Kerik Indictment Expected for Evading Taxes

Kerik, one of Rudy Guilani's main "enforcers" is in a bit of trouble. You can always judge criminals by the company they keep.

by Richard Esposito - Nov 7, 2007

Federal prosecutors are expected to ask a federal grand jury tomorrow to indict former New York City Police Commissioner Bernard Kerik for failing to pay taxes on free apartment renovations and rent, two federal sources say.

Kerik's reputation took on heroic proportions in the immediate aftermath of the Sept. 11 attacks on the World Trade Center. Side by side with "America's Mayor" Rudolph Giuliani, Kerik was seen as part of the glue that held the city together and soon, owing to the support of Giuliani and a bond he had developed with President George Bush, Kerik was nominated to be "America's Police Commissioner" -- the head of the Department of Homeland Security.

It was not to be. Kerik's fall from grace was swift. It began the same day the appointment was announced with a swirl of allegations of misconduct, including the employment of an undocumented immigrant as a nanny and the acceptance of what amounted to large gratuities, according to ABC News accounts at the time and other published reports. It was just a matter of time before he was the subject of a criminal investigation by a New York prosecutor that led to a 2006 guilty plea in connection with some of the same charges now leveled by the federal government.

Kerik, according to sources involved in preparing his defense, has expected the indictment, and his associates have been attempting to raise money for a legal defense fund. Assuming the grand jury sitting in suburban Westchester County federal courthouse votes to indict, Kerik is expected to surrender to the United States Marshals Friday morning.

"The Bernard Kerik Legal Defense Trust has been established to allow Mr. Kerik's friends and supporters to assist him in defending himself against possible charges that may be brought against him by the United States Attorney's Office in the Southern District of New York," an e-mail sent by the defense fund Wednesday evening stated.

The government's case as it has been presented to the grand jury has multiple components that would be reflected in a multiple count indictment.

One component stems from $165,000 worth of renovations to an apartment he owned in an upscale section of the Bronx from a contractor who had sought business with New York City. At the time of the indictment, Kerik was the New York City corrections commissioner. That federal charge -- often short-handed as bribery -- would most likely be for theft of services since the acceptance of the renovations might have clouded his judgment as a public official.

Another component of the case, according to federal sources and sources involved in the defense, stems from a second apartment Kerik used on East 79th Street in Manhattan's posh Upper East Side. In that instance, the rent -- for approximately two years -- was paid by a third party.

Another component of the case stems from the failure to pay taxes on imputed income stemming from the value of the rent and the renovations. According to sources familiar with the case, at least part of that failure to pay taxes component is linked to Kerik's 2000 federal tax return.

The expected indictment would be the latest twist in the tale that began when the child of a prostitute rose to police commissioner of New York City through the edict of Rudy Giuliani, then achieved heroic proportions in the shadow of the collapsing World Trade Center, was gifted a diamond-encrusted chief's badge by a supporter, awarded millions of dollars in stun gun stock options by business clients and given the proffer of a presidential appointment by President Bush to head the Department of Homeland Security.

The early chapters were well-documented by Kerik in his autobiographical account "The Lost Son." The final chapters have yet to be written.

They will very likely include a struggle to pay legal bills, as the defense fund e-mail suggests. They also could result in the sale of his multi-million-dollar New Jersey mansion, a long stretch in federal prison and severe damage to his consulting practice, which includes lucrative contracts with U.S. ally Jordan, according to multiple sources involved in the investigation.

Last spring, Kerik turned down a plea bargain in which the government offered a short prison sentence. Now friends of Kerik attempting to raise money for his defense have found the early going difficult, given that many of Kerik's associates may also have relationships with presidential candidate Rudolph Giuliani who is routinely questioned about his relationship with Kerik.

As recently as Monday, Giuliani said that whatever Kerik's failings, he had been an effective corrections commissioner and an effective police commissioner for the city of New York.

"There were mistakes made with Bernie Kerik," Giuliani said in an interview with the Associated Press while in New Hampshire. "But what's the ultimate result for the people of New York City? The ultimate result for the people of New York City was a 74 percent reduction in shootings, a 60 percent reduction in crime, a correction program that went from being one of the worst in the country to one that was on '60 Minutes' as one of the best in the country, 90 percent reduction of violence in the jails."

Giuliani was a staunch supporter of Kerik's nomination by President Bush to head the Homeland Security Department. That nomination fell apart amid allegations that Kerik, while corrections commissioner, paid less than $18,000 to a contractor for nearly $200,000 worth of renovations to his apartment. In 2006, Kerik pleaded guilty to misdemeanor charges related to the renovation.

"It was a mistake not checking him out as thoroughly as I should have," Giuliani told the AP about the failed nomination.

Longtime Kerik attorney Joseph Tacopina did not return a call for comment.

Kerik's tax attorney, Ken Breen, was not immediately available for comment, his office said.

The U.S. Attorney's Office for the Southern District of New York said it does not confirm or deny the existence of the investigations.