FEDERAL BUREAU OF INVESTIGATION
OfUee Office of Orlql0 Dole lo"."UqoHv. Period
Y ALBANY 8/11/87 9/3/86-4/30/87
Report made by Typ&d By:
S M. WHALEN III, SA DONALD H. JOHNSON nrk
r, City of Albany, New York
Choroet« of CO".
HOBBS ACT-CORRUPTION OF PUBLIC
RENCE: Albany airtel and LHM to Director dated 9/26/86.
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Title of C
FO-272 (Rev, 3
fD.517 IRw. 2-17-82)
FEDERAL BUREAU OF INVESTIGATION
PROSECUTIVE REPORT OF INVESTIGATION CONCERNING
THOMAS M. WHALEN. III
Mayor. City of Albany. New York
HOBBS ACT- CORRUPTION OF PUBLIC OFFICIALS
USA. NDNY FREDERICK J. SCULLIN. JR.
TABLE OF CONTENTS
Narrative of Offense B
Names of Defendants C
Prosecutive status 0
Table of Contents for Report Forms (FD-302's) 1
Report Forms (Fd-302 I s) 2-43
FD.51B (Rev. 2-17-B2)
SA DONAID B. JOHNSON
August il, 1987
Fie1d Office File t:
Narrative of offense:
194C-1.87 Bureau File ,: 194-6413
This investigation was predicated on information
supplied by an individual who requested confidentiality.
Henceforth in this report that individual will be referred to as
T-1. On September 3, 1986, T-l advised that Albany Mayor, THOMAS
M. WHALEN III, was a senior Partner in the Albany, New York law
finn of COOPER, ERVING AND SAVAGE, 35 state street, Albany, New
York, as well as the elected Mayor for the City of Albany, New
York. It was the belief of T-l that THOMAS M. WHALEN III used his
Official position for personal gain.
T-l. stated that upon becoming Mayor, the other partners
in the aforementioned law firm, became extremely uJ?set at the
prospect of subsidising WHALEN's political asperat1.ons. The
partners didn't feel it was right that WHALEN would receive a -. , ..
full Senior Partner share of the profits (approximately
$100 ,000. 00 per year) while he was "playing" Mayor, and they were
doing all the work, or, in essence, subsidising WHALEN's
political aspirations. After a long and heated discussion, an
agreement was reached which stipulated that WHALEN would
relinquish $30,000.00 of his $45,000.00 annual Mayoral salary to
eight other partners in the form of a creditor reduction to
WHALEN's partnership earnings, in eXchange for throwing lIcity
Business" to the finn. The $30,000.00 credit was to be split
equally among the partners of the firm. exclusive of WHALEN.
T-l advised during fiscal year 1984, COOPER, ERVING AND
SAVAGE had approxbnately $600,000.00 in annual billing's, of which
approximately $150,000.00 were received. from BANKERS TRUST
COMPANY of Albany, N.A. During this period of time, BANKERS TRUST
COMPANY was in the proc.ess of liquidating it's retail banking
operations. In so doing, an asset sale (as opposed to an
operation sale) was consumated for buildings and land with FIRST
AMERICAN BANK OF NEW YORK. The critical concern affecting the
sale was the increase in assessed Valuations on the property
being sold by BANKERS TRUST COMPANY to FIRST AMERICAN BANK and
the resultant in increase in property taxes.
This document contains neither recommendations nor conclusions
of the FBI. It is the property of the. FBI and is loaned to your
agency; it and its contents are not to be distributed outside
During the course of a partners meeting, WHALEN advised b1D
he had been confronted with the potenial rise in the assessed
valuation and resultant tax increase by the sellers (BANKERS
TRUST COMPANY OF ALBANY, N.A.). WHALEN stated, at this meeting,
to his partners, that they should not be concented as he would
personally handle this matter. Approximately two weeks later at
the next partners meetingI WHALEN stated he had arranged through
BRuCE MAC DONALD, to insure there would be no increase in
assessment which could posswly jeopardize the proposed sale or
the result in possible property tax increase.
T-l stated all land parcels sold are "Red Flagged
the time of sale for reassessment in the subsequent year. The
sale of BANKERS TRUST PROPERTIES were never "Red FlaggedII (even
though properly recorded) and, accordinglyf the assessment was
never increased. The law fim of NOLAN AND HELLER represented the
FIRST AMERICAN BANK in this transaction.
T-l advised the AJ..bany area law firms of NOLAN' AND
HELLER as well as COOPER, ERVING AND SAVAGE have attempted to
merge. The proposed merger had been rejected previously because
of apparent conflicts of interest which would arise effecting' the
ability of each firm to practice within the State of New York and
the City of Albany. This conflict arose from the fact that New
York State Senator HOWARD C. NOLAN, Jr., was a partner in NOLAN . "
AND HRI.I·ER and as such was precluded from. practice with New York
State, while at the same time, THOMAS M. WHALEN, III, Mayor, was
precluded from practice with the City of Albany.
T-1 stated in 1983, THOMAS M. WHALEN, III, had served
as the elected president of the Albany COllU1lon Council. Subsequent
to the death of former Albany Mayor ERASTUS CORNING, WHALEN was
appointed to fulfill the position of Mayor. In 1985, WHALEN was
elected to this position.
T-l advised JOSEPH A. YAVONDITTE, a recently deceased
Albany attorney had previously been placed on the payroll of
COOPER, ERVDG AND SAVAGE and given an office. The : : ~ ose of
+hia nJal"',pment was to allow YAVoNDITrE tor _ I
IIin exchange for use of YAVONDlm· s name legal
backers which were used to camoflage Albany City business
receiVed by COOPER, ERVING AND SAVAGE from Mayor THOMAS M.
WHALEN, III in his official capacity. The business receiVed by
COOPER, ERVING AND SAVAGE was performed by partners and employees
of COOPER, ERVING AND SAVAGE who received a fee but legally
recorded the same business using YAVONDI'ITE I S backers to preclUde
the appearance of impropriety or conflict of interest.
On september 4, 1986, a review a city Directory for
Albany, New York revealed that BRUCE MAC roNALD was the
commissioner for the Department of A s s e ~ e D t and Taxation f'
City of Albany, New York, and resided. a"t.- _
I I New York.
A review of city of Albany1 New York title transfer
records reflected a sale of approximately 14 parcels of land and
buildings between BANKERS TRUST COMPANY, N.A., to FIRST AMERICAN
BANK OF NEW YORK on or about october 1, 1984.
A review of selected parcels, namely 35 and 50 state
street in the City of Albany, New York, were reviewed in the
assessors oftice for the city of Albany, New York. The records
revealed no increase in the assessed valuation from one year
prior to the sale through the present date.
On January 19, 1987, T-2, ,a source of the Albany
of J 985. =Jave?: of City
to hold POSJ.t1ons or to rece1ve any l.ncrease in
salary it would be in their best interest to buy fund raising
tickets for the. "campaign '85 to re-elect Mayor WHALEN. II T-2
stated that the department heads and employees earning under
$23,000.00 a year were directed to buy tickets which cost $100.00
T-2 further advised that in the city of Albany, New
York, legislation was past requiring all contractors bidding work
for the city of Albany, New York, to have specific employee
benefit plans and employee job training programs. Source advised
the purpose of this legislation was to eliminate independant
contractors and promote union labor. T-2 stated that by-and-large
independant contractors could not compete or bid on City work
because they could not meet the aforementioned requirements.
T-2 advised that in August, 1985, Albany Mayor THOMAS
M. WHALEN III, made all city employees sign a Conflict of
Interest Policy statement. Source advised this statement, in
effect, stated that it was a duty of every employee of the City,
to avoid situations in which there is, or it may seem to be a
conflict of interest between that employee and the City. Source
stated the statement also stated that While it is impossible to
anticipate every situation which might create or contain such a
conflict, several examples were illustrated; including ownership
and concerns with which the city does business exclusive of
modest investments and securities listed on recognized security
exchanges; accepting payments; services or loans from others
rendering consulting services to persons or concerns dealing or
contemplating dealings with the City; or the active conanittment
of tiJne devoted to the management of any other business
enterprise. T-2 advised this statement was hypocritical in the
sense that the Mayor for the city of Albany, was a Senior and
managing partner for the Albany law firm of COOPER, ERVING AND
SAVAGE who represented clients doing business with several city
agencies. T-2 advised this statement was prepared by Albany
corporation Counsel vmCENT MCARDLE at the direction of Mayor
THOMAS M. WHALEN III.
T-2 advised in Ju1y of 1986, an ordinance authorizing
and directing the granting of an easement to VULCAN investors to
permit the maintenance of building approacbment on North Pearl
street and Pine street Extension was granted. T-2 advised that
jJdina in m'Qstion "is at 39 North Pearl street and
I _Source stated that Mayor THOMAS M.
III's law firm had negotiated a contract to move into this
building subsequent to it I S merger with the Albany law firm of
NOLAN AND HETJ·ER. T-2 stated that the firm. had additionally
requested tax incentives be grap+ed to tbt'S building inasmuch as
ownership rights had been sold L _to the merged law firm
of COOPER, ERVING, SAVAGE, WHALEN, NOLAN AND HELLER.
T,' ';'d.ad i rJuly of 1986, Albany City I
I . sold tickets to a friends o"f-J""" ....... LEQ=--
a I BRIEN fund ra aer. T-2 advised that J. LEO 0 I BRIEN was chairman
of the Albany Democratic Committee, and that all city of Albany
employees who served in a deparblent head position or higher were
required to bUy these tickets if they wanted to be part of the
"team" and retain their positions.
In December of 198
emnna. coverage predominately arose from
statements lDade by Albany City corporation Counsel VINCENT
MCARDLE and a private attorney, BRIAN MUMFORD (former Assistant
United states Attorney, Northern District of New York) who had
been retained by the city of Albany dill to t:hAllack of expertise
in Federal Law on the part of MCARDLE. had been retained
to represent the inCf the employees of the City of
Albany. Accordingly accompanied all City employees
regardless af their OS1 1an and their personal interest to
,interviews conducted by the Federal Rureau of Tnypst
At ills :int 1 ~ : : t::;m,:tia:Han ..m.aL:::
L1SCUSSiOfi()t me aocumen5 fUmisnoo and theJI revIew carmot be
revealed in this report due to secrecy requirements of the U. S
Federal Grand Jury system.
The investigation then focused on interviews conducted
of seJ.ected current and former City of Albany, New York
employees, as well as partners in the law firm of COOPER ERVING
B ~ 4
- - - - ------------------,
On January 16, 1987, BRUCE J. MAC DONALD, voluntarily
appeared at the Albany Office of the FBI. MAC DONALD advised that
he was formerly employed as the assessor for the city of Albany,
New York, a job from which he retired on December 27, 1.985, after
having served for 14 years. MAC DONALD advised at the time of his
retirement he was making $23,850.00 per year. MAC OONALD advised
he reported directly to the Mayor, THOMAS M. WHALEN, III, of the
city of Albany. MAC DONALD advised as, assessor, his
responsibilities included keeping track of and making assessments
on property within the city of Albany. MAC OONALD noted there had
never been a total reassessment within the City of Albany during
the last 50 years. MAC OONAID stated the basis of change to
assessment inclUded sales price, property improvements, market
devaluations, and state Supreme Court orders to reduce assessment
based on certiorari proceedings. MAC DONALD stated. that often the
sales price at a transfer became the basis of reassessment. MAC
OONALD further stated that property ilnprovements effected
property assessments. The basis of reassessment due to an
improvement would be the estimated increase in value as stated on
a building permit, and as verified by an onsight
MAC DONALD advised in the Summer of 1985, he suggested
a three year program with an estiJDated cost of 1.8 million
dollars to totally revalue all properties within Albany, New
York, be MAC OONALD advised his recommendation was
never acted upon.
MAC DONALD stated it was his belief that the sale of
property between BANKERS TRUST COMPANY, formerly of Albany, New
York and. FIRST AMERICAN BANK OF NEW YORK, was an intercompany
transaction resulting in a new name. MAC OONALD stated he did not
believe there was a change in title. MAC DONALD advised that
sometime after the transfer of property, he received a memo from
Mayor THOMAS M. WHALEN, III which stated in effect that the
transaction between BANKERS TRUST COMPANY and FIRST AMERICAN BANK
was a MAC DONAlD advised he viewed the term merger as a
confirmat10n in his own mind that there was never really a change
in title. MAC DONALD stated he had no recollection of any changes
or improvement to these properties. MAC DONALD stated to the
best of his recollection there were never any market devaluations
within the city of Albany, New York.
MAC DONALD advised that while employed by the city of
Albany, he was also a member of the Industrial Incentive Board,
which was comprised of four to £ive members. Those members,
according to MAC DONALD, included the Mayor of Albany who was
never at any of the meetings, VINCENT MCARDLE, the Albany
Corporation Counsel, CHARLES NEWlAND and CHARLES HEMINGWAY, the
Albany city Controller. MAC roNALD advised the members of this
board were not paid and he only recalls approximately six to
seven meetings ever being held. MAC DONALD stated the purpose of
the board was to review and :make recommendations on proposals
before the board. MAC DONALD could not recall whether or not the
board or it's members had the authority to approve anything.
On January 30, 1987, KEITH Me DONALD advised that he
was appointed to the position of assessor for the city of Albany,
New York, by Mayor THOMAS M. WHALEN IlIon March 31, 1986. Me
DONALD advised. he currently received a salary of $32,800. 00 for
Me OONALD advised the assessor for the city of Albany
was responsible to assess all property in the city of AlbanyI New
York as fairly and equitably as possible, to be totally
independant of outside influence, to review all city assessments,
look at undervalued areas and bring them up to current values and
to generally upgrade the office of assessor.
Me DONALD stated that since assmnption of his position,
the assessors office was completely independent of the Mayor's
Office. Me OONALD added he felt it was his responsibility to
advise the Mayor of reviews he was contemplating or planning to
conduct. Me DONALD advised the basis of value or assessment was
determined by sales price, building permits issued, and a review
of the general area and comparative properties. Me DONALD advised
he felt it was his responsibility to advise both the Corporation
Counsel's Office and the Mayor's Office of exactly what his
department was doing.
On March 13, 1987,
BELTRONE CONSTRUCTION COMPANY, INC., advised that in June of
1985, he. bid on a contract to complete certain renovations to the
South End Branch, 135 South Pearl Street. Albany, New York, of
FIRST l\MERICAN BlINK OF NEW YORK. I Istated that when this
iob was completed. the total cost of the job was $209,289.43.
[ I stated that on September 10, 1985, the city of Albany,
New York issued a building permit number 129844-37266 to BELTRONE
CONSTRUCTION COMPANY which permited the construction of
commercial interior alterations as per plans at 135 p;arl
Street, Albany, New York. The permit, according to I _ .Jwas
signed by ARTHUR W. PHINNEY, commissioner, Department 0
Buildings, Albany, New York. In addition to all invoices
associated with this construction project, I Iprovided
copies of an affadavit for compliance and occupancy, city of
Albany, New York, number 372p6 j SIDled Ito BELTRONE CONSTRUCTION
COMPANY on October 17, 1985.l stated he was paid in full
for the improvements.
s 0 e genera ounse wor or BANKERS TRUST COMPANY. upon
its sale to FIRST AMERICAN OF NEW YORK a fee arrangement was
negotiated. whereby COOPER, ERVING AND SAVAGE
approximately 60 percent of the banks business. t
continued to do most of the Counsel work for FIRST AMERICAN BANK
OF NEW YORK'LI""",;;;;;:-__1did not do routine collection and real
in law fim, namely THOMAS M. WHALEN III, who was also Mayor of
the City of Albany, New York, was familiar with tho assessors
office. I J
.----. stated that OOOPER, ERVING AND SAVAGE used to do
a lot of C'erEIo'rari work prior to THOMAS M. WHALEN III being
eJ ectep. President of the City of Albany, New York Common Counsel.
I j;tated that upon WHALEN's election, CDOPER, ERVING AND
SAVAGE, got out of certiorari work and accordingly those open
files weru;en transferred to other attorneys namely JOSEPH
YAVONDITTE. advised that YAVONDITTE used his own backers
when he s tted legal work which was transferred to him from
files of COOPER, ERVING AND SAVAGE.
I ladvised that there came a point in time when some
of the younger partners became concerned about the amount of
contact COOPER, ERVING AND SAVAGE had with the City of Albany,
New York. The concerns, according teL I were as a result of
THOMAS M. WHALEN III as a Mayor and its result in loss of income
versus THOMAS M. WHALEN III as a partner and a non-Mayor for the
aL ';J.JIle aav1.sed he had
raceived a notice of reassessment from a t:ownship I
adviseCI was co
a ....1.ve of mcreases on all
as a result of asses i: .
...... , :'"-: ...... I
referencing the real property assessme
4, 1985, he received a
thatl contact the
assessor .:for the City of -.Albany,
r this"" . .
.............. ...........' I...ue assessor .1.or WJ.B C1.l..¥ of Albany, but a partner
City of Albany, New York. I Istated that the partners agreed
to try to be supersensitive to conflicts for a period of time and
to analyze their impact on the firm.1 Istated there was no
formal venthough other members often expressed their
opinions. stated this review and analysis rQin no
change in prac by COOPER, ERVING AND SAVAGE. stated
that the members of COOPER, ERVING AND SAVAGE and l.Inse f at
times, looked at selected opinions from the AMERICAN BAR
ASSOCIATION regarding ethical personally has never
sought any Bar Association opinions. dvised that the only
change, which was in fact implement, s a monetary change due
to the time commitment M. WHALEN III, as Mayor for the
city of Albany, New WHALEN voluntarily took a
credit as part of his Mayor s aqa:ipst his draw from
COOPER, ERVING AND SAVAGE. It was Jrecollection initially,
this amount was $2,000.00 a month, owever, that mar not have
been the initial amount and the figure changed as d.l.d the Mayor1s
I ------, advised that I I an associate
of COOPER, ERV'ING AND SAVAGE did appear before some form of
aovel:Ip1lental body Q THOMAS M. WHALEN III was presiding.
I that was not aware at the time of his
appearance that the ind :v dual he was representing was a client
of the law firm but is aware of the fact at this time.
With respect to City of Albany, New YJ::Jiness
conducted by COOPER, ERVING AND SAVAGE clients, advised
that the L COMPANY was handled principa yl I
I recalled partner discussions regarding SWYER
were orily toeextent of the work that could not be handled by
COOPER, ERVING AND SAVAGE. c: la:v;:4 a similar situation
existed with another client ofI: namely, the MAIDEN LANE
PARKING AUTHORITY which did most 0 .1 business with the city of
Albany, New York,
On February 27, 19B7,1 I advised he
the Albany law firm of COOPER, ERVING, SAVAGE,
WHALEN, NOLAN AND HELLER. I Istated. a Senior Partner in
this firm was Albany THOMAS M. WHAT/EN I
advised, as a member ,1 _ _ lof Ithe law firm
of COOPER, ERVING Mill S vAGEI ,recognized
potential conflicts of when WHALEN fU'St came into
public office,( Jstated conflicts arose at the time
WHALEN was President of the Albany Common Council and became more
evident and blatent when WHA.LEN was appointed Ma or of Albany,
subsequent to the death of BRATUS CORNING II. advised
that although the conflicts existed the e rmer y
discussed amongst partners of the firm. stated that
these discussions often covered the fact that WHALEN should
remove himself from the firm due to the conflicts. I I
advised, that, as a result of the blatent conflicts, work was
farmed out to the law fin of RUTNIK AND RUTNIK. These
conflicts, according to L were discussed at partnership
________________ m • __.....
meetings. It was suggested at these meetings that WHALEN remove
himself from the firm. WHALEN, however, would not agree to this
nor would he accept a reduction in partner points but did
subsequentl.y agree to accept anJ'wguDtlless than that would have
been a Senior Partner share. I advised initially this was
a sum of $10,000.00 as a reductiOn to WHAUm's draw was to
be distributed equally amongst all partners.) ..J advised
that eventhough conflicts of interest were discussed openly
amongst partners no opinions were ever sought from the
Bar Association. fJadvised that approximately 50 percent
of all revenues generate within COOPER, ERVING AND SAVAGE came
from the principle accounts namely ::: TllUST COMPANY and to a
lesser extent ALBANY SAVINGS -lstated that when
BANKERS TRUST COMPANY sold its opera ens toFIRST AMERICAN BANK
OF NEW YORK an arrangement was made with the Albany law firm of
NOLAN AND HELLER to split the FIRST AMERICAN business
approximately 60 percent to COOP:; ERVING AND SAVAGE and 40
percent to NOLAN AND HELLER. r _ I recalled discussions of
partnership meetings at whicI1 po FtRsT AMERICAN BANK expressed
a concern for rising assesJ::::;::t :yoperties they purchased
from BANKERS TRUST COMPANY. Jadvised that be had taken
notes of all partners meet' 1 reviewed they would refresh
his recollection as to specifically what was said at these
I Iadvised that JOSEPH YAVONDITrE was not
considered an employee of COOPER, ERVING AND SAVAGE, yet his
backers were used on certiorari work completed and billed by
COOPER, ERVING AND SAVAGE. The backers were used to give the
appearance the enclosed work had been completed by YAVONDITI'E as
opposed to COOPER, ERVING AND SAVAGE because of apparent
conflicts of interest.
I Iwas shown : the
;a ...L:Vir his
I detalls had qeen war r roe
..Jbetween the client and the city of
Albany, New York.
On March 5, 1987, HARRY MAIREIS, former COIl'lD\issioner
for the Department of Public Wo .
J.nqu.1.re as 0 what the City of Al 00 or W.1.
respect to granting a concession agreement to operate a Bar and
submitted to the rea .1.on ent a proposal for
the operation of the golf course. MAIKELS added that the proposal
submitted by I Iwas most favorable to the City New
stated he then set up a meeting betwe
I JAl y Mayor THOMAS M. WHALEN III. MAIKELS he
!into the Mayor's Office and introduced him at this
- - --------------------,
meetinq. MAIKELS stated that he recalled that in general the
terms of the agreement and the City of Albany, New Y9rk
r I were discussed and agreed upon betweenL I and
Mayor WHALEN. MAIKELS stated at the conclusion of the meeting, he
recalled Mayor WHALEN askin if he ttorney.
MAIREIS stated that the piece of paper
upon which he had . IS advised that
he did not }mow who was l.eved him to be an
attorney in the city of Albany, New York.
on March 5, 1987, I 1advised that HARRY
MAIKEISI Commissioner for tli6 Department of Public Works "!95l.s:::=:J
for the Albany Municipal Golf Course.
_.... Jspoke to him and advised what
looking or Ul terms of a concession agreement. I sed
that after making a proposal he was advised _ of a
meeting with Albany Mayor :tlIOMAS M. WHALEN III and HARRY MAIKELS
at Albany City HalL I stated that upon attending this
meeting he and Mayor THOMAS M. WHALEN III ag;eed on. a two year
lease with two separate options for renewal. l j advised this
tenure was subsequently changed because the New York
Authority had required a three year license agreement.! .J
advised the terms of the lease agreement were then subSljmJAnt
changed to a three year lease with a three year option. l J
recalled, as the meeting was , Mayor THOMAS M. WHALEN
III asking him. if he had an attorney . the Mayor
the gave l\;m a hnfiness card and stated liquor
licensesll.L advised that the business ca he received from.
the Mayor had the Hayor I s name Of the ca; "j on
the back he had written the name _ ... __ _ _ stated
he knew that he s;lid not need a lawyer l..n 0 er to obta n a liquor
license. I ]stated he paid a fee of $1,500.00 to firm. of
COOPER, ERVING AND SAVAGE for its assistance in obtaining a
( I °:
: of 1983, the city of llbany, r
York solicited a request for proposals to lease a concession
consisting of a bar qnd restaurant area at the Albany Municipal
Golf Course. I Jstated it was his understanding there were
three individuals who expressed an interest and submitted their
to the City of Albany. '!be hjqheEtt of these bidders was
an Uldividual named I jadvised thatB
directly negotiated an agreement to operate the concess 0
the golf course with Albany Mayor THOMAS M. WHALEN III.
stated that WHALEN then wrote a note or m:md lstat1.nq the
terms of this a equested I Ito prepare a lease
agreement. was furttier to confirm the
agreement the Albany law
fim of G AND SAVAGE. advised that I ;:J
I ..Jin Mayor THOMAS M. II's law firm. I
that he felt the .,
On April 13,
COOPER, ERVING, SAVAGE, WHALEN, NOLAN AND
appeared at any Office of the FBI.
approximately ears a 0 he 'oined the
ERVING AND SA
, , name y OS PH YAVONDITl'E who served as
Of Counsel AND SAVAGE as well as an associate
I _ _ tated that YAVONDITTE did not become an
empLoyee of coo , 1i G AND SAVAGE, eventhough he had an
office at 35 state ¥ithin the office space of COOPER,
ERVING AND SAVAGE. r J stated that YAVONDITTE paid rent for
the space, operate 0 y independent, and was not aware of any
compensation YAVONDITTE received from. COOPER, ERVING AND SAVAGE.
I _stated that YAVONDITrE picked up all the certiorari work
y handled by COOPER, ERVING and SAVAGE, when THOMAS M.
became Mayor for the city of Albany, New York•
. ad that :: JqProXimatel
ago. stated thatr s -an associate I
before pnd aft,er joining ; AND SAVAGE·I I
advisedL .J became an employee of COOPER, ERVING AND SAVAGE
spent apnrpxim?'tely 80 percent of his time doing wopt undef
I _ J stated the type of work completed bYL .
Ulcluded "court appearances and all the dirty jobs around the
office that no one wanted to do. n
I Irepresented variQus i;
the L.A. SWYER COMPANY for approximately 20-25 years.[ I
I I represented the L.A. SWYER COMPANY in an In us ia
oevelopment Authority loan and securing a Payment In Lieu of
Taxes agreement between SWYER and thr Cityo: A:anv for
property located at 80 State Street. L JUid no
negotiation on behalf of SWYER with respea: 0 e Payment In
Lieu of Taxes, and does not know who did the negotiations with
former Mayor CORNING who then granted a Payment In Lieu of Taxes
which was subsequently renegotiated with THOMAS M. WHALEN III.
I Irepre:ted MAIn:
AUTOPARK whiCh was r: Ifrom
Newark, New Jersey:-l Ina raco ec of
• • b6
negotiating any leases with the city of Albany on behalf of
MAIDEN LANE AU'I'OPARK.
I Iadvised there were conflicts among junior
partners at COOPER, ERVING AND SAVAGE reqardinq THOMAS H. WHALEN
III, as Mayor for the City of Albany and as a Senior Partner in
the tirm. I I stated. he had. no recollection of any
discussion at partners meetings, no recollection that THOMAS M.
WHALEN III ever agreed to a ,reduction from his compensation as
partner and Mayor. L ladded that because of the increase in
his compensation as Mayor agreed to a reduction in his
partnership draw. r , recalled discussions among partners
because he was a .fully occupied Mayor for the City of Albany, and
not practicing as an attorney of the firm.
On February 4, :L987, I I 90
state Street, Albany, New York, he wasr
of the Albany law firm. of COOPER, ERVING AND SAVAGE at 35 state
Street New York. ad that was
f the . brought
).n 0 y stated that
ties a e ll'1U were unspecJ. c yet he did recall
performed collection work on behalf of COOPER, ERVING
AND SAVAGE and its clientI I
On September 3, 1986, T-l advised thatr Ian
associate of the Albany law firm of COOPER, ERVDJG AND SAVAGE was
direetep. to represent a COOPER, ERVING AND SAVAGE
.J before an Albany Zoning Board. Source stated
somewhere in 1982 to 1983 at which time THOMAS M. WHALEN III was
then President of the Albany Colmnon Council ting member
q ar enoe.
s was then granted a
On January 26, 1987, VINCENT MCARDLE, Corporation
Counsel, City of Albany, New York, advised that with respect to
the assessors office it generally operated independently. MCARDLE
advised the assessor was appointed by the Mayor, for the City of
Albany, who provided policy decision direction for the assessor.
MCARDLE advised that he could recall no general reassessment
within the city of Albany because they scare politicians to
death. MCARDLE advised that between 72 to 73 percent of all
properties located in the City of Albany, New York, were tax
exempt. MCARDLE adviSed in the last three years an excess of 80
percent of all properties located within Albany have turned over
and resuJ.ted in assessment increases. MCARDLE advised he could
recall no single area that had decreased in assessment within the
city of Albany.
On January 27, 1987, CHARLES M. HEMINGWAY, Controller,
Cit.y of Albany, New York, advised the City of Albany maintianed
approximately nine separate bank accounts. Of these HEMINGWAY
stated the City payro11 account of approximately $575,000.00 a
week was maintained in an interest bearing account at FIRST
AMERICAN BANK; a $30,000.00 trust fund reflecting City Court
receipts and bid deposits was maintained at FIRST AMERICAN BANK;
a police pension fund of $250,000.00 was additionally maintained
at FIRST AMERICAN BANK as well as a $250,000.00 New York state
Insurance Department foreign insurance fees account and a
firemans insurance fund. HEMINGWAY stated. that additionally a $2-
3001000.00 Capital Fund Account was also maintained at FIRST
On March 2, 1987, J 1. advised that he
and a group of other indiviuaIs were partners In thtf I
stated that this project was
OUSJ.ng an Ur Development Action Grant Funding.
L",==:! stated that in negotiating the loan or grant which was
s sequently signed by Albany Mayor THOMAS M. WHALEN III, who was
acting on :behalf of former Mayor ERASTUS CORNING at the time, the
city of AlbanyI New York, what assessments would
be upon completion of the proj ect. stat.ed that this was a
requirement of the Federal Housing Urban Development
Corporation in order to guarantee an adequat.e cash flow t.o
loans granted or provided by federal funds in this proj ect
stated that upon completion of an assessment agreement which was
signed by Albany Assessor BRUCE MAC DONALD specific assessments
were set. for each parcel. I I advised that approximately two
years later the city of Alban¥' reniqed on the assessments that
were previously assigned and m a one lump sum manner raised all
the assessments of all the properties. I J advised this totally
destroyed the marketability of the program and was in
contravention of the federal agreement which was previously
signed by WHALEN on or about October of 1983. .
NAMES OF DEFENDANTS i
1. THOMAS M. WHALEN, III
Date of Birth (dob):
January 6, 1934
Brown, greying, receding hair
Attorney, Mayor, city of
Albany, New York
159 South Pine Ave.,
Albany, New York
On September 3, 1986, information furnished by
previously described T-l was : Assistant
United states Attorney CAUSA) 1 " Northern
District of New York, who advl.i3 e woc! authorize
prosecution in captioned matter, if the result and
facts of investigation so warrant it.
On september 5, 1986, AnSAI ladvised captioned
matter was being re-assigned to AUSAr
of his office for potential prosecutive 0;+00:,
Accordingly, a meeting was held with AUS1f:: _
detailing fact;; of initial complaint. At 1S t1me
AUSAI I suggested various investigative
alternatives, including a closed circuit television
surveillance of subjects law firm, as well as
consepsual monitoring on the part of complaintant.
AUSA L Jwas advised that complaintant was in
a very sensitive position and agreed to testify
to all infonation provided, upon receipt of a subpoena
which would be iSSUed with other members
of subjects law firm. AUSA I agreed to the fact
that in order to conclude J.nVestigation it would
require presentation before a Federal Grand Jury.
On october 14, 1986, SA DONALD H. JOHNSON met with AUSA
I _and fUlly debriefed him again regarding
informatioq. SYDQl j ad by complaintant. At this same
time, AUSAl I was presented copies of FD-302
which reflected investigative (1 cat:'n ,?f
allegations made by complaintant. I Jwas advised
of the need for issuance of grand ;11''-v
...nn'" "'" .
.ne WOUl.d prepare the requested
sUDpoenas and advise SA JOHNSON when they were
completed in order that they could be served.
On October 20, 1986, AUSA I !was contacted to
as:e::' the status of requested subpoenas. AUSA
IIat this time advised he had not been able to
ge () e subpoenas and requested they be drafted for
him. The FBI agreed to lie so and jccording1
draft subpoenas to AUSAL _
On October 28, 1986, attempts to contact AUSAI====::J
at his office were negative. At this time AUSA
I ladvised he was too busy to meet with the
On November 6, 1986, AilSAI ladvised the
requested subpoenas would not be issued because the
United states At,,;orn:v FREtlERICK J. SCULLIN, Jr., NDNY
had so directed. _ ..J stated that SCULLIN had
requested a meetmg l.n order to be fully briefed on the
nature and scope of this investigation. SCULLIN had
directed that no subpoenas would fa iaBu: until such
time as this meeting took place. _ _, stated he
anticipated this meeting would occur some during
the next two weeks and further that no specific time
had been designated.
On November 14, 1986, AUSAI I, NDNY, advised
that a tentative llteeting had been set to take place on
November 24th or 25th, 1986. At this time, us Attorney
SCULLIN would lltake a determination as to whether or
not investigation into subject matter would continue
and further whether or not subpoenas requested would
On 1:6. nsuant to a request of
AUSA a meeting was held to
re-fen fa S 0 captioned matter in order for
I Ito brief U1J¢tornAV SCULLIN on the facts
of 18 matter. AUSA at this time stated
he was looking at Mal.rFraUd Violations. I I was
asked why he had not considered possible violations of
the HOBT the doctorine "Color of Official
Right" . stated he was not familiar with the
statute nor e considered its use.
On November 25, 1986, SAC ALBANY advised he had just
met with US Attorney SCULLIN who stated he had been
briefed on subject matter. SCULLIN authorized
issuance of the subpoenas requested 'eventhough he
questioned the nature of the investigation. SCULLIN
stated additionally that he wanted to personally stay
on top of this matter and would review the case upon
return of the subpoenas in order to determine if
further investigation was warranted.. At this same time,
SCULLIN was asked whether or not he had had any direct
conversations with subject concerning this
investigation to which he responded he had. SCULLIN
further stated that he then riferred Sllbijct to make
any further inquiries to AUSA in the NDNY.
On December 10, 1986, AUSA I Iadvised
:tEded a meeting neld libari A
'''-'''--''-00;-;;0-1;1'""- and (First na:me unlmown)
Je MAS M.
At this time a orneyI s
rtrf'Elier as to whether or n
FBI that th sgbp • W§ te hO';,:: r
;;1;; ;;;anyMa:yor THOMAS M. WHAImi III had
telephonically contacted US AttQrnev squ,gN
regarding the subpoenas issued. L- J stated at
the time of this contact WHALEN was advised he was
representing :e firm of COOPER, ERVING AND
SAVAGE, C Jst=te·t :-::tenrefmai
Albany 0 AUSA . advised that
pursuant to the tele one ca 1 any Mayor
WHALEN a meeting was set up between himself and AUSA
HOMER with the attorneys for COOPER, ERVING AND SAVAGE
for the purpose of discussing the information requested
on the subpoenas. Attendance at this meeting did not
include an FBI Agent.
11. On January 23, 1987, AUSA I lwas advised
of the results of the interv.lews conducted to date to
inclUde interviews of T-1 and T-2 as well as former
Albany Assessor BRUCE MAC DONAID.
12. On January 28, 1987, Iwas advised of the
results of interviews of any Corporation Counsel
VINCENT and CHARLES HEMMINGWAY. At this
AUSA I_jwas advised that copies of report fonus
would' be forthcoming upon completion frolll typing.
13. On February 2, 1987, AUSAI Iwas apprised of
results tion conducted to date. At this
time AnSAI +-,'
-.J Subpoenas were also
L"',,,e",qu;ru;e;;;s,,",=,,,,"uT. ,,,o;;r:'p;;e;;r;;s;;o;;n;;al;;--;.;;p;;p:;;e;;a;;r;::.::'n;;;ce of all I,'artners of
COOPER, ERVING AND SAVAGE, and ee records
COOPER, ERVING AND SAVAGE. AnsAf I
advised at this time he could n551O'1[is;;suru.enSUb5poenas
and would relay the information to AnSA r-lwho in
turn would relay the information to US A't£OEiey
sCOLL!N who would accordingly review the information
furnished on its merits to determine whether or not
any subpeonas would be forthcoming.
14. On February 24, 1987, AUSAI Iwas again apprised
of the need for the previously requested subpoenas
and also a subpoena to include all clients of the
Albany law firm of COOPER, ERVDfG AND SAVAGE as well as
their gross annual billings (in such a manner as to
preclude any priviledqe which may extend between
attorney and clients). It was additionally requested
that records of partnership draws and distributions be
15. On March 5, 1987, AUSA
re estin the afar
advised that USA 16.
such a subpoena nor
the previously requested ones and would again have to
present this information to AnSAI land in turn
again to USA SClJLLIN.
On March 11, 1987 AUSA
SCULLIN had a roved
es s enas
stated that all
en den ed by USA
on March 18, 1987, AUSA
regarding the status of
.i.::l.I::"A....h>z nfl' :rrJJ¥. l-
subpoena and it was not ready. It should
be noted that at this point the subpoena to date has
not been received.
On 1 1987 , a review at the request of AUSA
I was conducted ot his file reflecting report
fODnS investigation conducted to date by the FBI
to insure that of :' Etswere received
at that ti:me by AUSA 0rdioo1Y documents
found to be missing rom SA Ifile and
were furnished on March 20, 1 •
On July 24, 1987, USA FREDERICK J. SCULLIN, Jr.,
telephonically contacted SAC, FBI, Albany to reiterate
his concern about captioned investigation. USA SCULLIN
stated that because of the FBI investigation, II a cloud
is hanging over the city of Albanyll and it was
incumbent on the FBI to bring this matter to an
"1 BROCE J. M'C DON.rr
can testify the basis of assessment was sales price,
property ilnprovements, market devaluation and state Supreme Court
orders. can test.ify that he received a memo from THOMAS M. WHALEN
III, advising a sale of property between BANKERS TRUST COMPANY
and FIRST AMERICAN BANK was a merger. Can testify there were
never any market devaluations in the city of Albany, New York.
KEITH Me !lON.Ill
can testify the basis of assessment was determined by
sales price, building permits issued, and a review of the general
area and comparativa properties.
can testify that he contracted and. provided $209,289.43
in iJDprovements to 135 South Pearl Street, Albany, New York,
after having obtained necessary permits. can testify he was paid
for this work by FIRST AMERICAN BANK OF NEW YORK.
client of Can testify that FIRST
COOPER, ERVING AND
can test ....E!3liL ...J
I Can testify as to several
doing business with the city of Albany, knowing full well that
THOMAS M. WHALEN III, was both a partner and Mayor.
39 North Pearl street
Albany, New York
Can JecogniZed conflicts
of interest for which: eney recel.vect :fees did nothing. Can
testify to partnership meetings at which potential. increases in
assessments of FIRST AMERICAN BANK were discussed. can testify
that JOSEPH. YAVONDITI'E was not an employee of COOPER, ERVTIfG AND
SAVAGE, yet his backers were used on work completed by COOPER,
ERVINGJNQ SAVAGE bQCallSjof apparent conflicts ot interest. can
te:t.if contract between the City of Albany
I the details had been previously worked
BARRY F MURRIS I
can testify to a meeting at. which an agreement of terms
WHALEN III, Mayor, City of Albany, New York, and further that he witnessed WHALEN
a e ad an attorney. Can t.estify he saw WHALEN
a piece of paper upon which he wrote the namel
Can testify he negotiated a contract with THOMAS M.
WHALEN III, Mayor, city of Albany, New York. Can testify he knew
r= itten on i1;:. Can '1;:estify 1?e paid
SAVAGE for 1ts ass1stance 1n obtaining a l1quor
'blat III, Mayor, city
New York, wrote
negotiate any contract without an prior adoption of a Common
L... ----'- --
.. e ....'C===============::J1
can lthe L.A. SWYER COMPANY in
obtaining payment-in-rleu or taxes agre8lleJlt and an Industrial
Development Authority loan with the city of Albany, New York. can
testify the payment in lieu of taxes was negotiated by THOMAS M.
WHALEN III, Mayor, city of Albany, New York.
can testify thatt employed as an
associate with who performed collection
work tor it Client IL- -.J
11'1 JlII!CENT J, MORDlE J"
can testify that 72-73 percent ot all property in the
City of Albany, was tax exempt. can testify that 80 percent of
all property in the City of Albany turned over in the last three
years and. resulted in assessment increases.
12,\ ==S M. :JY
Can testify that five of nine bank account maintained
by the City of Albany were with FIRST AMERICAN BANI< OF NEW YORK.
can testify that two years after an agreement was
signed to stablize cash flow and assessments as required to
obtain federal funding the contract was breeched by the very man
who signed it THOMAS M. WHALEN III.
TABLE OF CONTENTS
BRUCE J. MAC DONALD
KEITH Me DONALD
HARRY F. MAIKELS
CHARLES H. HEMINGWAY
UNITED STATES DEPARI'MENT OF JUSTICE
FEDERAL BUREAU OF llWESTIGATION
SAC, ALBANY (194C-187)
SA OONALD H. JOHNSON
SUBJECT: THOMAS M. WHALEN, III,
Mayor, city of Albany, New York
Re Report of SA DONAID H. JOHNSON, dated August 11,
1987, and meeting of SAC WAYNE R. ALFORD, ASAC WILLIAM A.
MCDERMOTT, and SA DONALD H. JOHNSON.
Pursuant to request of SAC, ALBANY the following
leads reflecting investigation to be conducted is being
prepared with respect to captioned matter.
FBI AT ALBl\NX. NEW YORK:
1. Re-interview former Albany Assessor BRUCE MAC
DONALD, with respect to assessments levied on properties "Of
FIRST AMERICAN BANK within the city of Albany, New York.
2. Re-interview KEITH Me DONALD, with respect to
selective assessment increases directed by both the Corporation
Counsel and Mayor for the City of AlbanyI New York.
3. InterviewI FIRST
AMERICAN referenc1pql I
I IJ.n the AI Law F1XIlI of
COOPER, ERVING, SAVAGE, WHALEN, NOLEN AND HELLER.
____--"!4.... 0 Albany r I
I Iregarding cooph, ERVING AND SAVAGE clients
referred to the Albany Law Firm of RUTNIK AND RUTNIK because of
their apparent conflict of interest.
5. Intervjewl I
I referencing of a
==rject in order to
6. Interviewr regarding a favorable
zoning variance by the zoning Board to which
subj act was a voting rn=$er and before which subj ect' s law firm
7. Interviewl I VULCAN
MANAGEMENT regarding rllA, AIJ)C grants, payment in lieu of
taxes, zoning variances and tax incentives received for
properties owned at 39 North Pearl street.
s. Continue and complete review of LA SWYER records
regarding payoff to THOMAS M. WHALEN, III.
UNITED STATES ATl'ORNEY I S OFFICE. NORTHERN DISTRICT OF
NEW YORK AT ALBANY. NEW YORK:
1. Issuance of a subpoena tor annual client billings
by COOPER, ERVING AND SAVAGE for years 1/1/85 through present
to determine percentage of business for FIRST AMERICAN BANK and
BANKERs TRUST COMPANY, as well as to determine if any other
City business was generated as a result of COOPER, ERVING,
SAVAGE partner THOMAS M. WHALEN III in, and through, his
official position as Mayor for the city of Albany, New York.
2. Issuance of a subpoena reflecting financial
partnership records to illustrate favorable leases for COOPER,
ERVING AND SAVAGE at 35 State street, to determine percentage
of billings and draw earned by partner THOMAS M. WHALEN, III,
employment status of JOSEPH YAVONDITI'E, time records of
partners to prove work "backed" by YAVONOITTE was actually
perfomed by COOPER, ERVING AND SAVAGE.
3. Issuance of a subpoena to each and every partner
of the former law firm COOPER, ERVING AND SAVAGE to appear
before u.S. Federal Grand Jury with notes taken individually at
4. Receint of nrevioJJsly annrove" sJlbrywnac=l
OTHER X,RAPS NEEDING TO BE ADDRESSED:
1. Round out allegations of improprieties involving
the relationship of Albany taw Firm COOPER, ERVING AND SAVAGE
and it's partner 'I'HOMAS M. WHALEN, III, who represented the
NEENAN GARAGE CDMPANY before the Albany Local Development
Corporation and which was subsequently granted a $20,000.00
loan by the Albany Local. Development Corp.
3. Round out and investigate allegations that city
land was sold to a private group without bid or public notice
with respect to Bleeker Terrace Investment = ~ e s . :ich
are owned as a J ip"ted partnership betweenI
I lis a Client of the Albariy w F1rm 0
COOPER, ERVING AND SAVAGE.
Mr. Frederick J. Scullin, Jr.
Un!ted states Attorney
Northern District of New York
369 Federal Building
Syracuse, New York 13202
502 USPO & Court House
Albany, New York 12201
August 28, 1987
Re: THOMAS K. WHALENI III
MAYOR, CITY OF ALBANY, N.Y.
Dear Mr. Scullin:
Reference is made to FBI report with the above caption,
dated August 11., 1987, prepared by Special Agent Donald H.
After a review was made of referenced report, I
requested SA Johnson to prepare a summation of the investigation
that should be completed before this matter can be brought to a
logical conclusion. Based upon this request, the following
investigation should be conducted in the opinion of SA Johnson:
I. FBI AT ATjRNlY. NEW YORK:
1. Reinterview former Albany Assessor Bruce Mac Donald,
with respect to assessments levied on properties of First
American Bank within the City of Albany, New York.
2. Reinterview Keith Me Donald with respect to selective
assessment increases directed by both the Corporation Counsel and
Mayor for the City of Albany, New York.
J.l1 e any aw rm 0 ooper,
g, avage, a en, Nolen and Heller.
Interview Albany ,I =:;;-="'==::-::;;.,-=====:::;-=-
L,==-..... regarding Cooper, Erving ana Savage clients referred to
tne AI y law firm of Rutnik and Rutnik because of their
apparent conflict of interest.
1 -I I Assistant u. S. Attorney,
239 USPO & Court House, Albany, N.Y. 12207
.v 1iL 194C-187
RA,hmm it $1'\" c.
(3) . /f,;,-v
:j 0) '" "" ,) ......
j e S
6. Interviewr Iregarding a favorable zoning
variance granted by the Albany zoning Board of which subj ect was
Ia votjnq m:Jr and before which subject's law firm represented
7 • Interviewl l Vulcan Management I
regarding IDA, ALOe grants, payment In lieu of taxes, zoning
variances and tax incentives received for properties owned at 39
North Pearl street.
8. Continue and complete review of IA SWyer records
regarding payoff to Thomas Whalen, III.
II. U.S. ATTORNEY's OFFICE, NORTHERN DISTRICT OF NEW YORK. AT
ALBl\IlY, NEW YORK:
1. Issuance of a subpoena for annual client billings by
Cooper, Erving and Savage for years 1/1/85 through present to
determine percentage of business for First American Bank and
Bankers Trust Company, as well as to determine if any other city
business was generated as a result of Cooper, Erving, Savage
partner Thomas H. Whalen III in, and through, his official
position as Mayor for the City of Albany, New York.
2. Issuance of a subpoena reflecting financial
partnership records to illustrate favorable leases for Cooper,
Erving and savage at 35 state street, to determine percentage of
billings and draw earned by partner Thomas M. Whalen, III,
employment status of Joseph Yavonditte, tiJne records of partners
to prove work "backed" by Yavonditte was actually performed by
Cooper, Erving and Savage.
3 • Issuance of a subpoena to each and every partner of
the former law firm of Cooper, Erving and savage to appear before
u. S. Federal Grand Jury with notes taken LTldividually at
4. R . t
III. OTHER T,EN)§ NEEDING TO BE ADDRESSED:
1. Round out allegations of improprieties involving the
relationship of Albany law firm Cooper, Erving and Savage and
it's partner, Thomas M. Whalen, III, who represented the Neenan
WAYNl! R. ALFORD
Special Agent in Charge
I will be happy to meet with you on a mutually
convenient date to discuss your prosecutive opinion of this
Garage company before the Albany Local DeveloplRent corporation,
and which was subsequently granted a $20,000.00 loan by the
Albany li:lcal Development corp.
y, ew or •
through partnership papers L- --'
3. Round out and investigate allegations that city land
was sold to a private group without bid or public notice with
respect to Bleeker ~ c e Investen: :;rtiPSt w b j c b ~ e awn:d
as a , imited partnership between _ ~ _ _ J
I lis a client of the Albany aw inn 0 COoper, Erv and