Friday, February 24, 2012

FCR's Cantone testifies: defendant Jereis probably wouldn't have gained no-show job had he not gotten defendant Annabi's vote switch on Ridge Hill; also, Brooklyn Assemblyman Lentol played key cameo

Yesterday, in a Lower Manhattan federal courtroom, developer Forest City Ratner was for the first time forced to publicly explain its dubious role in the machinations that provoked the ongoing corruption trial centered around Yonkers.

Forest City has not been charged, but the developer was arguably a bigger beneficiary than the two defendants: ex-Council Member Sandy Annabi, charged with taking bribes to approve two projects, one of them FCR's Ridge Hill, or her distant cousin Zehy Jereis, charged with funneling her some $174,000 in cash and gifts, essentially keeping her on retainer.

Forest City hired Jereis in 2006 for a virtual no-show job not long after Annabi had switched her stance to approve Ridge Hill, an 81-acre, $650 million development with 1.3 million square feet of retail, plus residential and office space.

Jereis, Annabi's political mentor, after organizing a meetings between her and the developer and then getting her on board, then pestered Forest City Ratner for a job.

Yes, it "was certainly a concern" for him that Annabi might not change her vote in the absence of an immediate job for Jereis, Ratner executive Scott Cantone testified yesterday.

But FCR wouldn't agree to it. "We thought, optically, it would look bad," Cantone said, noting that "we had really just met Zehy Jereis."

At the end of the day's questioning, Assistant U.S. Attorney Perry Carbone asked a pointed question: "If Zehy Jereis had not produced Sandy Annabi's vote, would he have been hired by Forest City Ratner?"

"It's hard to say, but probably not," responded Cantone, Senior VP for Government and Political Affairs, in the matter-of-fact tones that marked his testimony.

The result, a seeming reward for Jereis, skates close to a violation of parent Forest City Enterprises' Code of Legal and Ethical Conduct:
2. No bribe, kickback or other improper payment or promise of same shall be authorized, approved or made, directly or indirectly, by or on behalf of FCE in connection with any of its business.
The term "improper payment" is ambiguous, but it can't be too proper to hire someone to do nothing. "Between June 2006 and the present, what of any value did [Jereis] bring to Forest City Ratner," Carbone asked.

"Besides providing access to Council Member Annabi, nothing at all," Cantone replied, raising the question, yet unanswered, of why Forest City kept paying him.

Pending questions, Bender in the wings

Unclear from yesterday's testimony was whether Forest City knew its own lobbyist Al Pirro had--in what one witness called a boast-- in 2005 claimed that Annabi's vote could be bought by hiring Jereis.

But it did seem that Forest City had no qualms about paying Jereis $5000 a month for three months, even though he'd done no work of value, until federal investigators began sniffing into things.

And, in a detail that had previously not emerged in the Ridge Hill saga, Assemblyman Joseph Lentol was named as a key go between.

Cantone's direct examination will continue when the trial resumes 9:30 a.m. Monday. Defense lawyers later will have a chance to cross-examine him.

Waiting in the wings to testify Monday is Cantone's close associate, former boss at Forest City, and future partner, Bruce Bender, who was ensconced yesterday in a witness room.

Both executives, who've also worked prominently on Atlantic Yards, recently announced they were leaving Forest City to become lobbyists--perhaps because their place at Forest City grew less comfortable.

In testimony yesterday, Cantone indicated that he was still employed by Forest City, but the phrasing of a prosecutor's question suggested that Bender has already departed from his post as Executive VP. (New government relations exec Ashley Cotton starts Monday.)

Forest City Ratner must be concerned about potential fallout. In the audience were not only designated lurker Michael Rapfogel, who's been tracking the trial daily, but also General Counsel David Berliner and outside public relations counsel Joe DePlasco.

And the trial looms large for Yonkers itself; while Cantone may have been the biggest witness for Forest City watchers, testifying yesterday, not all that comfortably, was current Yonkers Mayor Mike Spano, who as a lobbyist worked for Forest City.

(Here's coverage in the Journal News and also in the New York Post, which leaves the impression that Jereis was hired before the vote. The New York Times had two reporters there, but no story today.)

FCR payment "kind of peanuts"

In seeking a rezoning and tax breaks, Ridge Hill proponents had four votes on the seven-member Yonkers City Council. However, because the county of Westchester objected, a super-majority of five votes was needed.

Project opponents John Murtagh and Dee Barbato, testified earlier this week. Yesterday's testimony led off with former Council Member Dennis Robertson, a project supporter, who noted that opponents were concerned about environmental impacts like traffic and noise, as well as the financial benefits of the project.

Of Annabi, Robertson said, "She was opposed to it and wouldn't vote for it unless Dee Barbato voted for it."

But Annabi changed her vote, citing Forest City's willingness to give the city another $10 million or so over three years. It made no other concessions.

How significant was the $10 million, asked Assistant U.S. Attorney Jason Halperin.

"In the grand scheme of things, it was kind of peanuts," Robertson replied.

Could Jereis control Annabi?

Robertson testified he met in early 2005 with "political powerbroker" Al Pirro--an attorney, lobbyist, husband of the county District Attorney, and convicted felon--regarding a potential run for City Council President. Pirro might be able to deliver the Independence Party line.

Pirro brought up Ridge Hill. "He said he's not worried about Sandy Annabi," Robertson recalled. "All's he has to do is give Zehy Jereis a consulting contract and we [FCR] can get her vote."

Robertson said he was upset, and reminded Pirro he was not there to discuss Ridge Hill. He later met with Annabi and related his dismay at Pirro's account.

"She didn't really respond," Robertson related, perhaps leaving the impression that Annabi implicitly agreed with Pirro. "She just stared."

He also expressed concern that Annabi, a Democrat, relied so much on Jereis, Chairman of the Yonkers Republican Party.

"She told me Zehy taught her everything she knew about politics," Robertson said.

Jereis, Annabi told Robertson, was not a cousin--though they are distant cousins. She also told him that she and Jereis did not have a personal relationship, though Jereis had been pursuing her. Jereis's defense is that he conveyed the money because of his infatuation with her.

In 2007, Robertson said, Annabi reflected that "Zehy got her in a lot of trouble" and "she said she shouldn't have listened to him."

Cross-examination: a "boast"

On cross-examination, Annabi's lawyer, William Aronwald, got Robertson to admit he reported Pirro's claim only to the majority leader and to Annabi.

"I didn't believe it," said Robertson, who had, in previous interviews with investigators, called it a boast.

Upon meeting with Forest City's Bender, Jereis's lawyer Anthony Siano asked, "you never specifically told [him] of Mr. Pirro's boast?"

Robertson said he didn't recall. "I did mention to Mr. Bender that, if Mr. Pirro was charging him for his time with me don't pay him because I wasn't there to discuss Ridge Hill," he said.

(Pirro declined to comment when asked by the Times, and Forest City disavowed knowledge of his claim. Pirro is not expected to testify.)

Aronwald got Robertson to acknowledge that Annabi, unlike the other two opponents, was more concerned about tax revenues than environmental impacts.

Similarly, Siano reminded Robertson that he'd told the FBI that Annabi's vote switch was "sudden but not that sudden," given that Chuck Lesnick, who took office in 2005, had given her political cover.

Mayor on the stand

Mayor Mike Spano, who took office this year and comes from a powerful local family, took the stand a bit gingerly. In the run-up to the trial, his brother Nick Spano, a lobbyist and former state Senator, pleaded guilty to tax evasion.

After he left his Assembly seat at the end of 2004, Spano went to work for Patricia Lynch Associates, the powerful lobbying firm run by a former top aide to Assembly Speaker Sheldon Silver.

His job, Spano, said was to try to get a Council Member to vote for Ridge Hill, and Annabi was the most likely candidate. But she was resistant, saying that the demands of Barbato and Murtagh would have to be met.

Spano related an episode that suggested Jereis was manipulating the situation. While driving to Annabi's house together, Jereis had a friendly attitude regarding the recruitment of Annabi, but inside, Jereis took Annabi's side and resisted the project.

"What was that all about?" Spano said he later asked Jereis. "He indicated that 'Sandy needs to trust me.'"

Jereis at one point complained about the lack of Ridge Hill jobs "for the Republican leadership," a term that could include himself as well as several associates. Defense attorneys later suggested this could have been simple political patronage.

Spano said that he later reported to FCR's Bender that those trying to nudge Annabi included Jereis, his brother Nick, as well as Anthony Mangone, Nick Spano's counsel. (Mangone has already pleaded guilty to funneling bribes to Annabi via Jereis regarding the Longfellow project. It had not previously emerged--as far as I know--that Mangone had a role in Ridge Hill.)

"I've taken every angle with this Sandy," Spano wrote to Bender.

The FCR executive, Spano related, "was really being pushy. He was really being persistent: 'What are you doing to get a positive outcome for this project?'"

Defense attorney Aronwald got Spano to acknowledge that he'd never ruled out the possibility that changes in the project could influence Annabi to change her vote.

No, responded Spano, who recalled that demands made by opponents Barbato and Murtagh, such as reducing the amount of retail by 30%, could have killed the project.

A Brooklyn lunch and an Assembly intervention

Brooklyn Assemblyman Joseph Lentol, it turns out, played a key role in getting Forest City Ratner a meeting with Annabi, thanks to his indirect connection to Jereis. (Lentol, though this was not aired in court, is close to Assembly Speaker Sheldon Silver, a Forest City ally.)

Unlike most elected officials, Cantone explained, Annabi had been unwilling to  meet with the developer, even though he approached her personally at a Council meeting.

So Forest City relied on a skein of connections. Lentol was an old friend of Joseph Galimi, described yesterday as a former Department of Public Works in Yonkers but, as noted by the Journal News, who's also been investigated for organized crime ties. And Galimi knew Jereis well.

In a meeting at Tiro A Segno, a private club in Manhattan, Lentol brought up Ridge Hill to Jereis and Galimi, and Jereis agreed to meet with Forest City.

Galimi then organized a meeting in Brooklyn with Jereis, Lentol, Bender, and another "Forest Ratner" executive--who turned out to be Cantone. The early June 2006 lunch was held at Marco Polo Ristorante in Carroll Gardens, not without its own whiff of made men. (The bill was $227 plus a $50 tip. )

At the lunch, Jereis said he could probably arrange for a meeting with Annabi.

When Annabi voted for the project, Galimi, at Jereis's request, called a Teamster he knew to generate support for Annabi at the Council meeting.

When reports of the federal investigation surfaced in 2007, Galimi asked Jereis about his relationship with the developer: "He said he didn't receive a job, he didn't receive a penny."

FCR's gets through

When Cantone took the stand, prosecutor Carbone walked him though documents including internal FCR emails messages, restaurant receipts, and even an organizational chart.

Neither lobbyist--Pirro or Spano--had been able to get Annbi to sit down for a meeting with Forest City, let alone change her vote.

At the Marco Polo lunch, Cantone recalled, Jereis said "he'd talk to her and try to arrange a meeting."

FCR then held two meetings with Annabi in Yonkers, convincing her to change her vote. (I don't think he specifically mentioned the $10 million pledge, though his testimony is not over.)

"Did Sandy Annabi or Zehy Jereis ask Forest City Ratner for anything of value," Carbone asked.

Yes, Cantone said. The vote was scheduled for July 11, 2006, when Annabi had planned to be out of the country. "Mr. Jereis asked if Forest City Ratner would pay the cost for changing her flight," Cantone recalled.

"We said we did not think it was possible," Cantone said, citing "ethical and legal concerns." This was communicated to Jereis who said "he'll figure it out, maybe he'll pay it himself."

Annabi was concerned, Cantone related, of how her switch would look. Cantone drafted a press release for her, then had it tweaked by in-house pros.

Annabi was concerned there was no mention of the $10 million--actually $10.8 million--pledged. And she wanted language that indicated that she and Forest City were continuing to discuss traffic issues.

Cantone balked, citing a "problem we have mentioning $10.8 million right off the bat"--which wasn't quite explained--as well as "EIS [environmental impact statement] concerns" about reopening issues of traffic. His view prevailed.

Jereis presses for job

After Annabi agreed to change her vote, Jereis persistently, aggressively pursued a job. He sent his resume less than 24 hours after Annabi's public announcement in mid-June.

Cantone tried to put him off, as Annabi's vote was not until July 11. At a meeting with Jereis and two other Forest City executives at a Dunkin Donuts in Yonkers, "we asked if he was a valid business," Cantone recalled, indicating the need for a federal ID, a list of officers, and an identification of services.

"Did you tell him you'd hire him?" Carbone asked.

"No," responded Cantone. "We told him we would consider and think about it, but not make a decision at this time."

Jereis soon sent his Social Security number and the business name ZJ Enterprises.

Cantone acknowledged FCR was putting Jereis off, given the optics.

On September 19, Jereis was sent a consulting agreement, which--for reasons yet unexplained--he didn't send back until October 10. He had never been to Forest City's offices in Brooklyn, and he never visited afterward.

The agreement was backdated to August 1, 2006, lasting one year, with potential extensions. It was thus worth $60,000.

"Was the format unusual to Forest City Ratner?" Carbone asked.

Yes, Cantone replied, since Jereis would be assisting both the government relations office as well as the retail office.

He was not asked, however, why they agreed to backdate the agreement.

Payments without production

Jereis was required to provide monthly reports on his work, but did not do so. Nor, apparently, did Forest City request them.

Jereis met with Cantone only about two times between August 1, 2006 and March 2007, and talked on the phone only once or twice.

"How long after the contract was signed did you receive an invoice?"

"It was immediate," Cantone replied.

Only when news of the federal investigation surfaced in Marc 2007 did Jereis start sending in backdated reports, less than half a page, that were clearly inadequate: the described potential land acquisitions that were far too small for a developer like FCR, or indicated time-sensitive meetings that were long concluded.

In one case, Forest City asked Jereis for follow-up information about a potential project he'd suggested. Jereis didn't respond. Forest City paid his monthly fee anyway.

While Cantone said payment stopped in March 2007 after Forest City learned of the investigation, he also said that Jereis had only been paid for three months: August, September, and October.

That suggests that, for some reason, Forest City had stopped the payments earlier, so perhaps that will be resolved when the trial resumes.

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