Nancy’s new attorney, Myrna Felder, was confident, too, that Nancy would win an appeal of Judge Tyler’s December 18, 1985, divorce ruling, which had been so favorable to Andy.
On October 2, 1986, Felder called Nancy with the news that she had won a major victory. A Manhattan appeals court had tossed out the $2 million divorce settlement, voting five to zero that Judge Tyler had divided the assets and marital property improperly between Andy and Nancy. The appeals court ruled that Nancy should get more.
In its decision the court wrote, “We also find an error of law in the trial court’s wholesale, verbatim adoption of the husband’s requests for findings. At least insofar as they bear on property distribution, these proposals were unacceptable and should have been rejected across the board.”
The appeals court directed Judge Tyler to reconsider his decision and come up with a bigger financial award for Nancy. But on February 23 Judge Tyler rebuffed the appeals court and, using the same reasoning he had used in his initial decision, stood by his first ruling. Only this time he explained in detail in his decision why he chose not to grant Nancy any part of Andy’s business. “This court finds and determines that defendant’s [Nancy’s] activities during the marriage were limited, and her contributions as a spouse, parent, and homemaker did not contribute to the career advancement of plaintiff [Andy] or his business,” Tyler wrote. “The appreciated value of the plaintiff’s separate property is not the result of any direct contributions made by defendant, and indirect contributions of defendant as a spouse, wage earner, parent, homemaker are not considered.”
By the end of 1986 Giuliani’s federal grand jury was about ready to bring an indictment against Andy for federal tax evasion. During a nine-month investigation David Lawrence reviewed hundreds of documents and talked to more than fifty people. While he did not turn up any evidence that Andy had bribed politicians or city officials to win his city contracts, he did discover that Andy had evaded $774,000 in corporate and personal income taxes.
Working with investigator Tony Lombardi and city investigating attorney Kevin Ford, Lawrence talked to dozens of people whose names had appeared on canceled checks for bogus liability claims against Nanco. None of the people interviewed had ever made a claim against Nanco or had even heard of the company before. Still others could not be interviewed because they were deceased—and had been dead when the checks were made out to them. The checks had generated an estimated $358,323 in nontaxable cash for Andy, according to the government’s estimate.
In another tax fraud scheme Andy had charged more than $1.3 million in renovations to his Park Avenue and Fifth Avenue apartments to Nanco as business expenses, which he concealed through a series of false bookkeeping entries as expenses incurred by the company in the course of performing city contracts.
An audit of Nanco’s books revealed that another $500,000 had been diverted somehow from his company, but Lawrence and the investigators could not determine where the money had gone. They suspected that Bess, who kept at least thirty separate brokerage accounts, may have been hiding the money there. Since 1980, her net worth had quadrupled from $4 million to $16 million, primarily from investments in real estate partnerships and stocks. A former Nanco chauffeur had told investigators that Bess had given him large amounts of cash in white envelopes to deliver to her stockbroker.
In the middle of December Lawrence called Bess’s attorney, Fred Hafetz, and told him that Bess was about to be subpoenaed before the federal grand jury. In addition to questions about her personal finances, Lawrence warned, he intended to ask Bess questions about two other ongoing investigations: the circumstances surrounding the hiring of Sukhreet Gabel and whether she had used any influence to help Andy win city contracts. Lawrence also told Hafetz that Bess was considered a target of the investigation.
After angrily telling the prosecutor that he would advise Bess against testifying before the federal grand jury, Hafetz tried to persuade Lawrence not to force her to appear. Although Lawrence was insistent that she show up, he agreed not to serve the subpoena at the Department of Cultural Affairs, to help protect her privacy and maintain the secrecy that surrounds grand jury proceedings.
On Monday, December 15, a red satin ribbon tied into a huge bow was draped across the front of Carnegie Hall. After a seven-month renovation, the ninety-five-year-old grande dame of West 57th Street was opening its doors for a gala concert and celebration. Among the guests invited to the most important social event of the season were Brooke Astor, Oscar de la Renta, Lally Weymouth, Lee Radziwill, Armand Hammer, Mary and Laurance S. Rockefeller, Nancy Kissinger, Maureen Reagan, Patti Hearst Shaw, Frank and Barbara Sinatra, Gregory Peck, Beverly Sills, and William S. Paley.
Bess, the city’s commissioner of cultural affairs, appeared at the reopening wearing a gold embroidered Trigere gown. She looked fabulous at Mayor Koch’s side as she talked about the city’s role in helping to finance the $50 million face-lift. “This is the best: restoration at its best, New York City at its best, music at its best,” she told the audience.
As the flashes illuminated her smile, Bess revealed no trace of the tremendous pressure she must have felt knowing that within a few days she had to appear before a federal grand jury.
Minutes later the concert opened with “The Star-Spangled Banner” played by the New York Philharmonic under Zubin Mehta. Onstage, leading the audience in song, were sopranos Leontyne Price and Roberta Peters, baritone Sherrill Milnes, mezzo-soprano Betty Allen, and Mayor Koch and Bess Myerson.
It was one of her last public appearances.
Bess had decided not to tell Koch that she intended to take the Fifth Amendment rather than testify before a federal grand jury. She later said she had believed the grand jury process was secret and that no one would know. She didn’t want to tell the mayor about her predicament because he would have wanted her to testify and cooperate with the federal prosecutors.
The following Monday, December 22, Hafetz accompanied Bess to the fifth floor of the U.S. District Courthouse at Foley Square. Since no one but the prosecuting attorney and the grand jurors was allowed inside the grand jury room, Hafetz waited in the hallway.
Entering the grand jury room that day, Bess looked nervous. Tiny beads of sweat formed on her forehead as she took a seat at the end of a long oak table facing David Lawrence. Grand jury rooms are not like standard courtrooms. There was no judge at the proceedings. It was just Bess, David Lawrence, and the members of the grand jury, about twenty-five people who sat in a box looking down at the witness and the prosecutor at a long table.
Following her attorney’s advice not to answer any questions, Bess gave her name, then invoked the Fifth Amendment protection against self-incrimination in response to every question.
While Bess had exercised her constitutional rights that afternoon, she had also violated a promise that Mayor Koch had made to the public only six months before. Koch had vowed that all of his commissioners and staff members would cooperate fully with the numerous corruption investigations. Anyone who did not cooperate, he had said, would be fired.
29
“The Bess Mess”
Mayor Koch was on his way home to Gracie Mansion on Friday, January 9, 1987, when the call about Mike Taibbi’s bombshell report on the six o’clock news came in over the car phone. Taibbi, an enterprising reporter then working for WNBC-TV, had found out that Bess had taken the Fifth Amendment three weeks earlier while testifying before a federal grand jury investigating municipal corruption.
Koch was stunned by the news. Bess had never mentioned to him anything about testifying before a grand jury.
After the mayor reached Gracie Mansion, Bess called to apologize for not having informed him of her refusal to testify. “She said her lawyer didn’t think it necessary to tell me because he didn’t think anything further would result from her appearance there,” Koch said later. He then asked her to meet with his first deputy mayor and top legal adviser on Monday morning “to explain what happened here.
”
The disclosure of Bess’s decision to take the Fifth Amendment rocked City Hall and once again made corruption in city government a front-page story. Reporters who for months had ignored Marcia Kramer’s stories about Bess in the New York Daily News were now asking her for copies. Everyone wondered what Bess had to hide.
Whatever anger Koch felt about Bess’s decision, he gave her the benefit of the doubt, telling reporters that he had a “great deal of confidence and respect for her and for her integrity.” At the same time, he acknowledged to Joyce Purnick, then City Hall bureau chief of the New York Times, that “a negative inference has to be drawn when the Fifth Amendment is used. There is no question an explanation is required here.”
On Monday Bess and her lawyer, Fred Hafetz, met for more than two hours with the mayor’s top advisers, Corporation Counsel Frederick A. O. Schwarz and First Deputy Mayor Stanley Brezenoff. Afterward, Schwarz told reporters: “I didn’t hear the state of mind of a duplicitous person. I heard the state of mind of someone who was a little confused about the situation she was in, concerned about the situation she was in, because it was unfamiliar, and who followed the advice of her lawyer.”
Even so, Bess’s refusal to testify presented Koch with a personal and political dilemma. How could he fire Bess, the woman who had helped make him mayor, a close friend of more than twenty years, and a top official in his administration? On the other hand, he knew those personal considerations could not color his responsibilities as mayor.
To figure out his next step Koch met with his top two legal advisers following their meeting with Bess to discuss his options. They advised him that he could not fire Bess for exercising her constitutional rights and recommended instead that Koch appoint someone to conduct a formal inquiry to determine whether Bess had abused her public office. They suggested that the inquiry focus on whether Bess had used her influence to help Andy obtain city contracts and whether she had sought to win a favorable divorce ruling for Andy by giving Sukhreet a job. Since the city’s commissioner for investigations, Ken Conboy, was already cooperating with the federal probe, they suggested that Koch appoint someone from outside city government to undertake the inquiry.
Koch turned to former federal judge Harold R. Tyler, Jr., a sixty-four-year-old partner in the firm of Patterson, Belknap, Webb, and Tyler who in the past had been called on by city officials to investigate other politically sensitive allegations and who by happenstance was Giuliani’s mentor. “He was kind enough on a pro-bono basis to undertake the investigation,” Koch said later. “I said to him, ‘While you have to look at these questions, it’s unlimited. You just make a full investigation and report to me. Whatever your investigation discloses, that’s going to be something I am going to accept as factual. That’s it, for me.’”
Koch ordered Bess to take a ninety-day leave of absence without pay pending the outcome of Tyler’s inquiry. Bess objected to taking the leave without pay, but Koch promised her she would be reimbursed for the time when she returned to work.
On Tuesday, January 13, just four days after Taibbi’s broadcast report, Koch announced at a crowded City Hall press conference that Bess would step down as cultural affairs commissioner while Tyler determined whether or not she had done anything wrong.
In a statement released through her lawyer Bess vowed to return to her post in city government. She was defiant, declaring flatly: “I will return as commissioner.… I want to make clear: I have done nothing wrong. I state unequivocally that I never in any way helped Mr. Capasso to get any city contract.… I agree with the appropriateness of this procedure and expect to testify at this inquiry.”
She acknowledged having hired Sukhreet—which she had earlier blamed on one of her employees—but she insisted she had done so because she had believed Sukhreet was “extremely qualified.” Bess went on to insist that the hiring was “in no way done to influence in any way the decisions of Justice Gabel.” She concluded her statement by saying, “I plan no further comment to the media until I return to my position as commissioner.”
The following day Giuliani announced a nine-count federal indictment against Andy, accusing him of having evaded $744,000 in corporate and personal income taxes through his phony liability scheme and of having billed $1.3 million to his company for renovations at his luxurious Fifth Avenue apartment.
Andy’s attorney, Jay Goldberg, called the indictment the “last gasp” by federal prosecutors and told reporters, “We view the present indictment, unpleasant as it is and incorrect as we will show it to be, as a vindication of any notion that Mr. Capasso made improper payments to public officials or secured his contracts through any but lawful means.”
But Giuliani warned that the federal grand jury had just completed “one aspect” of a “continuing and active” investigation.
In a move that took federal prosecutors by surprise, Andy pleaded guilty to all nine counts in the federal indictment at his arraignment on January 22. Some of the regular court reporters speculated that he had made his decision after learning that his case would be handled by U.S. district judge Charles Stewart, who had a reputation for leniency. But Andy told friends that he wanted to spare his family and friends, particularly Bess, the agony of a long public trial.
The night before Andy’s court appearance, Bess called one of her assistant commissioners, Richard Bruno, at home. She respected his abilities as a writer and thought that the prepared statement Andy intended to read to the press following his guilty plea needed to be revised.
Bruno was at home with his sleeping infant daughter when Bess called, so he asked if she could bring the statement over to his apartment, which was only a few blocks away. About fifteen minutes later she arrived at his apartment with Andy and showed him the statement.
After reading it, Bruno went into the bedroom, where he worked on an alternative draft on his computer for about a half hour. Bess seemed to like the revision, and as they got up to leave, Andy pulled out his wallet. Bruno stopped him. “Please don’t,” he said.
As they were leaving, Bess turned to Bruno and promised him the favor would be returned. “When Mr. Capasso is released, he will probably be needing public relations assistance, and you should keep that in mind,” Bruno recalled she said.
But Andy had already left a $100 bill on a table in the apartment.
Because of all of the publicity surrounding her decision to take the Fifth Amendment, Bess did not accompany Andy to his arraignment the next day. After entering his guilty plea, he stood alone on the court house steps and read his prepared statement facing the television cameras. “I categorically deny that any improper influence, bribery or bid-rigging was involved in my obtaining contracts with New York City and New York state,” he said. “Any claim that Bess Myerson exerted influence with the city or state … in my behalf is totally false.… I am ready to face whatever punishment the court decides is appropriate. I am also ready to face any continuing investigation secure in the knowledge that my guilty plea today encompasses the totality of my misconduct.”
Later that day his attorney, Jay Goldberg, happened to be in the U.S. attorney’s office when he ran into Howard Wilson, the chief of the criminal division. According to Goldberg, Wilson said he would like to talk with him about getting Andy’s cooperation with the federal investigation into city corruption. Cooperation with the U.S. attorney’s office could mean the prosecutors might not ask for a long prison term at Andy’s sentencing hearing on March 30.
Goldberg asked Wilson what information he thought Andy could provide.
“He said to me, and this is a quote because I will never forget it,” Goldberg later recalled, “‘You know that Andy plays tennis with Stanley Friedman regularly and that he is a very close friend and he also played tennis regularly with Donald Manes. You know what kind of people they are. He must have information about public corruption.’”
Goldberg said that he was astonished that anyone would think Andy might have information on Manes and Friedman “
because he is a tennis mate of these people.” Goldberg said he asked Andy whether he had any information that could help the government in its investigation, and Andy replied that he didn’t have any information at all.
But according to prosecutor David Lawrence, Goldberg told him that Andy would not cooperate with the federal government because Andy did not want to be a “rat” and “it would take more than a tax case to make him talk.”
In the two-and-a-half months before Andy’s sentencing hearing on March 30, Bess and Andy gathered glowing letters from friends and family on his behalf to submit to Judge Stewart in the hope that these testimonials would convince the judge to spare him from going to prison.
There were letters from longtime family friends, high school buddies, directors of the charities Andy had contributed to over the years, and prominent members of the community. Samuel Peabody, who was president of the cooperative at 990 Fifth Avenue when Andy and Nancy first moved in, wrote a letter asking Judge Stewart to “show leniency.” Andy’s stepson also wrote a letter praising Andy for being a good stepfather.
Bess sought help from a few of her old friends, including former state supreme court judge Jerome Becker, who wrote that “whatever mistakes Andy made as a citizen cannot diminish in my own mind, the fact that he is a self-made businessman whose professional achievements are marked with excellence.…”
Another letter came from Bess’s longtime friend and psychiatrist, Dr. Ted Rubin, who had gotten to know Andy well over the past few years. In his letter, Dr. Rubin wrote:
… I have never witnessed so much growth by an incredibly curious human mind in so short a time. The Andy Capasso of old and of confused values is surely the man who is responsible for current difficulties. The Andy of today has become a self-contemplative, ever-changing, growing man, much too wise to ever be the victim of pride or greed again.…
Queen Bess Page 34