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Article from The New York Times

Posted by consigliere on February 26, 2002 at 09:20:29:

In Reply to: Tax Assessors Face Racketeering Indictment posted by consigliere on February 26, 2002 at 03:04:27:

18 City Tax Assessors Indicted in Decades-Long Bribe Scheme

By CHARLES V. BAGLI and WILLIAM K. RASHBAUM

Eighteen current and former New York City tax assessors were indicted yesterday in a scheme that lasted decades in which they took millions of dollars in bribes to cut property taxes for the owners of office towers, residential buildings and warehouses, federal prosecutors said.

The assessors, including 15 of the 38 working in Manhattan, were charged by the United States attorney's office in Manhattan with racketeering, bribery and fraud for taking what the indictment says was more than $10 million to alter assessments on more than 500 buildings in the last 35 years.

As a result of the fraud, the authorities said, the city lost $160 million in tax revenue during the last four years alone. But during the life of the scheme, the Federal Bureau of Investigation said there were perhaps tens of millions in bribes and hundreds of millions in lost revenue.

According to the authorities, taxes were reduced illegally at several of the city's best-known skyscrapers: 9 West 57th Street, a 50-story tower that commands some of the highest rents in the city; the Crown Building at Fifth Avenue and 57th Street; the 51-story tower at 277 Park Avenue; the Parker Meridien Hotel, on West 56th Street; and the Hampshire House on Central Park South.

James B. Comey, the United States attorney, would not say whether any other assessors, tax consultants, lawyers or property owners who benefited from the scheme would be indicted. But he did say that the investigation, which the F.B.I. called Operation Knockdown, was continuing.

The assessors, Mr. Comey said, "committed a breathtaking betrayal of the public trust."

"In doing so," Mr. Comey continued, "they undermined a bedrock of the city's finances, and that is a fair and honest tax assessment system."

Put at the center of the scheme was Albert Schussler, an 85-year-old tax consultant for many prominent Manhattan landlords who had a reputation for being especially effective at persuading assessors to reduce the value of buildings and therefore the owner's tax bill. Mr. Schussler, who was an active figure at the Real Estate Board of New York and an owner of the landmark Ansonia Hotel, has been bribing assessors on behalf of himself and other owners ever since he ended his own 30-year career at the tax assessor's office in 1967, according to the indictment.

Mr. Schussler offered bribes ranging from expensive dinners to thousands of dollars for each building assessment, the indictment said. The Finance Department reassesses the value of the city's 960,000 properties for tax purposes every year. According to Barry W. Mawn, the assistant director in charge of the F.B.I.'s New York office, the assessors would bring Mr. Schussler their work sheets and Mr. Schussler "would then suggest assessed values that were acceptable to him." The city announces the assessments every year on Jan. 15.

The indictment said Mr. Schussler funneled the bribes to the assessors through three lieutenants, one of whom had been an assessor for decades.

In a separate but related case, Mr. Schussler paid $4.1 million in bribes during five years to Joseph Marino, a former assessor who had responsibility for a major swath of Midtown Manhattan real estate in the 1990's, according to a transcript of his sentencing to 48 months in prison. Mr. Marino pleaded guilty to the charges in April 2000 in Federal District Court in Manhattan and was not named in the indictment yesterday. At the time, Mr. Marino's lawyer said his client lost most of the money gambling in Atlantic City.

Yet Mr. Marino was only one of the veteran assessors caught up in the scheme. Also indicted yesterday were Joseph Iovino, Howard Habler, Anthony J. Antinoro and Edward J. Frankola, who were supervising assessors in Manhattan, as well as the city's top assessor in the Bronx, Michael B. Cooney.

A lawyer for Mr. Schussler, Steven Cohen, declined to comment on the charges, as did lawyers for many of the other defendants.

Gerald Shargel, a lawyer for one of the men, Mr. Habler, said his client would fight the charges. "Our client has been a dedicated civil servant for 24 years," Mr. Shargel said. "We ask that everyone do what the Constitution entitles, that is, presume that he is innocent until proven guilty."

A former assessor, Alan G. Edelstein, began bribing his former colleagues only last July, after he retired, according to the indictment.

"I'm extremely shocked and saddened," said William K. Block, a property tax lawyer and a former deputy commissioner of finance. "It's much larger than I would have imagined."

Investigators said the scheme struck hard at the city's lifeblood, property taxes, which bring in $8.5 billion in the $40 billion city budget.

Mr. Mawn said, "The history of conspiracy, racketeering, bribery and mail fraud outlined in this indictment and engaged in by these defendants has cost New York City hundreds of millions of dollars and has cost its citizens all the benefits of those funds, to include possibly new schools, better roads and many other services."

If Mr. Schussler and other property owners were paying lower taxes because of the bribery schemes, then other landowners were paying more, to make up the difference.

"It's more than just lost tax revenues for the city," said Jeffrey Golkin, a tax lawyer. "It's a systemic corruption that negatively affects other taxpayers. The people who live by the rules had to pick up more than their fair share."

Martha E. Stark, the city's new finance commissioner, said yesterday that because it was unclear exactly when in the assessment process the reductions were made, it was difficult to say precisely how much tax revenues the city has lost. She said her office was examining tax records for the 500 buildings dating back at least five years and possibly further to determine the losses, a process she said could take between several days.

Rose Gill Hearn, the new Department of Investigation commissioner, said she and Commissioner Stark would work together in an effort to reform the way the assessors work to prevent similar corruption in the future. She said changes would be made to the Finance Department computer system and to the way that assessors meet with building representatives, but she would not elaborate.

The indictment comes only four days before the annual deadline for filing objections to the city's tax assessments, which were announced in January. The case could prompt major difficulties for the city at a time it faces a nearly $4 billion budget gap. Property taxes generate more than one-fifth of the city's annual budget.

It is unclear whether the city will attempt to recoup the lost taxes. But Mr. Golkin said that one Manhattan landlord, who did not pay any bribes, had already asked him to file a class action lawsuit to recover any extra taxes paid as a result of corruption at the Finance Department.

"This will undermine people's confidence in the equitable assessment of property," Mr. Golkin said.

Keith Schwam, a spokesman for the city's Department of Investigation, which worked with the F.B.I., said it seemed to be the largest fraud ever against the city, and the largest tax fraud in municipal history. "At this point," he said, "we know of no larger municipal fraud case."

Mayor Michael R. Bloomberg said yesterday that the city was still assessing the financial damage. He said the city was reviewing procedures at the Finance Department to determine how the scheme could have gone undetected for so long and what should be done to prevent it from happening again.

"It would appear that it is an enormous amount of money, but it is monies that are hard to calculate because you don't know for sure what the assessments would have been," he said.

Mayor Bloomberg added that "there is no evidence so far that any building owner was involved."

The man portrayed as the ringleader, Mr. Schussler, had a blue-chip client list that at various times included many well-known figures, including Stephen L. Green, Aaron Gural and the Resnick family.

Howard J. Rubenstein, a public relations executive who represents three owners whose property tax bills were illegally reduced, said the owners Mr. Green, Burton P. Resnick and Sheldon H. Solow had "no knowledge of any wrongdoing."

Several former tax assessors who left the city in the early 1990's out of frustration with the apparent corruption said that they found it hard to believe that so many owners could be ignorant of what was going on.

People who know Mr. Schussler described him as an affable, philanthropic real estate executive. They also said he charged exorbitant fees for his services and was almost always successful in his efforts at lowering tax bills.

"It's a huge scandal," said one Manhattan property owner and a leading figure in the real estate industry. "It just seems strange that no one in our industry has been questioned."

A former tax assessor lamented: "They never touch those guys. It's always people on the lower rungs."


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