Real-estate developer and Port Authority board member Charles Kushner may soon be facing yet another lawsuit from former colleagues and business partners.
The political heavyweight has been beset since early last year by claims made by his brother, Murray, a former business partner, and Robert Yontef, his former accounting manager, that he misdirected company funds to become a massive political contributor in New Jersey. One of the beneficiaries of his largesse, New Jersey Governor James E. McGreevey, appointed the developer to the Port Authority board last year.
While Mr. Kushner has become a political lightning rod in New Jersey, he continues to gain influence over projects in New York. In recent weeks, Mr. Kushner served on the eight-person panel that ultimately decided to make Studio Daniel Libeskind and the New York–fronted team of architects known as Think the finalists in the design competition for Ground Zero. His influence will grow even wider when, as is widely expected, he assumes the chairmanship of the Port Authority in April. Not bad for a man referred to as a “political rookie” in a recent Star-Ledger editorial.
But some rookies have a veteran’s instincts, and Mr. Kushner is no exception. A published report recently stated that former U.S. Senator Robert Torricelli was thinking of hooking up with Mr. Kushner as he plans a new career, perhaps as a lobbyist for real-estate interests. Through a spokesperson, Mr. Torricelli denied the link, but Mr. Kushner, through his spokesman, affirmed it. “Kushner and Torricelli have entertained the possibility of a business relationship,” Howard Rubenstein told The Observer. “Under no circumstance will Kushner be in conflict as a result [of his relationship with Mr. Torricelli]. He’s always asserted that and will be extremely cautious.”
Meanwhile, Albany power brokers have been passing around articles from the Star-Ledger and the Record of Hackensack detailing Mr. Kushner’s travails amid a chorus of “tsks.” Nevertheless, the New Yorkers have honored the Port Authority tradition of non-interference in the nominations of New Jersey governors, who get to select the chairman of the bi-state agency’s board.
But the tsk-tsking in Albany may become even louder soon. The Observer has learned that one of Mr. Kushner’s business partners is considering taking legal action against him to leverage access to financial statements of three limited liability corporations in which he is an investor. In a letter to fellow investors in the three corporations, dated Nov. 15, 2002, but only circulated last month, Stanley Greenberg of Livingston, N.J., accuses Mr. Kushner of withholding financial statements from partners in the corporations, which manage real-estate properties in New Jersey.
“In order for him to release any information any more he wants me to sign a confidentiality agreement not to divulge the information to anyone else,” the letter reads. “This leads me to believe that there is something to hide. According to our partnership agreement he is required to supply us with annual financial statements and keep us informed as to what is going on at each property.”
The question of whether Mr. Kushner is indeed hiding something has become a political obsession in Trenton, the New Jersey state capital. He has become the man New Jersey Republicans love to hate. They cannot abide Mr. Kushner’s rapidly growing power, and the seeming willingness of the McGreevey administration to defend his appointment to the Port Authority at all costs.
State Senator William Gormley has asked Mr. Kushner to appear before the body’s Judiciary Committee to answer questions about recent news reports and allegations filed in New Jersey courts that allege he has made improper use of his company’s funds. According to one source, Mr. Gormley is now preparing a letter to send to Mr. Kushner’s fellow Port Authority board members advising them of Mr. Kushner’s refusal to appear before his committee.
McGreevey spokesman Micah Rasmussen said that such an appearance would be “unnecessary,” as Mr. Kushner’s appointment has already been vetted-albeit behind closed doors-by the New Jersey State Attorney General’s office. But that was before the lawsuits came to light.
“There are no do-overs. The guy’s been confirmed,” said Mr. Rasmussen. “I would say that if an individual senator has an individual concern that he wants to discuss with Commissioner Kushner, or if he wants to have a dialogue with Commissioner Kushner, then he should open up that dialogue. I am certain that Commissioner Kushner has a desire to be responsive to the State Senate.”
And Mr. Kushner’s world already has expanded beyond the confines of Trenton. Working alongside New York political and business heavyweights like Pataki aide Diana Taylor and Deputy Mayor Daniel Doctoroff, Mr. Kushner will become a critical figure in the increasingly murky leadership of the Ground Zero redevelopment process. Though Mr. McGreevey cited Mr. Kushner’s keen interest in the redevelopment project when he appointed him to the board, his Port Authority colleagues and members of the Lower Manhattan Development Corporation have heard little new from him. But that may well change.
A Loud Voice
While negotiations about a possible land-swap involving Ground Zero and the city’s airports have been led by the Port Authority executive director, Joseph Seymour, an appointee of Governor Pataki, Mr. Kushner very likely will have something to say about New Jersey’s interests in the transaction when he takes over as chairman.
“Kushner is a guy who listens to all the staff information and tries to come to a decision, but he’s not initiated anything new, really,” said one source.
“He wants to bring something back for New Jersey and be a big hero,” said another source familiar with the Port Authority’s leadership.
Mr. Kushner will have to tangle with Mr. Doctoroff and a host of New York city and state power brokers to get his agenda through. And surviving Trenton politics could be a good training ground for him if he plans to become an effective member of the rebuilding junta. That will be difficult if the lawsuits-especially the ones that allege mismanagement of funds and potentially dirty political contributions-continue to surface.
Mr. Greenberg’s letter, for instance, claims that Mr. Kushner was charging a 25 percent management fee against the accounts of the companies, significantly reducing the regular distribution checks investors in the three developments received. (Most companies charge management fees of 4 to 5 percent.)
“As far as I can ascertain he has been doing this for the last 10-12 years,” Mr. Greenberg wrote. “That 20 percent difference would approximately double our distribution.”
The charges mirror those made by others against Mr. Kushner, including his brother Murray, who is now in binding arbitration with Charles over management of their investment partnerships. The connection does not escape Mr. Rubenstein.
“Stanley Greenberg is a close friend of Murray Kushner,” Mr. Rubenstein told The Observer . “Greenberg owns less than 3 percent in three small deals that he purchased more than 10 years ago and that have yielded him many multiples of his original investment. He is, sadly, jumping on Murray Kushner’s litigation bandwagon.” Indeed, many of the charges in that lawsuit are not public, since a judge has sealed the case. But more recently, a lawsuit by Mr. Kushner’s former bookkeeper, Mr. Yontef, revisits many of Murray Kushner’s complaints in the context of a whistle-blower lawsuit. Mr. Yontef claims that he was threatened and fired for providing testimony to advance Murray Kushner’s case against his brother. That suit got new attention last week, when it was dropped in the Essex County courthouse and reinstituted at the federal level. Mr. Yontef’s attorney, Ted Moskowitz, successfully argued before a judge in December that the evidence found in discovery by his client could not be made the subject of a court seal, making it appear likely that as discovery progresses over the next two months or so, specific allegations against Mr. Kushner will come to light.
As they arrange their arsenal against Mr. Kushner, New Jersey Republicans have not limited themselves to repeating the accusations made in the various lawsuits against the developer. A group of Republican Assembly members is looking at whether Mr. Kushner’s campaign contributions were legal in the first place. A New Jersey statute holds that the majority shareholder in a bank cannot make political contributions or hold an elected or unelected position of public trust. Kushner Companies bought Norcrown Bank, according to its Web site, in 1996.
Clive Cummis, a lawyer who counseled Charles Kushner on his political contributions and the state’s campaign laws, said that though Kushner Companies does indeed own Norcrown Bank, it doesn’t disqualify Mr. Kushner from political contributions, fund-raising activities or holding a position on the Port Authority board.
“We have an opinion on those questions which we articulated to [Mr. Kushner] a year ago,” Mr. Cummis said. “One, he is a trustee of a trust that holds stock in a bank, and as such in our opinion is not a majority shareholder within the meaning of the statute.” He added that in Mr. Kushner’s current position, it would be unconstitutional to enforce a law barring him from holding public office or making political contributions.
Assembly leader Alex DeCroce, who said that he and several colleagues are continuing to look into the matter, said that such answers should be given directly to the Senate Judiciary Committee. “To me, [trusteeship and ownership] seems like it’s one and the same, but I’m not a lawyer,” Mr. DeCroce said. “Regardless, whatever it is, if Mr. Kushner feels he is really ethically right in these things, he should go before Senator Gormley’s committee and answer these questions, and then there will be no questions about his taking the position.”
In a backhanded way, Mr. Rubenstein, Mr. Kushner’s spokesman, seemed to acknowledge the political fallout of the Yontef suit, calling it a “transparent, media-directed effort to manipulate public opinion and the political process” by “a disgruntled and unfaithful” former employee looking for a monetary settlement.
Sources close to Mr. Yontef said that the 52-year-old would have come forward himself earlier if that were the case. Months after he provided testimony to Murray Kushner in his suit against his brother, the sources said, Mr. Yontef remained in the background, wanting simply to keep his job. It was only after he was “kicked upstairs” at the Kushner Companies, in what his lawyers call retaliation for providing his testimony, that Mr. Yontef came forward.
He was in a position to know something about the way the Kushner Companies’ books were run, to be sure, which makes his allegations that much more compelling to Mr. Kushner’s and Mr. McGreevey’s political enemies. And they are not unrelated to Mr. Kushner’s massive campaign contributions to the New Jersey governor and other Democratic campaigns and causes.
Fee for Clinton
The lawsuit alleges, for instance, that Charles Kushner diverted $675,000 from his business partners’ accounts to pay for celebrity guest speakers at events at his home and at his synagogue, including former Israeli Prime Minister Benjamin Netanyahu, former Federal Reserve chairman Paul Volcker and former President Bill Clinton.
The lawsuit also alleges that Mr. Kushner paid $3.4 million to buy an insurance company, Highview Planning, from Gary Taffet, a close friend and personal adviser to Mr. McGreevey who became the Governor’s first chief of staff in early 2002, 14 months after the sale. According to Mr. Yontef, $2 million of the money used to buy the firm was diverted from Mr. Kushner’s business partners without their consent.
The suit also alleges that Mr. Kushner annually diverted millions of dollars from his partners’ accounts to make political and charitable contributions. It is not clear whether contributions made to Mr. McGreevey are among the disputed funds.
Details of the allegations in Mr. Yontef’s 35-page federal suit would be enough to make most politicians’ hair stand on end-the kinds of details that must have made McGreevey administration officials heave a sigh of relief when the lawsuit filed by Mr. Kushner’s brother was sealed by the court. But now, Mr. Rubenstein confesses, the Yontef lawsuit could bring out allegations that have been concealed from the public in the previous lawsuit.
“Mr. Yontef is a disgruntled, unfaithful former employee allied with Charles Kushner’s jealous brother,” Mr. Rubenstein told reporters last week. “Mr. Kushner is confident in the outcome of this lawsuit.”
So, apparently, is Mr. McGreevey, who is pulling out the big guns to make sure that Mr. Kushner’s elevation to the chairmanship of the Port Authority goes through without a hitch.