.;)-.5 91 ...~~FEDERAL BUREAU OF INVESTIGATION .;OfUee Office of Orlql0 Dole lo"."UqoHv. PeriodY ALBANY 8/11/87 9/3/86-4/30/87 Report made by Typ&d By:-S M. WHALEN III, SA DONALD H. JOHNSON nrkr, City of Albany, New YorkChoroet of CO".HOBBS ACT-CORRUPTION OF PUBLICOFFICIALS-J!l!ll'IMl'xPROSECUTIVERENCE: Albany airtel and LHM to Director dated 9/26/86.RMANTS: ". - .-. ..".,".,..,.-I I . b2 -- -".b7DSpecial A'lool00 not Wl'1I. In IIpocontactedJ aL ';J.JIle aav1.sed he hadIraceived a notice of reassessment from a t:ownship IadviseCI was coIa ....1.ve of mcreases on all as a result of asses i: .J...... , :'"-: ...... Ireferencing the real property assessmeI I ..h ...". 4, 1985, he received aI reqardina rtysm andingthat what requeste4 thatl contact the assessor .:for the City of -.Albany,reqa r this"" . ............... ...........' I...ue assessor .1.or WJ.B C1.l.. of Albany, but a partnerB-7B-8City of Albany, New York. I Istated that the partners agreedto try to be supersensitive to conflicts for a period of time andto analyze their impact on the firm.1 Istated there was noformal venthough other members often expressed theiropinions. stated this review and analysis rQin nochange in prac by COOPER, ERVING AND SAVAGE. statedthat the members of COOPER, ERVING AND SAVAGE and l.Inse f attimes, looked at selected opinions from the AMERICAN BARASSOCIATION regarding ethical personally has neversought any Bar Association opinions. dvised that the onlychange, which was in fact implement, s a monetary change dueto the time commitment M. WHALEN III, as Mayor for thecity of Albany, New WHALEN voluntarily took acredit as part of his Mayor s aqa:ipst his draw fromCOOPER, ERVING AND SAVAGE. It was Jrecollection initially,this amount was $2,000.00 a month, owever, that mar not havebeen the initial amount and the figure changed as d.l.d the Mayor1ssalary.I ------, advised that I I an associateof COOPER, ERV'ING AND SAVAGE did appear before some form ofaovel:Ip1lental body Q THOMAS M. WHALEN III was presiding.I that was not aware at the time of hisappearance that the ind :v dual he was representing was a clientof the law firm but is aware of the fact at this time.With respect to City of Albany, New YJ::Jinessconducted by COOPER, ERVING AND SAVAGE clients, advisedthat the L COMPANY was handled principa yl II recalled partner discussions regarding SWYERwere orily toeextent of the work that could not be handled byCOOPER, ERVING AND SAVAGE. c: la:v;:4 a similar situationexisted with another client ofI: namely, the MAIDEN LANEPARKING AUTHORITY which did most 0 .1 business with the city ofAlbany, New York,On February 27, 19B7,1 I advised he the Albany law firm of COOPER, ERVING, SAVAGE,WHALEN, NOLAN AND HELLER. I Istated. a Senior Partner inthis firm was Albany THOMAS M. WHAT/EN Iadvised, as a member ,1 _ _ lof Ithe law firmof COOPER, ERVING Mill S vAGEI ,recognizedpotential conflicts of when WHALEN fU'St came intopublic office,( Jstated conflicts arose at the timeWHALEN was President of the Albany Common Council and became moreevident and blatent when WHA.LEN was appointed Ma or of Albany,subsequent to the death of BRATUS CORNING II. advisedthat although the conflicts existed the e rmer ydiscussed amongst partners of the firm. stated thatthese discussions often covered the fact that WHALEN shouldremove himself from the firm due to the conflicts. I Iadvised, that, as a result of the blatent conflicts, work wasfarmed out to the law fin of RUTNIK AND RUTNIK. Theseconflicts, according to L were discussed at partnershipb6b7C1-________________ m __..... b6b7Cmeetings. It was suggested at these meetings that WHALEN removehimself from the firm. WHALEN, however, would not agree to thisnor would he accept a reduction in partner points but didsubsequentl.y agree to accept anJ'wguDtlless than that would havebeen a Senior Partner share. I advised initially this wasa sum of $10,000.00 as a reductiOn to WHAUm's draw was tobe distributed equally amongst all partners.) ..J advisedthat eventhough conflicts of interest were discussed openlyamongst partners no opinions were ever sought from theBar Association. fJadvised that approximately 50 percentof all revenues generate within COOPER, ERVING AND SAVAGE camefrom the principle accounts namely ::: TllUST COMPANY and to alesser extent ALBANY SAVINGS -lstated that whenBANKERS TRUST COMPANY sold its opera ens toFIRST AMERICAN BANKOF NEW YORK an arrangement was made with the Albany law firm ofNOLAN AND HELLER to split the FIRST AMERICAN businessapproximately 60 percent to COOP:; ERVING AND SAVAGE and 40percent to NOLAN AND HELLER. r _ I recalled discussions ofpartnership meetings at whicI1 po FtRsT AMERICAN BANK expresseda concern for rising assesJ::::;::t :yoperties they purchasedfrom BANKERS TRUST COMPANY. Jadvised that be had takennotes of all partners meet' 1 reviewed they would refreshhis recollection as to specifically what was said at thesepartnership meetings.I Iadvised that JOSEPH YAVONDITrE was notconsidered an employee of COOPER, ERVING AND SAVAGE, yet hisbackers were used on certiorari work completed and billed byCOOPER, ERVING AND SAVAGE. The backers were used to give theappearance the enclosed work had been completed by YAVONDITI'E asopposed to COOPER, ERVING AND SAVAGE because of apparentconflicts of interest.I Iwas shown : the ;a ...L:Vir hisI detalls had qeen war r roe ..Jbetween the client and the city ofAlbany, New York.On March 5, 1987, HARRY MAIREIS, former COIl'lD\issionerfor the Department of Public Wo .J.nqu.1.re as 0 what the City of Al 00 or W.1.respect to granting a concession agreement to operate a Bar and c::sp::::ttuof >lbFihensubmitted to the rea .1.on ent a proposal forthe operation of the golf course. MAIKELS added that the proposalsubmitted by I Iwas most favorable to the City New stated he then set up a meeting betweI JAl y Mayor THOMAS M. WHALEN III. MAIKELS he !into the Mayor's Office and introduced him at thisB-9. -'- - --------------------, b6b1Cmeetinq. MAIKELS stated that he recalled that in general theterms of the agreement and the City of Albany, New Y9rk r I were discussed and agreed upon betweenL I andMayor WHALEN. MAIKELS stated at the conclusion of the meeting, herecalled Mayor WHALEN askin if he ttorney.MAIREIS stated that the piece of paperupon which he had . IS advised thathe did not }mow who was l.eved him to be anattorney in the city of Albany, New York.on March 5, 1987, I 1advised that HARRYMAIKEISI Commissioner for tli6 Department of Public Works "!95l.s:::=:J for the Albany Municipal Golf Course. _.... Jspoke to him and advised what looking or Ul terms of a concession agreement. I sedthat after making a proposal he was advised _ of ameeting with Albany Mayor :tlIOMAS M. WHALEN III and HARRY MAIKELSat Albany City HalL I stated that upon attending thismeeting he and Mayor THOMAS M. WHALEN III ag;eed on. a two yearlease with two separate options for renewal. l j advised thistenure was subsequently changed because the New York Authority had required a three year license agreement.! .Jadvised the terms of the lease agreement were then subSljmJAntJ changed to a three year lease with a three year option. l Jrecalled, as the meeting was , Mayor THOMAS M. WHALENIII asking him. if he had an attorney . the Mayorthe gave l\;m a hnfiness card and stated liquorlicensesll.L advised that the business ca he received from.the Mayor had the Hayor I s name Of the ca; "j onthe back he had written the name _ ... __ _ _ statedhe knew that he s;lid not need a lawyer l..n 0 er to obta n a liquorlicense. I ]stated he paid a fee of $1,500.00 to firm. ofCOOPER, ERVING AND SAVAGE for its assistance in obtaining aliquor license.( I :1: of 1983, the city of llbany, rYork solicited a request for proposals to lease a concessionconsisting of a bar qnd restaurant area at the Albany MunicipalGolf Course. I Jstated it was his understanding there werethree individuals who expressed an interest and submitted their to the City of Albany. '!be hjqheEtt of these bidders wasan Uldividual named I jadvised thatBdirectly negotiated an agreement to operate the concess 0the golf course with Albany Mayor THOMAS M. WHALEN III.stated that WHALEN then wrote a note or m:md lstat1.nq theterms of this a equested I Ito prepare a leaseagreement. was furttier to confirm theagreement the Albany lawfim of G AND SAVAGE. advised that I ;:JI ..Jin Mayor THOMAS M. II's law firm. Ithat he felt the .,On April 13, COOPER, ERVING, SAVAGE, WHALEN, NOLAN ANDappeared at any Office of the FBI.approximately ears a 0 he 'oined theERVING AND SAoluntarilyadvised thatb6b7C, , name y OS PH YAVONDITl'E who served asOf Counsel AND SAVAGE as well as an associateI _ _ tated that YAVONDITTE did not become anempLoyee of coo , 1i G AND SAVAGE, eventhough he had anoffice at 35 state ithin the office space of COOPER,ERVING AND SAVAGE. r J stated that YAVONDITTE paid rent forthe space, operate 0 y independent, and was not aware of anycompensation YAVONDITTE received from. COOPER, ERVING AND SAVAGE.I _stated that YAVONDITrE picked up all the certiorari work y handled by COOPER, ERVING and SAVAGE, when THOMAS M.

became Mayor for the city of Albany, New York. ad that :: JqProXimatelY three yearsago. stated thatr s -an associate I before pnd aft,er joining ; AND SAVAGEI IadvisedL .J became an employee of COOPER, ERVING AND SAVAGE spent apnrpxim?'tely 80 percent of his time doing wopt undefI _ J stated the type of work completed bYL .Ulcluded "court appearances and all the dirty jobs around theoffice that no one wanted to do. nI Irepresented variQus i;the L.A. SWYER COMPANY for approximately 20-25 years.[ II I represented the L.A. SWYER COMPANY in an In us iaoevelopment Authority loan and securing a Payment In Lieu ofTaxes agreement between SWYER and thr Cityo: A:anv for property located at 80 State Street. L JUid nonegotiation on behalf of SWYER with respea: 0 e Payment InLieu of Taxes, and does not know who did the negotiations withformer Mayor CORNING who then granted a Payment In Lieu of Taxeswhich was subsequently renegotiated with THOMAS M. WHALEN III.I Irepre:ted MAIn: AUTOPARK whiCh was r: IfromNewark, New Jersey:-l Ina raco ec ofB-1l J b6b7Cb7Dnegotiating any leases with the city of Albany on behalf ofMAIDEN LANE AU'I'OPARK.I Iadvised there were conflicts among juniorpartners at COOPER, ERVING AND SAVAGE reqardinq THOMAS H. WHALENIII, as Mayor for the City of Albany and as a Senior Partner inthe tirm. I I stated. he had. no recollection of anydiscussion at partners meetings, no recollection that THOMAS M.WHALEN III ever agreed to a ,reduction from his compensation aspartner and Mayor. L ladded that because of the increase inhis compensation as Mayor agreed to a reduction in hispartnership draw. r , recalled discussions among partnersbecause he was a .fully occupied Mayor for the City of Albany, andnot practicing as an attorney of the firm.On February 4, :L987, I I 90state Street, Albany, New York, he wasrof the Albany law firm. of COOPER, ERVING AND SAVAGE at 35 stateStreet New York. ad that wasf the . brought).n 0 y stated thatties a e ll'1U were unspecJ. c yet he did recallperformed collection work on behalf of COOPER, ERVINGAND SAVAGE and its clientI IOn September 3, 1986, T-l advised thatr Ianassociate of the Albany law firm of COOPER, ERVDJG AND SAVAGE wasIdireetep. to represent a COOPER, ERVING AND SAVAGE .J before an Albany Zoning Board. Source stated somewhere in 1982 to 1983 at which time THOMAS M. WHALEN III wasthen President of the Albany Colmnon Council ting memberof theinstructedq ar enoe.s was then granted aOn January 26, 1987, VINCENT MCARDLE, CorporationCounsel, City of Albany, New York, advised that with respect tothe assessors office it generally operated independently. MCARDLEadvised the assessor was appointed by the Mayor, for the City ofAlbany, who provided policy decision direction for the assessor.MCARDLE advised that he could recall no general reassessmentwithin the city of Albany because they scare politicians todeath. MCARDLE advised that between 72 to 73 percent of allproperties located in the City of Albany, New York, were taxexempt. MCARDLE adviSed in the last three years an excess of 80percent of all properties located within Albany have turned overand resuJ.ted in assessment increases. MCARDLE advised he couldrecall no single area that had decreased in assessment within thecity of Albany.On January 27, 1987, CHARLES M. HEMINGWAY, Controller,Cit.y of Albany, New York, advised the City of Albany maintianed8-12approximately nine separate bank accounts. Of these HEMINGWAYstated the City payro11 account of approximately $575,000.00 aweek was maintained in an interest bearing account at FIRSTAMERICAN BANK; a $30,000.00 trust fund reflecting City Courtreceipts and bid deposits was maintained at FIRST AMERICAN BANK;a police pension fund of $250,000.00 was additionally maintainedat FIRST AMERICAN BANK as well as a $250,000.00 New York stateInsurance Department foreign insurance fees account and afiremans insurance fund. HEMINGWAY stated. that additionally a $2-3001000.00 Capital Fund Account was also maintained at FIRSTAMERICAN BANK.On March 2, 1987, J 1. advised that heand a group of other indiviuaIs were partners In thtf Istated that this project wasOUSJ.ng an Ur Development Action Grant Funding.L",==:! stated that in negotiating the loan or grant which wass sequently signed by Albany Mayor THOMAS M. WHALEN III, who wasacting on :behalf of former Mayor ERASTUS CORNING at the time, thecity of AlbanyI New York, what assessments wouldbe upon completion of the proj ect. stat.ed that this was arequirement of the Federal Housing Urban DevelopmentCorporation in order to guarantee an adequat.e cash flow t.o loans granted or provided by federal funds in this proj ect stated that upon completion of an assessment agreement which wassigned by Albany Assessor BRUCE MAC DONALD specific assessmentswere set. for each parcel. I I advised that approximately twoyears later the city of Alban' reniqed on the assessments thatwere previously assigned and m a one lump sum manner raised allthe assessments of all the properties. I J advised this totallydestroyed the marketability of the program and was incontravention of the federal agreement which was previouslysigned by WHALEN on or about October of 1983. .orB-13b6b7Cb7DNAMES OF DEFENDANTS i1. THOMAS M. WHALEN, IIIRace:Sex:Date of Birth (dob):Height:Eyes:Hair:Occupation:Address:c*CaucasianMaleJanuary 6, 19346'HazelBrown, greying, receding hairlineAttorney, Mayor, city ofAlbany, New York159 South Pine Ave.,Albany, New Yorku ----, PROSECUTIVE STATUSb3bbb"7C1.2.3.4.5..On September 3, 1986, information furnished bypreviously described T-l was : AssistantUnited states Attorney CAUSA) 1 " NorthernDistrict of New York, who advl.i3 e woc! authorizeprosecution in captioned matter, if the result andfacts of investigation so warrant it.On september 5, 1986, AnSAI ladvised captionedmatter was being re-assigned to AUSArof his office for potential prosecutive 0;+00:,Accordingly, a meeting was held with AUS1f:: _detailing fact;; of initial complaint. At 1S t1meAUSAI I suggested various investigativealternatives, including a closed circuit televisionsurveillance of subjects law firm, as well asconsepsual monitoring on the part of complaintant.AUSA L Jwas advised that complaintant was ina very sensitive position and agreed to testifyto all infonation provided, upon receipt of a subpoenawhich would be iSSUed with other membersof subjects law firm. AUSA I agreed to the factthat in order to conclude J.nVestigation it wouldrequire presentation before a Federal Grand Jury.On october 14, 1986, SA DONALD H. JOHNSON met with AUSAI _and fUlly debriefed him again regardinginformatioq. SYDQl j ad by complaintant. At this sametime, AUSAl I was presented copies of FD-302 1swhich reflected investigative (1 cat:'n ,?fallegations made by complaintant. I Jwas advisedof the need for issuance of grand ;11''-v ...nn'" "'" .AUSA .ne WOUl.d prepare the requestedsUDpoenas and advise SA JOHNSON when they werecompleted in order that they could be served.On October 20, 1986, AUSA I !was contacted toas:e::' the status of requested subpoenas. AUSAIIat this time advised he had not been able toge () e subpoenas and requested they be drafted forhim. The FBI agreed to lie so and jccording1Y furnisheddraft subpoenas to AUSAL _On October 28, 1986, attempts to contact AUSAI====::Jat his office were negative. At this time AUSAI ladvised he was too busy to meet with theFBI.D-1 ..- -----------------------. b6b7C6.7.8.9.On November 6, 1986, AilSAI ladvised therequested subpoenas would not be issued because theUnited states At,,;orn:v FREtlERICK J. SCULLIN, Jr., NDNYhad so directed. _ ..J stated that SCULLIN hadrequested a meetmg l.n order to be fully briefed on thenature and scope of this investigation. SCULLIN haddirected that no subpoenas would fa iaBu: until suchtime as this meeting took place. _ _, stated heanticipated this meeting would occur some duringthe next two weeks and further that no specific timehad been designated.On November 14, 1986, AUSAI I, NDNY, advisedthat a tentative llteeting had been set to take place onNovember 24th or 25th, 1986. At this time, us AttorneySCULLIN would lltake a determination as to whether ornot investigation into subject matter would continueand further whether or not subpoenas requested wouldbe iSSUed.On 1:6. nsuant to a request ofAUSA a meeting was held tore-fen fa S 0 captioned matter in order forI Ito brief U1JtornAV SCULLIN on the factsof 18 matter. AUSA at this time statedhe was looking at Mal.rFraUd Violations. I I wasasked why he had not considered possible violations ofthe HOBT the doctorine "Color of OfficialRight" . stated he was not familiar with thestatute nor e considered its use.On November 25, 1986, SAC ALBANY advised he had justmet with US Attorney SCULLIN who stated he had beenbriefed on subject matter. SCULLIN authorizedissuance of the subpoenas requested 'eventhough hequestioned the nature of the investigation. SCULLINstated additionally that he wanted to personally stayon top of this matter and would review the case uponreturn of the subpoenas in order to determine iffurther investigation was warranted.. At this same time,SCULLIN was asked whether or not he had had any directconversations with subject concerning thisinvestigation to which he responded he had. SCULLINfurther stated that he then riferred Sllbijct to makeany further inquiries to AUSA in the NDNY.D-2- -'- b3b.b7C10.On December 10, 1986, AUSA I Iadvised

:tEded a meeting neld libari A'''-'''--''-00;-;;0-1;1'""- and (First na:me unlmown)Je MAS M.representatives 0At this time a orneyI srepresenting indicated rtrf'Elier as to whether or nattem tintoceFBI that th sgbp W te hO';,:: r;;1;; ;;;anyMa:yor THOMAS M. WHAImi III hadtelephonically contacted US AttQrnev squ,gNregarding the subpoenas issued. L- J stated atthe time of this contact WHALEN was advised he wasrepresenting :e firm of COOPER, ERVING ANDSAVAGE, C Jst=tet :-::tenrefmaiAlbany 0 AUSA . advised thatpursuant to the tele one ca 1 any MayorWHALEN a meeting was set up between himself and AUSAHOMER with the attorneys for COOPER, ERVING AND SAVAGEfor the purpose of discussing the information requestedon the subpoenas. Attendance at this meeting did notinclude an FBI Agent.11. On January 23, 1987, AUSA I lwas advisedof the results of the interv.lews conducted to date toinclUde interviews of T-1 and T-2 as well as formerAlbany Assessor BRUCE MAC DONAID.12. On January 28, 1987, Iwas advised of theresults of interviews of any Corporation CounselVINCENT and CHARLES HEMMINGWAY. At thisAUSA I_jwas advised that copies of report fonuswould' be forthcoming upon completion frolll typing.13. On February 2, 1987, AUSAI Iwas apprised ofresults tion conducted to date. At thistime AnSAI +-,'-.J Subpoenas were alsoL"',,,e",qu;ru;e;;;s,,",=,,,,"uT. ,,,o;;r:'p;;e;;r;;s;;o;;n;;al;;--;.;;p;;p:;;e;;a;;r;::.::'n;;;ce of all I,'artners ofCOOPER, ERVING AND SAVAGE, and ee recordsCOOPER, ERVING AND SAVAGE. AnsAf Iadvised at this time he could n551O'1[is;;suru.enSUb5poenasD-3of h3b.b7Cand would relay the information to AnSA r-lwho inturn would relay the information to US A'tOEieysCOLL!N who would accordingly review the informationfurnished on its merits to determine whether or notany subpeonas would be forthcoming.14. On February 24, 1987, AUSAI Iwas again apprisedof the need for the previously requested subpoenasand also a subpoena to include all clients of theAlbany law firm of COOPER, ERVDfG AND SAVAGE as well astheir gross annual billings (in such a manner as topreclude any priviledqe which may extend betweenattorney and clients). It was additionally requestedthat records of partnership draws and distributions bealso furnished.15. On March 5, 1987, AUSAre estin the afar was contactedadvised that USA 16.AUSA advised such a subpoena northe previously requested ones and would again have topresent this information to AnSAI land in turnagain to USA SClJLLIN.On March 11, 1987 AUSASCULLIN had a rovedSCULLIN.es s enasstated that allen den ed by USA17.18.on March 18, 1987, AUSAregarding the status of .i.::l.I::"A....h>z nfl' :rrJJ. l-Ia: au:: subpoena and it was not ready. It shouldbe noted that at this point the subpoena to date hasnot been received.On 1 1987 , a review at the request of AUSAI was conducted ot his file reflecting reportfODnS investigation conducted to date by the FBIto insure that of :' Etswere receivedat that ti:me by AUSA 0rdioo1Y documentsfound to be missing rom SA Ifile andwere furnished on March 20, 1 0-4- ----------------1 19. On July 24, 1987, USA FREDERICK J. SCULLIN, Jr.,telephonically contacted SAC, FBI, Albany to reiteratehis concern about captioned investigation. USA SCULLINstated that because of the FBI investigation, II a cloudis hanging over the city of Albanyll and it wasincumbent on the FBI to bring this matter to aninvestigative conclusion.0-5* . ..WITNESSES; b.b1