Aug. 7 (Bloomberg) -- Manhattan U.S. Attorney Preet Bharara and then-New York Attorney General Andrew Cuomo once teamed up to take down members of the Lucchese organized crime family, a mortgage-fraud ring and a crooked dermatologist.
They were building careers fighting for justice from Manhattan to Albany. Bharara, known as the sheriff of Wall Street, was the head of New York’s Southern District, the highest-profile federal prosecutor’s office. Cuomo was using the attorney general’s office in Albany as a stepping stone to the governor’s mansion, calling himself the sheriff of State Street.
The sheriffs aren’t working together anymore. Bharara is investigating the Cuomo administration after the governor disbanded an anti-corruption commission he created before its term was over. The probe has put Cuomo on the defensive as he gears up for a re-election campaign that was supposed to have been an easy ride.
“Everyone is watching this dance to see what happens,” said George Arzt, who was press secretary for former New York Mayor Edward Koch in the 1980s, when Rudolph Giuliani had Bharara’s job. “It’s reminiscent, for those of us around a long time, of Rudy. There is no one else who has been this outspoken.”
Bharara’s office has provided a prelude for political careers. Giuliani used it to prosecute insider traders and the heads of New York’s five crime families before becoming mayor and later running for president. Elihu Root, who ran it in the mid-1880s, went on to become the U.S. secretary of war and a senator. Bharara, 45, says he has no such higher ambition. He said he knew while attending Columbia Law School that he wanted to be prosecutor.
A Bruce Springsteen fan who was born in India and raised in Eatontown, New Jersey, Bharara was appointed by President Barack Obama in 2009. The post put him in the position to target Wall Street banks after the market meltdown that led to the worst recession since the Great Depression. He has won insider-trading convictions of more than 80 hedge-fund managers, analysts and employees at technology companies, earning him national recognition.
“I have no idea what his grand plans for the future are, but I think he is a true believer who realizes the need to get your message out,” said New York lawyer Glen Kopp, who worked in the terrorism unit in Bharara’s office from 2008 until November. “His agenda, bottom line, is justice.”
Jerika Richardson, a spokeswoman for Bharara, declined to comment on the probe.
In 2009, Bharara worked with Cuomo’s office to indict 19 members of an illegal gambling, sports betting and loan-sharking scheme controlled by the Lucchese family, according to a press release from Cuomo at the time. He thanked Bharara’s office for its “outstanding cooperative efforts.”
The same year, they teamed up to arrest 12 members of a mortgage-fraud enterprise in New York City and Long Island, according to a press release from Bharara in which he thanked Cuomo’s office. In 2010, Bharara praised the attorney general’s office for its co-prosecution of a dermatologist who agreed to pay $2.75 million in civil damages for filing false Medicaid and Medicare statements.
Those days are over.
On the morning of April 10, Bharara was about to close out one of the biggest cases of his career, a $1.8 billion penalty leveled against SAC Capital Advisors LP for insider trading. Instead of trumpeting the victory on a New York City radio show, he inveighed against Cuomo’s disbanding of the anti-corruption panel known as a Moreland Commission.
Cuomo, a 56-year-old Democrat, had set up the panel nine months earlier after Bharara arrested two state senators and an assemblyman over two months and legislators refused to pass measures that would empower local prosecutors to target crimes by lawmakers. The arrests were a blow to Cuomo, who ran as attorney general -- and then as governor -- on a promise of cleaning up graft.
Cuomo said the Moreland Commission would last 18 months and be allowed to investigate anyone, including himself.
Instead, the New York Times reported last month, his top aide, Larry Schwartz, leaned on the commission when it moved to subpoena the governor’s biggest backers. In March, Cuomo shut down the panel halfway through its work, saying it had achieved its goal after legislators reversed course and approved the laws. Bharara had been the first to testify before the commission when it held its inaugural hearing to great fanfare.
“At the time the Moreland Commission was established, it was clear that in part it was because of a lot of the cases that the fine career prosecutors in my office brought,” Bharara said in the radio interview on WNYC. “People in our office have a sincere and strong interest in making sure that prosecutions and investigations are followed through on.”
Bharara seized documents from the panel’s unfinished work, with the goal of completing it. Last week, he sent a letter to the commission warning of efforts to tamper with witnesses after at least three of the panel’s members issued press releases supporting Cuomo’s contention that they had acted independently.
The governor said in a statement e-mailed July 31 that his administration asked them for help in addressing inaccuracies in media reports that followed the Times story. He said he would no longer speak about the matter because it’s under investigation.
“We discussed these concerns with relevant parties,” Cuomo wrote. “Several members of the commission (district attorneys and a law school dean) issued personal statements to correct the public record.”
Rich Azzopardi, a Cuomo spokesman, declined to comment about Bharara and his probe, citing the July 31 statement.
Daniel Richman, a former federal prosecutor in Manhattan and now a professor at Columbia Law School, said Bharara isn’t doing anything out of the ordinary by raising the question of tampering.
“When the feds have expressed an interest in a matter, circling back and trying to get people to change or clarify their accounts really is a dangerous move,” Richman said. “Corporate counsels are generally careful about this, and one would have thought that the governor’s office would be too.”
The notion that Bharara is taking on Cuomo to further his political ambition is nonsense, said David Hantman, a former chief of staff for U.S. Senator Charles Schumer, for whom Bharara was chief counsel before becoming U.S. attorney.
“This isn’t a guy who is sort of unknown, trying to get his name recognition up,” Hantman said. “If he’s in this, he must have seen something that convinces him that justice wasn’t done.”