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News finds Kerik
in cash conflict

Got thousands, didn't report it

Daily News Exclusive

By RUSS BUETTNER
DAILY NEWS STAFF WRITER

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.