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Uncommon Albany Access Stirs
Questions of Improper Influence
By DAN BARRY and KATHERINE E. FINKELSTEIN
The cover of an Israeli magazine that contained an article featuring the Two Josephs and focusing on their relationship with Governor Pataki.
They lingered in the restricted halls of state government with a familiar air, their cell phones ringing. They huddled with state officials and spent time between appointments lounging outside Governor Pataki's office. They were ubiquitous enough to earn a nickname: the Two Josephs.
What annoyed some and amused others was that neither worked for the state; one ran a dress shop, the other a kosher supermarket. The men, Joseph Goldberger and Joseph Menczer, had earned V.I.P. status by helping to raise an estimated $500,000 in 1994 for a little-known gubernatorial candidate named George E. Pataki. Given access upon his election, they peppered state agencies with requests — always implying that they represented a small Hasidic group in Brooklyn called the Pupa, and often bragging of friends in high places.
They cultivated those around the governor, selling hard-to-get World Series tickets to a top aide and offering to help staff members get discounted jewelry. Meanwhile, they lobbied for several for-profit businesses — one in which their partners included a lawyer who was both the health commissioner's brother-in- law and the governor's personal tax lawyer.
Often, their access reaped only so much. They landed a $600,000 job- training contract for a Pupa organization that had no experience in job training, but the contract was not renewed. They secured the no-bid lease for a government building in their neighborhood, but never took occupancy. Even that partnership with the governor's lawyer fizzled.
But the state attorney general's Medicaid fraud control unit and the state inspector general are now examining whether the two men got more than the minor consideration that politicians routinely grant to ethnic-neighborhood emissaries who support them. They are investigating whether the men were shadow lobbyists for several businessmen, including Lawrence Friedman, the Brooklyn nursing home owner who was indicted last year on charges that he bilked New York of $62 million in the state's largest Medicaid fraud case ever.
The attorney general has charged that Mr. Friedman's adult day care operation collected millions in Medicaid payments by pretending to offer medical services to frail clients when it was providing little more than borscht and Russian-language television to a relatively robust population. Since the indictment of Mr. Friedman, who denies the allegations, investigators have explored why the Health Department allowed his annual billings to mushroom to $47 million from $4 million in three years.
In seeking the answer, investigators are poring over Mr. Friedman's record of success at the Health Department, including his rare fortune in averting a damaging audit. They have also been told by people with knowledge of Mr. Friedman's operations that he paid Mr. Goldberger and Mr. Menczer roughly $500,000 to represent his interests in Albany.
The investigation into the conduct of the Two Josephs is continuing, and the extent of their connection to Mr. Friedman is not clear — including whether they played any role in the aborted audit of Mr. Friedman's operation.
But interviews with government officials, health professionals and members of Brooklyn's Hasidim, as well as examinations of campaign and government documents, suggest that Mr. Goldberger and Mr. Menczer capitalized on the support they had given Mr. Pataki. Without health care expertise or credentials as lobbyists, they had extraordinary access to the Health Department; the inspector general has already given the State Ethics Commission evidence that the two men gave gifts to Deputy Health Commissioner Dennis Whalen, who said in a statement that he was cooperating with the inquiry.
The tale of the Two Josephs provides an example of how relationships forged in political campaigns can become unwritten pacts of obligation. Those who produce money and votes sometimes want only autographed photos; others want and sometimes get the kind of access to government not afforded to typical constituents. Investigators are now trying to determine whether the Two Josephs crossed the line from uncommon access to improper influence.
Mr. Goldberger and Mr. Menczer did not respond to requests for interviews. But Zenia Mucha, a top adviser to Mr. Pataki, signaled that their days of access were over, saying, without elaboration, that the administration had forwarded information involving the Two Josephs to state investigators.
Asked about the Pataki administration's current relationship with the men, Ms. Mucha carefully used the past tense: "The governor considered them supporters and friends."
Cash and Kosher Pizza
How the dress shop manager and the grocer gained their unusual access dates to 1994, when a politician looking to become governor bonded with a Hasidic sect looking to assert itself.
Although the Hasidim represent a small minority of the state's Jewish voters, politicians often seek the support of at least one Hasidic sect, which brings blocs of votes and the appearance of a connection to all Jews. "They're the most visible Jews," said Samuel Heilman, a professor of Jewish studies at the Graduate Center of the City University of New York.
The Democratic incumbent, Mario M. Cuomo, built alliances with most of the state's Hasidic sects, including the Satmar, many of whose roughly 50,000 members live in Williamsburg, Brooklyn. But a smaller neighboring sect decided to support the Republican candidate, George Pataki. That group was the Pupa.
Named for the Hungarian village where it originated, the Pupa has about 10,000 members in the state, with most living around bustling Lee Avenue. Pupa leaders believed Mr. Cuomo had ignored their needs, and they remembered that Mr. Pataki, then a state senator, had once tried to help them expand a yeshiva in Westchester County.
Many Hasidic sects choose several members to maintain political connections, a vital role in largely poor communities that need government aid. For the Pupa, Joseph Goldberger, who ran the Fashion Oasis store, and Joseph Menczer, who oversaw the One Stop Kosher supermarket, took on the task. Former Pataki campaign aides still recall the omnipresent volunteers: always together, always exhorting others to eat the kosher pizza they had brought. Those aides, and other supporters, say the men also brought in money, and were credited with raising about $500,000 of the campaign's $14.5 million.
One internal campaign document, detailing the money raised in Orthodox Jewish and health care circles, reads: "Pupa Breakfast $25,000 for June Breakfast," an event at Mr. Goldberger's home, and "Pupa $10,000 for October 19th," an event at Mr. Menczer's home. Ms. Mucha described the role of the Two Josephs in the campaign as "more of a social role." As for the money they were credited with raising, she said, "There were hundreds of other supporters who raised equal amounts."
Eventually, a grateful governor-elect acknowledged Mr. Menczer with a silver clock at the Pupa annual dinner in Williamsburg, and he appointed the Two Josephs to his transition team — an honor described by aides as carrying more pomp than power.
Still, the Two Josephs saw themselves as kingmakers. As a neighborhood Yiddish newspaper put it: "Thank God, with their help, Pataki won."
Visits From the Governor
Soon the corridors of government were almost as familiar to Mr. Goldberger and Mr. Menczer as their Brooklyn streets. They gave Godiva chocolate to secretaries, handed out neckties on birthdays and Hanukkah. Routinely given the governor's schedule, they attended his public appearances.
They also had a personal caretaker in Jeffrey Wiesenfeld, an executive assistant who was the governor's liaison to Jewish constituents.
Mr. Wiesenfeld said the help he gave the Two Josephs was indistinguishable from what he provided constituents from other ethnic groups. He described them as "friends of the governor" who always responded to administration requests for help. But other state officials say that Mr. Wiesenfeld often gave preferential treatment to the Two Josephs, who frequently accompanied him on his appointed rounds. For example, he directed their many routine concerns to the heads of state agencies, such as their requests for reviews of insurance claims that had been denied.
Meanwhile, in Williamsburg, the perception of power surrounding the Two Josephs grew each time the governor returned for a Menczer family bar mitzvah or a Goldberger wedding. But one of his visits had to address a diplomatic gaffe he had committed by rewarding the Pupa.
Shortly after Mr. Pataki's 1995 inauguration, the state gave a $1-a-year lease for the Williamsburg armory — an unofficial community center — to a nonprofit Pupa agency less than four months old. Ms. Mucha said recently that the administration had hoped to correct a favoritism shown the Satmar by previous governors; she said the lease had stringent stipulations, and that the agency, Concern Inc., never took occupancy.
Still, the gesture caused unease among the Satmar. That October, Governor Pataki went to Williamsburg, meeting first with Satmar leaders, then with Pupa leaders.
The next day, Mr. Wiesenfeld, fulfilling what he recently called his "ministerial duty," forwarded to Mr. Pataki a candid memorandum outlining a potpourri of Pupa desires that the governor had promised he would look into.
The governor followed through on a couple of promises, Ms. Mucha said, including his stated desire that the State Labor Department finance the $600,000 job-training contract. The memorandum also reminded the governor that he had agreed to meet with Mr. Goldberger, Mr. Menczer and a man named Benjamin Landa — in response to a request that apparently went beyond the specific concerns of the Pupa community.
Mr. Landa is not a Pupa member, but a nursing home operator who had contributed roughly $22,000 to the Pataki campaign. At the time, he was working with Mr. Goldberger and Mr. Menczer in putting together a for-profit venture, called Quest Care, that would direct health care providers to Medicaid patients. It was an idea that state health officials had, in effect, already rejected.
In addition, a Quest Care document indicates that the business proposal's partners included Mr. Goldberger, Mr. Menczer and Richard Farren, a Manhattan lawyer who is Mr. Pataki's longtime friend and personal lawyer as well as the brother-in-law of Dr. Barbara DeBuono, who was then the health commissioner.
Aides to Governor Pataki said they had no recollection of a proposal for something called Quest Care. And Ms. Mucha said the governor never followed up on the Two Josephs' request related to the Quest Care venture, which she said had been described simply as an idea "for saving the state some money."
Calling Officials at Home
Mr. Goldberger and Mr. Menczer were soon focusing considerable attention on the Health Department. They had regular contact with several health officials, especially Mr. Whalen, the agency's second-ranking official, whose calendar lists 27 encounters with the men from 1995 to 1999. Indeed, Mr. Whalen spoke with them "day and night" from his office and home telephones, a law enforcement official said.
Mr. Whalen recently issued a brief statement concerning the Ethics Commission inquiry into whether he had accepted gifts from the Two Josephs: "I am aware of the ethics inquiry which, in fact, resulted from voluntary disclosures on my part, and I have cooperated fully with that agency."
In its own written statement, the Health Department characterized the Two Josephs as "self-described" community leaders who had been referred by Mr. Wiesenfeld. It said they had "specifically indicated" that they were not lobbyists or consultants, and had no financial interest in anything they brought before the agency.
With respect to questions about the nature of specific meetings between Mr. Whalen and the Two Josephs, the agency answered in general terms, saying Mr. Whalen discussed local health issues with the men. It said officials had also met with AIDS activists and Roman Catholic bishops to hear "as many voices as possible."
Still, state health officials said, the two men stood out by bombarding Mr. Whalen and other senior employees with requests for information about applications the department might approve for various medical services.
Gil Bernstein, a consultant who worked with Mr. Goldberger on a successful application for a home health-care business in Manhattan, said he was surprised to learn of the extent of Mr. Goldberger's access. In 20 years, he said, he can remember meeting only twice with Mr. Whalen, both times about a hospital construction project.
The Two Josephs often applied pressure on behalf of for-profit ventures that neither originated from nor particularly benefited Brooklyn's Hasidim. One example is the Fairview Nursing Home, in Queens, whose application for an adult day care program — inexpensive, medical-based assistance for frail older people — was to serve the needs of Russian Jews in the Canarsie section of Brooklyn.
Some Health Department officials initially resisted the Fairview application in 1998, noting that the city was saturated with adult day care programs. One official wrote in an e-mail message: "I can't recommend administrative approval."
Investigators have been told that the Two Josephs pushed Fairview's case, badgering Health Department officials and telephoning at least one health official at home. A department record also indicates that Mr. Goldberger appeared as a Fairview representative at a Health Department meeting about the program.
The Fairview application for 100 day care slots, worth millions of dollars a year, was approved one month after being distributed for agency review — three times faster than average, according to Health Department figures.
The department, without elaboration, said that Fairview's application was approved on its merits, including the "special needs" the program would address.
George Arzt, a spokesman for Abraham Klein, Fairview's principal owner, said "any suggestion of wrongdoing" by Fairview was "simply wrong."
The office of the attorney general is investigating the role of the Two Josephs in Fairview.
An Audit Narrowly Averted
What first intrigued investigators about Mr. Goldberger and Mr. Menczer was their connection to Lawrence Friedman, whose Brooklyn adult day care program grew tenfold in just three years — a growth his lawyers have said was approved by health officials because he provided quality care to the needy.
But Mr. Friedman's central business, the Parkshore nursing home, may have benefited from influence with the department.
Investigators have received copies of numerous e-mail messages written by Joseph Chiseri, a deputy health commissioner appointed by Mr. Pataki, that advocated expediting Mr. Friedman's applications. Mr. Chiseri, who had no prescribed role in the application process, was dismissed in April for belatedly telling his superiors that Mr. Friedman had offered him $20,000 for his help.
Investigators are also examining how Mr. Friedman avoided an audit of the nursing home, which might have imperiled his overall profits, since the Medicaid reimbursement there determines what he receives from the state for his two adult day care centers.
In 1998, independent auditors under contract with the Health Department uncovered irregularities at Parkshore. The findings were confirmed by a second audit, one that should have prompted a "stage-three" audit, an exhaustive review that can result in significantly reduced payments.
But the Health Department sidestepped its practices by assigning a team of department nurses to review the independent audit. That review resulted in a sudden end to the auditing process, making Parkshore the only nursing home in the state ever to avert a "stage-three" audit after a confirmed finding of serious irregularities, a Health Department official said. Nevertheless, the official contended, the case had been handled properly.
Law enforcement officials said they had credible information that in the late 1990's, Mr. Friedman paid Mr. Goldberger and Mr. Menczer roughly $500,000 for consulting on matters before the state. But the timing, form and purpose of the payment remains unclear.
Over time, the Pataki administration came to sense that the Two Josephs were overstaying their welcome. The supervisors of Mr. Pataki's 1998 re-election campaign subtly moved them to the periphery. Mr. Wiesenfeld was removed as Jewish liaison last year. Then Mr. Friedman was indicted, raising questions about the Health Department and attracting investigators who soon became curious about the Two Josephs.
Last month, another of Mr. Goldberger's children was married. This time, Mr. Pataki did not attend the grand reception in Williamsburg.
