Port’s New Head, Sued by Brother, Faces an Inquiry

Charles Kushner, the Port Authority commissioner who is New Jersey Governor James McGreevey’s choice to be the agency’s next chairman, may soon find the dreaded appellation “embattled” attached to his name.

Mr. Kushner is facing a whistle-blower lawsuit that could jeopardize his appointment to head the Port Authority-an appointment he doubtless helped to secure through generous contributions to New Jersey Democrats. He was the single largest donor to Mr. McGreevey’s campaign fund last year; to Hillary Clinton’s in 2000 and 2001; and to Senator Robert Torricelli’s in 1999 and 2001. Kushner companies collectively provided the largest bundle of contributions to Mr. Torricelli’s legal defense fund.

But those very contributions could be his undoing. The New Jersey real-estate executive raised eyebrows last year when his brother and business partner, Murray Kushner, filed a lawsuit accusing him of diverting money from their joint concerns to political candidates, as well as other improprieties.

But the case was sent to binding arbitration and sealed by a state judge in March, before much of the discovery in the case was completed. That move kept most of the evidence Murray Kushner’s lawyers had assembled out of the public eye-and away from the New Jersey Senate Judiciary Committee that approved his appointment in June.

Now, Charles Kushner’s chief accountant turned whistle-blower, Robert Yontef, has sued him for unspecified monetary and other damages, charging that he was fired when he provided Murray Kushner and other partners with evidence that, he said, supported their case.

His testimony, under seal in the lawsuit between the brothers, could become a matter of public knowledge during the course of the current whistle-blower trial in Newark. Mr. Yontef will have to prove that he had reason to believe that Charles Kushner was involved in wrong-doing when he provided the company information to Murray Kushner’s lawyers.

Whether Mr. Yontef’s allegations actually become part of his court proceedings could become a point of argument when his attorneys square off with Mr. Kushner’s on Dec. 13. Already, Mr. Kushner’s spokesman, Howard Rubenstein, is arguing that the two cases are inextricably linked, and that the confidentiality agreement between the Kushners in their current litigation would cover the same matters in the Yontef suit.

“Any matter related to the arbitration between Charles Kushner and his older brother, Murray, is the subject of a confidentiality agreement by the parties and the court,” Mr. Rubenstein wrote in an e-mail to The Observer , responding to questions about the lawsuit. “Inasmuch as Mr. Yontef is aligned and acting in conjunction with Murray Kushner and the questions involved relate to the arbitration, Charles Kushner will not be able to comment.”

In the suit, Mr. Yontef says that after he complied with his superiors’ orders to assemble the documents requested by Murray Kushner’s lawyers in discovery motions-documents, he said, that supported Murray Kushner’s claim that his brother Charles diverted money to political candidates to the tune of millions of dollars, among other alleged improprieties-CharlesKushner’s lawyers claimed in arbitration that they

were lost.

Neither Mr. Yontef nor his attorney, Ted Moskowitz of McCarter & English, would comment for this story.

Mr. Kushner would only provide a general statement through his spokesman, Mr. Rubenstein, in which he expressed confidence that the case would be dismissed.

“As he has indicated previously, Charles Kushner states that this baseless lawsuit is filled with false accusations brought by Robert Yontef,” the statement said, going on to characterize Mr. Yontef as “a disgruntled and disloyal former employee of the Kushner Companies.”

The Observer has learned from sources familiar with the litigation between the brothers that a Hudson County Superior Court judge has appointed a receiver-the New York firm of Price Waterhouse Coopers-to “recreate” the documents without prejudice as to whether they were lost or stolen.

Also politically damaging is the charge in Mr. Yontef’s lawsuit that misappropriated funds from the companies managed by Charles Kushner were used to purchase the Highview Planning Insurance Agency in September of 2000. The money was returned to the companies at an unspecified time after the purchase was mentioned in Murray Kushner’s suit. The company had been owned by Mr. McGreevey’s outgoing chief of staff, Gary Taffett. Except for the three years he owned Highview, Mr. Taffett has worked with Mr. McGreevey since the late 1980’s. Mr. Taffett, who has said that he received more than $350,000 from the sale, announced in November that he was leaving Mr. McGreevey for personal reasons.

It wasn’t the first time that Mr. Kushner had been linked to politically questionable moves inside the McGreevey administration. Shortly after taking office in January, Mr. McGreevey appointed Golan Cipel, whom he has said he met on a tour of Israel, as his homeland-security adviser. It turned out that Mr. Cipel is not an American citizen but an Israeli, and that federal agencies would not share national-security data with him. Mr. Cipel has since resigned. Mr. Cipel had previously been employed by Mr. Kushner, who sponsored him for a visa. He wrote corporate press releases from the Kushner Companies’ offices in Florham Park, N.J. Mr. Kushner hired Mr. Cipel after he had served as the McGreevey gubernatorial campaign’s outreach coordinator to Jewish voters.

In these incidents, political hay is made of friendships that play out against the backdrop of politics. In other instances, it is the potential for Mr. Kushner to use his political power-particularly as head of the Port Authority-to cement business and personal relationships that has caused alarm.

As a real-estate developer, Mr. Kushner’s interests already coincide with many corporations that do business with the Port Authority. Several weeks ago, after an inquiry by The New York Observer, Mr. Kushner’s spokesperson said that Mr. Kushner would recuse himself from any decisions regarding the proposed tower above the Port Authority Bus Terminal, which was being developed by a partnership including Vornado Realty Trust. Mr. Kushner had struck a deal with Vornado to buy the Monmouth Mall in Monmouth County, N.J., this fall, a deal that was not disclosed to the Port Authority. At the time, Mr. Kushner’s spokesperson said that Mr. Kushner was eager to avoid “even the appearance” of impropriety.

Power and Influence

Charles Kushner’s name isn’t familiar to many New Yorkers, even though, if he does become head of the Port Authority, he will have extensive influence over massive development projects throughout the region-including the redevelopment of the World Trade Center site.

But Mr. Kushner is well known in political circles throughout New York and New Jersey as a philanthropist, a conduit to Jewish constituencies, a fund-raiser and a hefty donor to political campaigns. He serves on the boards of more than half a dozen charitable organizations-educational organizations, medical organizations and Jewish charities-and sits on the board of trustees of Hofstra University, his alma mater, where a building in the law school is named after him and his wife, Seryl. Al Gore has spoken at a Hebrew school in Livingston, N.J., that in 1986 was renamed to honor the memory of Mr. Kushner’s father. In the fall of last year, when Mr. Kushner was honored at the Cerebral Palsy of North Jersey’s annual “Steps to Independence” dinner, former Israeli Prime Minister Benjamin Netanyahu was among the guests. At that event, Mr. McGreevey called Mr. Kushner “a shining example of the difference our businesses can make throughout the state.”

Mr. Kushner’s businesses have certainly made a difference to Mr. McGreevey and other political candidates. A review by The Record of Hackensack found that over the last five years, Mr. Kushner, members of his family and the heads of businesses operated by him funneled at least $3.1 million to various political-action committees and politicians. Mr. Kushner’s four children gave nearly $300,000 to various beneficiaries. A total of $237,000 poured into the state’s Democratic Committee from Mr. Kushner or his associates on one day in March of last year. “No single politician has benefited from Kushner’s open wallet more than McGreevey,” The Record reported. “Since 1997, the Kushner network has contributed more than $1.5 million to political funds benefiting McGreevey.”

These contributions-political as well as charitable-are at the heart of both the bitter lawsuit between Mr. Kushner and his brother Murray, and Mr. Yontef’s more recent allegations.

Mr. Yontef alleges that Mr. Kushner would have one of his many limited-liability partnerships either directly make a political or charitable donation, or have the holding company, Westminster Management, send a check and then allocate it back to several or all of those partnerships. At the end of each year, Mr. Yontef would send the accounts to an outside accountant, Schonbaum, Safris, McCann, Bekritsky & Co., which listed all the contributions made. The completed tax returns that came back, Mr. Yontef alleges in the suit, “listed no charitable contributions whatsoever.”

Mr. Yontef claims that he was ordered to miscode the contributions in the company’s internal accounting system to conceal from which accounts the contributions originated.

The suit also repeats allegations that Mr. Kushner made donations in the names of individual principals in the partnerships without their prior consent, getting the money to the candidates in the name of say, a manager at one of his companies. Mr. Rubenstein, the spokesman for Mr. Kushner, conceded to The Observer that such donations were made in the past, but insisted that the matter had been corrected.

Specifics about which contributions were disbursed from which companies were not available, because they are subject to a gag order imposed on the suit between the Kushner brothers. Asked whether Mr. McGreevey might order his own review of the source of the $1.5 million in campaign contributions he has received from Charles Kushner and his affiliates, spokesman Kevin Davitt said, “Absolutely not.”

“The Governor has full confidence in Mr. Kushner. Our attitude is, it appears to be a family squabble of sorts at this point, and … that’s why God made the courts,” Mr. Davitt continued.

Indeed, if Mr. Kushner’s legal troubles threaten his hard-won political friendships, the developer would have far to fall. Last spring, according to The Record , Mr. Kushner was able to gather 1,000 friends and supporters on short notice to the Grand Ballroom of the Puck Building (which his company owns) to celebrate the bris of his 8-day-old grandson. The guests included Rudolph Giuliani and then ex-Senator Frank Lautenberg. Mr. McGreevey even managed to put in an appearance, despite a serious injury. He hobbled in on crutches.