Rudy Giuliani ‘Shag Fund’ Scandal

Rudy Giuliani ‘Shag Fund’ Scandal While the right side of the blogosphere busied itself with outrage over planted questions in the YouTube debate, our counterparts on the left were exulting over news that Rudy Giuliani billed New York City taxpayers for security services and travel expenses for his then-mistress (now wife) back in 2000. TPM’s Josh Marshall has dubbed this “Rudy’s Shag Fund,” an appellation which has apparently caught on.

ABC’s Richard Esposito has a quick run-down:

Well before it was publicly known he was seeing her, then-married New York Mayor Rudy Giuliani provided a police driver and city car for his mistress Judith Nathan, former senior city officials tell the Blotter on ABCNews.com. “She used the PD as her personal taxi service,” said one former city official who worked for Giuliani.

New York papers reported in 2000 that the city had provided a security detail for Nathan, who became Giuliani’s third wife after his divorce from Donna Hanover, who also had her own police security detail at the same time.

The former city officials said Giuliani expanded the budget for his security detail at the time. Politico.com reported yesterday that many of the security expenses were initially billed to obscure city agencies, effectively hiding them from oversight. The former officials told ABCNews.com the extra costs involved overtime and per diem costs for officers traveling with Giuliani to secret weekend rendezvous with Nathan in the fashionable Hamptons resort area on Long Island.

When the New York City comptroller began to question the accounting, Mayor Giuliani’s office declined to provide details to city security, officials told ABCNews.com today. “The Comptroller’s Office made repeated requests for the information in 2001 and 2002 but was informed that due to security concerns the information could not be provided,” a spokesperson for the comptroller’s office said.

Giuliani, as might be expected, claims he did nothing wrong. The Politico‘s Ben Smith reports,

Giuliani said that the “perfectly appropriate” practice of funneling his security detail’s expenses through the mayor’s office was begun in the mid-1990s to speed payments that had been delayed in police bureaucracy. “The police department would sometimes … be slow in payment,” he told CBS’ Katie Couric. “City Hall would pay it first, then the police department would reimburse every single penny of it.”

A spokesman for Mayor Michael Bloomberg confirmed that the police department reimbursed the mayor’s office for its expenses. The spokesman, Stu Loeser, declined to comment on Giuliani’s claim that the billing practice was unremarkable, or that it predated the period examined by Politico, which coincided with Giuliani’s affair with Judith Nathan.

Giuliani was not asked directly why payments went through offices like the Loft Board and the Assigned Counsel Administrative Office, rather than directly through the mayor’s office. A top campaign aide who was his City Hall chief of staff, Anthony Carbonetti, said he simply doesn’t know the reason. “It was a bookkeeping exercise,” he said in an interview with Politico. “Why it was done this way, I don’t know.” Carbonetti also said he was unaware that the city comptroller had sought explanations for some of the billing during Giuliani’s last year and early in the term of his successor. “I couldn’t even tell you who that correspondence went to,” he said.

”When [the auditors] tried to get answers to the questions, they were getting stonewalled by City Hall and this is in the previous administration, under the Giuliani administration. They were not giving answers,” [City Comptroller William] Thompson said Thursday. “This isn’t the normal practice that we see now in other agencies. … These are disturbing trends that we made the Bloomberg administration aware of, and it’s clear that … they haven’t repeated the same mistakes, they haven’t used the same processes of the former administration.”

This morning’s NYT adds:

Rudolph W. Giuliani last night called a Web site’s account of his spending a “political hit job” as his campaign struggled to explain why hundreds of thousands of dollars in travel expenses for his mayoral security detail were billed to obscure city offices instead of the Police Department.

[…]

Mr. Giuliani, in an interview on the CBS Evening News, went further. Speaking of the Web report, which was posted on Wednesday afternoon on Politico.com, he said: “This story is five years old. It came out two hours before a debate. It’s a typical political hit job with only half the story told.”

[…]

It is unclear precisely how and when the billing practice developed, but there was no question that Mr. Giuliani’s travel itinerary grew more expansive toward the end of his tenure as mayor. He had been a mayor who seldom left the city and prided himself on rarely taking a vacation. But at that time, he began to move about the state and beyond, in part because he was running for the United States Senate against Hillary Rodham Clinton, and in part because of his relationship with Ms. Nathan.

[…]

Bernard B. Kerik, who was Mr. Giuliani’s police commissioner when some of the charges were billed, said in an interview yesterday that the security detail’s travel expenses would normally come out of the Police Department’s budget. “There would be no need for anyone to conceal his detail’s travel expenses,” said Mr. Kerik, who was indicted earlier this month on unrelated federal tax fraud and corruption charges. “And I think It’s ridiculous for anyone to suggest that the mayor or his staff attempted to do so.”

Big Tent Democrat, an experienced attorney, argues that Giuliani’s actions “sound like a felony.” The evidence is rather thin, though: A NYT story that a former city comptroller pled guilty to crimes related to providing a chauffeur for his wife. There’s a small problem, though:

Mr. Hevesi admitted to using the driver but claimed he was needed for security reasons. He paid the state back nearly $83,000, which is what his office calculated was owed to cover the driver’s services. But a State Ethics Commission report found that there was no security threat to justify the use of a driver for his wife, and charged Mr. Hevesi with breaking a civil law.

I don’t know how far the law goes in allowing protective services for people close to public officials but Giuliani had a reasonable case to argue he had legitimate security concerns. Indeed, it appears he was entitled to use police services in this way. The scandal, if there is one, is that he may have tried to hide where the money was going through deceptive filing practices (which strikes me, as a layman with little legal training, as fraud) in an attempt to cover up the fact that he was traveling to see his mistress. Then again, his explanation — that this was done to speed up payment processing as well as to keep his secret locations secret for legitimate security reasons — are plausible.

I hasten to add that doing the wrong thing for the right reason might still be illegal. Further, while I’m willing to have tax dollars going to protect public officials and their families from crazies who want to do them harm, paying for mistresses to back and forth or wives going shopping out of state seems above and beyond the call in that regard. For that matter, campaign trips out of state ought be funded out of campaign funds. But my preferences in that regard aren’t necessarily the law.

Josh Marshall, who is actually apologizing when he posts about something other than the Shag Fund, has three reporters working the story and is updating at a furious pace. It’s a story that bears watching. I’d like to see the thoughts of some Republican-leaning experts on this one but haven’t seen anything as of yet. Patterico? Beldar? Volokh Conspirators?

Photo source: ABC News.

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James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Here’s a question- Is Rudy any different than President Bill Clinton? Both used their office to further their extramarital affairs. If one is outraged at what Clinton did, how does anyone rationalize supporting Rudy?

    Bill

    “A man who marries his mistress leaves a vacancy in that position.”- Oscar Wilde

  2. Triumph says:

    But my preferences in that regard aren’t necessarily the law.

    The issue here is not the legality of it–rather it offers a window into the way Giuliani does business.

    His penchant for secrecy and pilfering of public funds to support his affair gives us a window into how he might govern. This, coupled with his renowned judgment by knowingly putting a mob-connected crook in the top cop job and pushing his candidacy for Director of Homeland Security show that he sees himself as the inheritor of the Bush-model of management.

    This model, of course, has proved to be a disaster. This story tells voters that if you want more incompetence, mendacity, and cronyism, then vote for Giuliani. Issues of legality are secondary.

  3. Anderson says:

    It’s the deliberate effort at deception that bothers me more – the “Loft Board”?

    Then again, his explanation — that this was done to speed up payment processing as well as to keep his secret locations secret for legitimate security reasons — are plausible.

    Don’t think so. It would speed up payment for Giuliani to grab handfuls of cash from the city treasury (if such existed), but that wouldn’t make it okay. And I don’t believe for an instant that his accounting frauds had anything to do with “keeping his secret locations secret.”

    What do you call a guy whose pals are sleazes, who’s a sleaze to his wife, and who’s a sleaze with the public till? I say, you call him a sleaze.

  4. Dave Schuler says:

    Get used to it. Over the years Rudy Giuliani has provided an enormous amount of fodder for scandals real and imagined. We’ll have a steady diet of this stuff as long as he’s in the race or if, heavens forfend, he’s elected president.

  5. cian says:

    What a creepy bunch the republican candidates for the presidency are. I mean, one day they’re championing torture, the next bursting a vein to out hate each other on the question of immigrants, and while Huckabee is busy on the phone chatting with God and promoting creationism at a public event, Giuliani is cheating on his wife at the tax payers expense, and Romney is busy banishing American’s from cabinet posts because, well, he wasn’t too sure at the time what it was they wanted him to say.

    Creepier still is the fact that so many sane, highly educated and articulate people are prepared to put their intelligence to work in defence of these guys.

  6. Anderson says:

    Creepier still is the fact that so many sane, highly educated and articulate people are prepared to put their intelligence to work in defence of these guys.

    But, Cian – the Democrats are worse!

    The GOP could be running a Boy from Brazil for prez, and we’d still see how liberal fascism is so much worse than that other kind.

  7. Tom Murphy says:

    It is disgusting that mainstream media elites continue to let the big lie go unchallenged. Why is no one calling Presidential Candidate Giuliani on his lie? see video