As the city tax-assessor scandal moves toward a new phase, with the first
trial scheduled in January, newly disclosed information suggests that the
corruption was much more extensive than prosecutors have previously said.
Despite repeated warnings and investigations, the city seemed unable to root
out the corrupt assessors. A newly disclosed letter suggests that in 1993 the
city was asked to investigate whether not only tax assessors and tax
consultants, but also prominent tax lawyers and -- by extension -- owners may
have been knowing participants in the scandal. Mayor Michael R. Bloomberg has
called it ''the largest and most financially damaging corruption scheme ever
conducted within city government.''
Fifteen assessors have pleaded guilty in the scheme. The man accused of
being its leader, a tax consultant named Albert Schussler, 86, has pleaded not
guilty and is scheduled to go on trial on Jan. 27. Mr. Schussler is accused of
paying bribes to the assessors to lower tax assessments, and thus tax bills,
for owners of office towers, hotels, apartment houses and parking lots in
Manhattan.
As investigators prepare for the trial, testimony by the tax assessors who
have pleaded guilty in the scandal, and a previously unreleased letter from a
city official, raise new questions about the possible involvement of property
owners and property-tax lawyers.
Many of the owners of the 562 properties that prosecutors say benefited from
the bribes, however, have said that they were unaware of any wrongdoing by Mr.
Schussler. No owners or property-tax lawyers have been charged.
For more than 14 years, despite repeated warnings, the city was seemingly
powerless to stop the scheme, which involved nearly half the municipal tax
assessors, according to previously unreleased city documents and the testimony
of those involved.
In 1993, for instance, the president of the city's Tax Commission sent an
urgent letter to the city's Department of Investigation alerting investigators
to possible corruption in the tax assessor's office. But the official, David Goldstein,
never heard back from the agency.
Nine years later, the two men cited in Mr. Goldstein's letter -- Mr.
Schussler and Thomas J. McArdle, who were both consultants to some of the
city's biggest property owners and tax-law firms -- figure at the center of an
indictment brought in February against Mr. Schussler and 17 other current and
former assessors accused of taking bribes to lower taxes. Mr. Goldstein said in
his letter that the tax consultants were offering owners lower assessments
before the city's tax roll was published in January.
Prosecutors say that Mr. Schussler was the mastermind of the scheme, which
began in 1967. The indictment charges that Mr. Schussler used three
unidentified co-conspirators, or go-betweens, to bribe assessors.
Prosecutors have refused to name those suspected of being Mr. Schussler's
co-conspirators. But some of the 15 assessors who have already pleaded guilty
to bribery charges and defense lawyers have identified Mr. McArdle; his son
Stephen E. McArdle and a third man, Joseph Marino, as the go-betweens who
handed the assessors cash-stuffed envelopes. All three men, who did not return
calls requesting comment, are believed to be cooperating with investigators.
Frank Valvo, who is 70 and had worked as a city assessor for 27 years before
he pleaded guilty in September, testified that ''Mr. Schussler was the one who
was soliciting real estate, outside interests, and going to Mr. McArdle.'' He
said Mr. McArdle had paid him $130,000 over the years to reduce taxes.
The involvement of Mr. McArdle raises a series of questions, since he was a
city assessor in the 1970's, a hearing officer for appeals to the Tax
Commission in the 1980's and a tax consultant in the 1990's for some of the
largest tax-law firms in the city, including Schwartz & Weiss.
Asked about Mr. Goldstein's 1993 letter, Emily Gest, a spokeswoman for the
Department of Investigation, said, ''D.O.I. never gave up on its efforts to
uncover the scheme.''
Joel R. Marcus, a former president of the Real Estate Tax Review Bar
Association, said he had been disappointed by the Department of Investigation.
He said he was interviewed by the agency after he complained to Mr. Goldstein
in 1993 about potential corruption among assessors, property owners and certain
tax lawyers.
''I left D.O.I. thinking they weren't going to do anything,'' he said. ''I
don't know what happened, but nothing changed.''
Mr. Goldstein said this week that the corrupt assessors seemed to have
powerful political patrons in the Democratic Party in Brooklyn. After
suspicious supervisors transferred Mr. Marino and Mr. Valvo out of Manhattan in
the 1970's, he said, ''they got transferred right back.''
One lawyer who has worked inside and outside the city's Finance Department
said the corruption persisted for a variety of reasons. But, he said, ''None of
the mayors wanted anything to happen on their watch. It broke with Bloomberg
because he'd just come into office, so it's not his fault.''
Mr. Goldstein said recently that when the federal indictment was announced
in February, nine years after his letter, ''I was only surprised at the
magnitude. I thought it was a little cottage industry. I didn't think it was
endemic.''
Federal prosecutors and the Department of Investigation finally made some
progress in 2000, when Mr. Marino, who was an assessor for 45 years before
retiring in 1996, pleaded guilty in a separate but related case to taking $4.1
million in bribes from Mr. Schussler.
After Mr. Marino pleaded guilty in September 2000, Mr. Schussler dropped out
of the scheme, according to prosecutors. But some corrupt assessors revived the
operation, recruiting another tax consultant and former assessor, Alan
Edelstein. Mr. Edelstein has also pleaded guilty to related charges.
Mr. Edelstein had worked as a consultant to Podell Schwartz Schechter &
Banfield, a law firm that specializes in property-tax work, as did Mr. McArdle.
Defense lawyers have identified Mr. McArdle as the unnamed co-conspirator
they say was recruited by Mr. Schussler when they say he started the bribery
scheme in 1967. After Mr. McArdle retired from his city job in 1980, he was a
part-time hearing officer at the Tax Commission from 1983 to 1988. As a hearing
officer, Mr. McArdle had the power to uphold the assessment if an owner disputed
it, or reduce it.
Mr. Goldstein said that he ''got rid of all the part-time hearing officers''
in late 1987, including Mr. McArdle, after he became president of the Tax
Commission, because he had no control over them.
Some former tax assessors and tax lawyers said that Mr. McArdle then had a
tax consulting practice, working closely with Allan C. Schwartz, then a partner
at Schwartz & Weiss, which in 1997 merged with the Podell firm, becoming
Podell Schwartz Schechter & Banfield. They said the two men worked for
Donald J. Trump, who recently sued the city claiming that he had paid higher
property taxes because the other owners' taxes were lowered in the scheme.
Herbert Podell, a founder of the firm, referred questions about Mr.
Edelstein to his partner, William Banfield, who did not return calls requesting
comment, and Mr. Schwartz.
Mr. Schwartz's lawyer, Benjamin Brafman, said that his client had worked for
Mr. Trump in the past, but that ''it did not involve Mr. McArdle, to our
knowledge.''
''McArdle was an industrywide consultant who was used by the most prominent
and well-respected law firms and real estate firms in the city,'' Mr. Brafman
said. ''Mr. Schwartz is not aware of any wrongdoing by McArdle, Edelstein or
anyone else.''
Mr. Trump said he stopped using Mr. Schwartz in the early 1990's because he
seemed ineffectual. The developer said that Mr. McArdle's name was unfamiliar
and that he could find no record of his employment by the Trump Organization.
Michael R. Lippman, a partner at Lippman Krasnow & Kelton, acknowledged
that Mr. McArdle also did some consulting work for his law firm.
In his letter to the Department of Investigation, Mr. Goldstein cited three
''high-value'' Manhattan office buildings represented by Lippman Krasnow &
Kelton, where even ''a cursory analysis'' might justify a higher assessment,
although he said he had no evidence of a crime. The same three properties are
on the list of 562 properties that prosecutors now say benefited from the
scheme. Mr. Lippman said that his firm represented the three buildings only on
appeals, after the assessments were set.
The indictment indicates that Mr. McArdle's son, Stephen, became involved in
1998. Investigators later persuaded the younger Mr. McArdle to record his
meetings, where he gave assessors cash in return for altering assessments. One
of those recordings, at the Marriott World Trade Center on Sept. 11, 2001,
became the only uninterrupted audio account of the attack on the twin towers.