Monday, February 27, 2012

Forest City's Bender, Cantone testify in Ridge Hill trial; no quid pro quo in Jereis hiring, but they strung him along until Annabi voted; developer nearly desperate, ordered Spano to get his brother's help

Today was no red-letter day for developer Forest City Ratner. Though not charged in the Yonkers corruption case, two key Forest City executives involved in the $650 million Ridge Hill project--Scott Cantone and Bruce Bender--took the stand and had to explain the company's curious and even desperate behavior in ensuring the project's approval.

Surely the federal jury must have wondered why exactly the developer--the greatest beneficiary of the alleged bribes paid by defendant Zehy Jereis, a former Yonkers Republican chairman, to defendant Sandy Annabi, a former Yonkers Council Member--remains unscathed.

After all, they were concerned about Jereis's persistent requests for a consulting gig, which began before Annabi's vote, so they strung him along, and finally signed him up a few months after Annabi changed her vote in mid-2006 to green-light Ridge Hill.

Defense attorneys did get the Forest City government relations executives to acknowledge that Jereis never requested a quid pro quo. And the execs acknowledged that Annabi never knew anything about Jereis's requests. Nor did they know Jereis had funneled money to her.

(Jereis's defense is that he spent money--$174,000 over some years--on Annabi because he was infatuated with her.  Annabi, who denies a romantic relationship, claims she changed her vote on Ridge Hill and the other project involved in the trial, Longfellow, because developers made concessions. However, Forest City's concessions on Ridge Hill did not meet all those she'd requested, were not new, and were deemed minor by others.)

And prosecutors, gingerly managing their not-quite-squeaky-clean witnesses, got Bender and Cantone to affirm that no, they would never have hired Jereis for what was essentially a no-show job had they known he had been paying Annabi's bills. (Then again, Cantone testified last week that they wouldn't have hired Jereis if he hadn't helped get Annabi's vote.)

Ultimately, the testimony illuminated the urgent, nearly desperate posture of Forest City, which had committed at least $70 million on Ridge Hill, found factionalized Yonkers politics "crazy," found a unique situation given that Annabi wouldn't even meet with them, and didn't want to see their investment go sour.

After lobbyist Mike Spano, who's now the mayor of Yonkers, told Bender that he and others had been unable to budge Annabi, Bender replied pungently in an email: "No fucking around. Get Sandy on board. Tell your brother we need help now."

Spano's brother Nick, as Yonkers political watchers know, is a local political powerbroker, a state Senator-turned-lobbyist who just happened to plead guilty to tax charges earlier this month.

Sketchy behavior

But Forest City Ratner did hire Jereis--and paid him $15,000 for three months--as a kind of reward for helping win Annabi's support, and they didn't seem to care that his invoices were sketchy--at least not until news of a federal investigation surfaced and the payments stopped.

Beyond that, the trial illuminated some curious Forest City practices, in which meetings with Annabi and Jereis were inaccurately described internally as with "Friends of Yonkers" and with "consultants," neither of which were accurate.

Moreover, in two cases, Forest City agreed to concessions that were never delivered--an echo of promises made in the Atlantic Yards saga.

Also, both Bender and Cantone saw their credibility challenged when faced with grand jury testimony that they initially didn't remember.

If the jury had cause to wonder about Bender and Cantone, that wonder was compounded by learning, upon Bender's cross-examination, that he not only had recently left Forest City, but was starting a firm called Bender Cantone Consulting. That thus indicated that Cantone, who in testimony had been described only as a Forest City employee, was also leaving the powerful developer.

Who actually hired Jereis, Bender was asked at one point.

"The company is a collective," Bender said, prompting a query from Judge Colleen McMahon as to whether an individual offered him the job.

Bender's answer was oblique: "Ultimately, it's based on the approval of Mr. [Bruce] Ratner."

Bender will be back on the stand when the trial resumes at 9:30 a.m. in federal court. Cantone's testimony has concluded.

As with testimony Thursday, Forest City had executives David Berliner and Michael Rapfogel in the room, as well as outside public relations counsel Joe DePlasco.

Cantone: we strung Jereis along

The trial resumed with direct examination of Cantone, who wore a gray suit and a generally stoic expression.

Assistant U.S. Attorney Perry Carbone reminded him how Jereis, after a 6/2/06 initial meeting with Forest City executives at Marco Polo Ristorante in Brooklyn, was able to set up a meeting with Annabi, who had previously rebuffed the developer.

"How did you view this development?" Carbone asked.

"It was a very interesting development for us," responded Cantone, who said that the company had been told by various people--elected officials, unions--"that all roads to Sandy Annabi go through Zehy Jereis." Others, he noted, had warned them against going through Jereis.

But the 4-3 pro-project alignment on the City Council had become insufficient after a County of Westchester vote against the project necessitated a supermajority on Council and thus a fifth vote.

By the end of June 2006, how much money had Forest City spent on Ridge Hill?

"Approximately $70 million," responded Cantone.

Was Forest City aware that Jereis had paid $10,000 for Annabi's Mercedes, paid off loans, and otherwise rewarded Annabi financially?

"Absolutely not," Cantone replied. "If we had any inkling of any of the accusations or facts, we not only would not have been meeting with him, we certainly wouldn't have hired him."

Was Forest City concerned that, if they didn't hire Jereis, Annabi's vote would be lost?

"We certainly had a concern about that," Cantone responded, "which is why we did not tell Zehy Jereis we wouldn't hire him."

What relationship?

On cross-examination, Annabi's attorney, William Aronwald, asked if Jereis had ever discussed his relationship with Annabi.

Only in their last meeting, in March 2007, replied Cantone.

"Did he tell you the relationship was such it would cost him a divorce?" Aronwald asked.

Cantone said Jereis had reported that investigation had questioned him about his closeness with Annabi.

Did Jereis discuss how he had gone shopping with Annabi?

Cantone said that came up at a meeting at Starbucks, which may or may not have happened before Annabi voted on Ridge Hill. Jereis had bought Annabi shoes or a handbag, and Annabi was upset about it, "which we found very odd."

"In what way?"

"We didn't understand what the relationship was," Cantone replied, "why he was buying her things."

But did Forest City ask more about it?

"No, we did not," Cantone responded.

Agents of influence

Aronwald then asked if Forest City had ever bribed or benefited any legislator to win a vote--a question that drew prosecutors' objections, which were upheld by McMahon.

Aronwald asked how much Forest City had paid to lobbyists Al Pirro and Mike Spano, suggesting sums of $1 million and $175,000 respectively, figures Cantone could not confirm.

Under questioning from Aronwald, Cantone acknowledged that he and Bender had called Annabi at her job at St. Joseph's Hospital in Yonkers but said he had no knowledge that the developer was trying to pressure the Council Member. The issue would recur with Bender's testimony.

Cantone affirmed that it was unusual for an elected official to not even be willing to meet with a developer. Was it the first time in his experience?

"Yes," replied Cantone, with a tinge of wonderment.

Did Annabi explain why she wouldn't meet with Forest City?

"Initially, no," replied Cantone. But later she said, essentially, "You heard my objections to the project; there's really no reason to meet."

Responding to Aronwald, Cantone affirmed that Jereis had not guaranteed he could gain Annabi's vote.

He also affirmed that meetings with Jereis and Annabi at eateries were not in back rooms, with no attempt to hide or conceal anything.

A questionable expense report

Aronwald then probed an expense report Cantone filed regarding a Forest City meeting with Annabi and Jereis.

Is it important to make information on expense reports as accurate as possible, Aronwald asked.

"I guess," replied Cantone gingerly. "Yes."

Aronwald then pointed to a document, blown up on screen for the jury and other parties to the trial, which described a "lunch meeting with consultants, Ridge Hill." What did the term "consultants" mean?

"These were people we were consulting with," Cantone replied, noting that they were not paid consultants.

Kicking Bender under the table

The first meeting with Annabi, 6/9/06, Cantone acknowledged, as confrontational in portions. Apparently Annabi and Forest City retail executive Richard Pesin, who had overall responsibility for developing Ridge Hill, had gotten into a heated exchange.

"Did you ever say that the meeting ended badly?" Aronwald asked.

"No," responded Cantone.

Aronwald then brought up grand jury testimony from 2008, in which he said that the meeting had ended badly, but they agreed to talk.

Annabi was resistant to the project's impact on traffic, and thought the developer wasn't paying enough taxes. Pesin argued back. "I was kicking Bruce Bender under the table at this point to get rid of Richard Pesin," Cantone stated.

"Is that a routine practice?" Cantone was later asked, prompting the response, "I've kicked him a number of times."

Didn't Annabi and Pesin then leave?

"I think we all left together," Cantone said.

Aronwald then read back the grand jury testimony, in which Cantone and Bender were left with Jereis, who said he supported the project and advised it would be good politics for Annabi to extract more concessions.

Bender, said Cantone would go back and see if Forest City could be more flexible.

After that meeting, Jereis first asked Forest City for a job. Aronwald got Cantone to acknowledge that Forest City Ratner copied Jereis on emails to Annabi about her vote, but didn't copy Annabi on emails to Jereis about the job he requested.

Did Annabi ask for Jereis to be copied on emails to her?

"I don't recall," Cantone replied. (Fun fact: both Annabi and Jereis had AOL addresses.)

"You never told her Zehy Jereis was seeking a consulting agreement with Forest City Ratner?" Aronwald asked.

"No, responded Cantone, acknowledging that Annabi was never asked if her vote was dependent on Jereis's hiring.

"Did she ever say the road to her vote was financial benefits to Zehy Jereis?" Aronwald asked.

"No," responded to Cantone. The issue was concessions on taxes, which Forest City could meet, though it could not make concessions on project changes to reduce traffic.

Aronwald asked Cantone if Jereis was ever threatening, ever said it was a quid pro quo, or ever put the developer in the position of having to say yes or no to the consulting agreement.

Cantone confirmed the answer was no.

After Annabi agreed to change her vote, Forest City drafted a press release, which Annabi objected to because it didn't mention the $10.8 million in new taxes Forest City agreed to pay. "I need that in there, since that is the reason I agreed to come on board," Annabi wrote at 11:05 pm on 6/14/06.

Forest City, however, was unprepared to release the figure until Pesin "had discussions with City Hall," another nod to the factionalized nature of Yonkers politics.

Another job request

Jereis's attorney, Anthony Siano, asked Cantone about the first meeting that Forest City had with Jereis, which was organized by Forest City ally Assemblyman Joesph Lentol, via his Yonkers friend Joseph Galimi, who knew Jereis.

Galimi also asked Forest City for a job. Cantone took his resume and said they'd look at it.

Galimi never contacted them again, "so the issue went away," Cantone said.

While Cantone described Jereis as "persistent" in his request for a job, hadn't he found other job applicants to be persistent as well, asked Siano. The question was ruled out of order.

Hiring Jereis

Annabi's vote on Ridge Hill was 7/11/06. Forest City agreed to hire Jereis sometime later--in August or September--and backdated the contract to August 1.

The backdating wasn't really explained, but an 8/11/06 email from Cantone to a colleague, John Cournoyer, suggested some level of urgency: "What are we doing? I need to get Zehy something fast."

Jereis turned in invoices that Cantone, in testimony last week, described as almost comically inadequate.

"You saw nothing wrong with Mr. Jereis's invoices for August, September, October?" Siano asked.

"No," responded Cantone, who admitted he never had a conversation with Jereis about the parameters for his reports, which were delivered only in March 2007 after news of the federal investigation surfaced.

Jereis was hired for both "retail hunting"--finding possible properties--and advice on government relations. Siano pointed out that Paul Feiner, Supervisor of adjacent Greenburgh, was still an avowed opponent of the project.

"That was one of the things you talked to Mr. Jereis" about, Siano pressed.

"It's possible, sir," Cantone replied.

Bringing it back

On redirect examination, Carbone asked Cantone why Forest City hadn't reached out to Jereis before 6/2/06.

Well, said Cantone, Forest City had already been told not to do so by others, including paid lobbyists and other elected officials who supported the project. Given the "political climate, which was crazy"--with factions within parties--"we did not want to offend supporters," he said.

As to the concessions offered to Annabi, "is it fair to say the concessions had been made already, to other Council Members and the public?" asked Carbone.

"Yes," replied Cantone.

He also agreed that, while Annabi may not have asked him to copy Jereis on emails, she did so herself, thus ensuring Jereis was in the string.

Bender enters

After waiting in a witness room last Thursday without testifying, Bender arrived at the stand at about 12:35 pm. While he was mostly a responsive witness, with signs of the political savvy he built in city government and at Forest City, Bender also appeared somewhat uncomfortable--understandably--as if going through a medical procedure that was painful but necessary.

Until recently, he told Carbone, he was Executive VP for Government Affairs and Public Relations at Forest City, with responsibility for five to 20 people.

In meeting with Yonkers Council Member, Carbone asked, did Forest City agree to concessions?

Yes, said Bender, citing the realignment of a road and the calling of a town hall meeting in response to requests from Council Member Dee Barbato. He also met with John Murtagh, like Barbato, another opponents.

But he couldn't get a meeting with Annabi. He even "reached out" to her employer, speaking to a member of the board of directors to see if Annabi would meet with them.

Was this unusual?

"Unique," replied Bender, who noted that two lobbyists and other elected officials had been unable to wangle a meeting with Annabi.

On 6/2/06, after a morning meeting at Starbucks at the Atlantic Terminal mall with Council Member Diana Reyna, Bender went to Marco Polo for lunch to meet Jereis.

"I asked him why he was against the project," Bender recalled. Jereis said he wasn't: "He responded, Maybe you just hired the wrong people."

Jereis explained that he had helped elect Annabi and had a political relationship with her.

Moving toward concessions

A week later, on 6/9/06 at Jake's Steakhouse in Riverdale, Bender finally met Annabi, with Jereis and Cantone. Bender asked her why she wouldn't meet with them, he recalled, "we weren't bad people, we just wanted to get together to explain the project."

During the discussion, Pesin agreed to offer the additional tax payment of approximately $10 million.

"Did Forest City Ratner make any concessions that had not been previously offered?" asked Carbone.

"No," responded Bender.

Then, at a 6/14/06 meeting at Madison's Restaurant in Riverdale, they continued the discussions about the tax contribution and other concessions.

In the final agreement, not only would Forest City contribute more taxes but "we were going to create an education fund" that Annabi requested, said Bender.

"Did that ever come to pass?"

"No," responded Bender.

Did Annabi follow up?

"Not that I can recall," responded Bender.

Uncomfortable feeling

On 6/28/06, Bender, Cantone, and Pesin met with Jereis at a Dunkin Donuts. Bender acknowledged he felt "just an uncomfortable feeling."

Why?

"The whole dynamics of the situation. On the one hand, we finally got to meet Council Member Annabi. On the other, he was asking for a consulting contract," Bender said. He said he felt pressure, on a corporate level: it had taken months to get a meeting, but the person who organized it could take it away.

"We were caught between a rock and a hard place," he concluded.

When the meeting ended--before Annabi's vote the next month--had they promised Jereis a job?

"It was inconclusive," Bender replied, "but we certainly left the impression we were probably going to do it."

Why?

"We didn't know what tomorrow was going to be, the vote was coming up on July 11," Bender said. "We wanted to keep the discussions going."

Forest City, he confirmed, had invested between $70 and $80 million.

Under questioning by Carbone, Bender, like Cantone, affirmed that he knew nothing of Jereis's record of paying Annabi and would not have hired him if he did.

"Were you grateful he was able to get a meeting with Sandy Annabi?" Carbone asked.
"Yes, very much so," replied Bender.

Cross-examination: Bender's benefit

Under cross-examination by Aronwald, Bender acknowledged that he'd left Forest City earlier this month and was co-founder of a consulting firm.

"What is the name of your consulting firm?" asked Aronwald.

Prosecutors objected to the question, but were not upheld.

"Bender Cantone Consulting," Bender replied, with a slight croak in his voice. He clarified that Cantone would probably be leaving Forest City next month.

"You had a financial interest in Ridge Hill being done?" Aronwald asked.

"I guess so," responded Bender. (Cantone, when asked the same question, said no.)

Bender elaborated that there was "a complicated formula based on the assessed value after it [Ridge Hill] stabilized," and said he was unable to attach a dollar figure.

Frustration and anger

Aronwald asked Bender if the failure to gain access to Annabi in 2005 was a source of frustration and anger.

Bender copped to the former, not the latter.

Aronwald then pointed to the 9/25/05 email from Mike Spano, who stated, "I've taken every angle with this Sandy. I have Nick [Spano] involved, Zehy [Jereis], and Anthony [Mangone, who's already pleaded guilty regarding his role in the Longfellow project. She has not moved. We have union heads talking to her too. We are still working it."

"He doesn't refer to Zehy Jereis. He just uses Zehy," Aronwald pointing out, indicating that Jereis was known to Forest City and its consultants.

Bender responded with obvious anger. After indicating he'd just been to the emergency room for a family issue, he wrote, "No fucking around. Get Sandy on board. Tell your brother we need help now. I have to close this and take care of my family."

"You wanted Nick [Spano] to help?" Aronwald asked.

"Yes, that's correct," Bender said a bit resignedly.

Did Bender try to have Annabi's employer influence her?

No, he said, though he got her number from them.

He called up and mistakenly thought Annabi was expecting the call. "She hung up and on me and said don't ever call me at my place of work," Bender recalled.

Drawing the lines

Under questioning from Aronwald, Bender acknowledged that Jereis never promised he could obtain Annabi's support.

When they finally met 6/9/06, did the meeting start off badly?

"Yes and no," replied Bender. "Just sitting down with her was a success." But he acknowledged that Annabi and Pesin had clashed, and that he apologized for Pesin's tone.

Annabi, Bender agreed, never asked Forest City for anything of value.

After the 6/9/06 meeting, Bender wrote his boss Bruce Ratner: "We had a good meeting with Sandy. We offered 10 mil over 3 years in tax and we are 2 mil short to make the deal, or 700K short over 3 years. I think we have to make the deal."

Ratner responded positively, in a message that wasn't entered into the record, and Bender replied on 6/10/06, "Thank you for your confidence. Let's see if we can bring this home this month. We may have to put some funds away for [Council Member Chuck] Lesnick and traffic. There's a good chance that this money will never be drawn down."

Getting to yes

While other opponents on the Council wanted a 30% reduction in the project, which would have killed it, Annabi wasn't as hard line.

"As far as you were concerned, you persuaded Sandy Annabi on the merits to vote for the project, not Zehy Jereis," asked Aronwald.

"I wouldn't take the credit," Bender replied, shaking his head slightly.

Aronwald then showed Bender his grand jury testimony. "Does that refresh your mind, that you persuaded her?"

"Yes," replied Bender. "In that context, yes."

Aronwald pointed out that the 6/14/06 meeting at Madison's with Jereis and Annabi was listed in Bender's appointment log as "Friends of Yonkers."

Who, he asked Bender, " are the Friends of Yonkers"?

"I don't know why it was coded that way," Bender responded.

The Longfellow tangle

Aronwald asked Bender if he recalled asking Council Member Dennis Robertson, an ally, to take the Longfellow project off the Council's agenda at one point--apparently to give Annabi more time.

Annabi had to leave the 6/14/06 meeting before Bender wanted her to because she had Council business related to Longfellow, a project unrelated to Forest City

On cross-examination, Siano asked Bender why he sent an email to Annabi on 7/11/06, "What happened to Longfellow? Who did us wrong."

"This email was an effort to bond--a sort of collegial email," Siano asked.

"Yes," confirmed Bender.

Beyond Yonkers

Siano said Bender continued to talk to Jereis.

"Here and there," the witness responded.

Siano brought up the opposition to Ridge Hill from Greenburgh's Feiner.

Bender said it did continue but had been resolved at some point by a monetary settlement.

The Lentol connection

Siano brought up the role played by Lentol in arranging the initial meeting with Jereis. "You were in Pennsylvania" when Lentol called, the lawyer stated. "He was needling you about what he'd heard about the project. He was with someone and they were telling stories how you were never going to get Ridge Hill built."

When the meeting with Lentol was set up, "it was Mr. Galimi who brough Mr. Jereis," Siano asked.

"That I do not know," Bender said, though that's been confirmed by other witnesses.

Another consultant

Aronwald, noting the role of consultants Al Pirro and Mike Spano, pointed out that another consultant, Melvin Lowe, was tasked with getting Council Member Patricia McDow's support.

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