LINK

The FBI's corruption probe of New York's most powerful Republican gathered steam as a federal grand jury was going over state Senate Majority Leader Joe Bruno's business dealings, the Daily News learned last night.
The grand jury has authorized FBI subpoenas related to Bruno's dealings with Albany-area businessman Jared (Jerry) Abbruzzese, a principal of a Troy, N.Y., high-tech company to which Bruno steered $500,000 in pork-barrel grants over the past four years, sources said.

One specific subpoena was issued to a big-time Albany lobbyist, who confirmed the FBI rousted him for records on a land deal he and his pal Bruno were involved in until last year.

"Someone from the FBI dropped by with a subpoena and asked for the records," the lobbyist, James Featherstonhaugh, said. "They were provided."

A spokesman for Bruno, who revealed on Tuesday the FBI has been probing his "outside business interests" for seven months, said there was nothing fishy about First Grafton Corp. - Bruno's real estate venture with Featherstonhaugh.

Bruno placed his 25% stake in First Grafton in a blind trust in 1992 - before he became majority leader - and made no business decisions, the spokesman, John McArdle, said.

"Joe Bruno didn't have any contact with First Grafton for a decade," added Featherstonhaugh.

Abbruzzese also has ties to the Grafton deal. Last year, his wife, Sherrie Abbruzzese, bought a 12-acre waterfront lot from First Grafton for $90,000 in 2004.

The agent who earned the commission on the sale was Bruno's son, former lobbyist Kenneth Bruno. He handled the sale of a lot to his then-girlfriend, lobbyist Theresa Russo.

At the time, the younger Bruno was going through a bitter divorce from his wife, Mary Beth, the mother of their two daughters.

Reached yesterday by The News, Mary Beth Bruno would not say whether she was helping the FBI in the Bruno probe. But sources said records from all her ex's Grafton deals are now in the hands of federal investigators.

Bruno, 77, has denied any wrongdoing and claims he is cooperating with investigators. "I have nothing to hide," he said Tuesday.

Bruno, who earns $79,500 a year as a senator and gets another $41,500 as majority leader, is also a principal in a firm called Capital Business Consultants LLC. The FBI has subpoenaed those company records as well.

Federal prosecutors in Albany declined to comment on the Bruno probe yesterday. But Gov. Pataki stood by Bruno.

"I have confidence in Sen. Bruno, I have confidence in our judiciary system, and I'm confident things will work out fine in the end," the outgoing governor said.

Abbruzzese is also the subject of an ongoing state Lobbying Commission investigation into plane rides he arranged for Bruno after the senator steered $500,000 in pork-barrel money to Evident Technologies Inc. - a private company in which Abbruzzese is one of the principals.

At the time, Abbruzzese was a partner of Empire Racing, which is seeking the state's approval to replace the New York Racing Association. Bruno helps decide which group runs racing in the state.