The Nathan Detroit of Candidates, OTB’s Cornstein Is Finally Running

To the list of business executives who pine for the glories of elective office, add the name of 63-year-old David

To the list of business executives who pine for the glories of elective office, add the name of 63-year-old David Cornstein, a jewelry magnate and chairman of New York City’s Off Track Betting Corporation who has spared no expense in his preparations to run for State Comptroller next year. A man of immense wealth and influence, Mr. Cornstein is matching Mayoral hopeful Michael Bloomberg in his purchase of some of the best and most expensive talent New York has to offer: former Senator Alfonse D’Amato, former state G.O.P. chairman William Powers and election wizard Arthur Finkelstein. He has pledged to spend $10 million of his own money on the campaign.

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While money and muscle do not guarantee victory (veterans will recall the gubernatorial campaign of Lew Lehrman in 1982), you’d figure Mr. Cornstein has a good chance at achieving his long-sought ambition of public office. But a number of early missteps and ethical questions are threatening to turn Mr. Cornstein’s electoral juggernaut into a spectacular and expensive bust. In recent weeks, his fellow Republicans have accused Mr. Cornstein of exaggerating his support from key party members, and he has come under attack in the State Senate over the questionable business practices of a company that he chairs. In addition, the pending sale of OTB-the formerly decrepit city agency restored to solvency under Mr. Cornstein’s watch-may raise questions about his involvement with two of the bidders, potentially marring what he bills as his greatest accomplishment.

Now, before his campaign has even begun, state Republicans are wondering whether Mr. Cornstein is their version of Eliot Spitzer-the Democratic Attorney General who leveraged his family wealth into electoral victory in 1998-or something else entirely. “Let’s be honest about David Cornstein,” said East Side Assemblyman John Ravitz, who is supporting one of Mr. Cornstein’s likely Republican primary opponents. “He can throw all the money in the world at these consultants, but it’s not going to get him anywhere. Spitzer had money, but he worked hard and learned the issues. Cornstein reminds me more of Pierre Rinfret. Nobody wants that again.” (Mr. Rinfret, an unknown businessman, ran a disastrous campaign for Governor on the Republican line in 1990. He drew fewer votes than any major-party candidate for statewide office in recent history.)

Mr. Cornstein, who declined to be interviewed for this story, is an affable racehorse owner, a longtime officer of the Friars Club and a major Republican donor. Though he has long aspired to run for office-he wanted to run for Mayor in 1993 and Governor in 1994, but the Republicans looked elsewhere-his list of supporters is a reflection of his colorful past rather than the result of grass-roots organizing. On June 5, at his announcement fund-raiser at a midtown restaurant, he’ll be rubbing shoulders with an unlikely cast that will include 60’s crooner Paul Anka, real-estate titan Lew Rudin, Borscht Belt comedian Freddie Roman and talk-show hostess Sally Jessy Raphael (the evening’s M.C.).

As befits a political novice, perhaps, there are some minor errors on the invitation to the event: Ms. Raphael’s name is misspelled, for example, as is one of the evening’s “honorary chairs,” Mr. D’Amato.

Then there is a more serious error: listed just above Mr. D’Amato’s name is that of another well-known New York Republican, Mayor Rudolph Giuliani. This came as a surprise to Mr. Giuliani, who enjoys cordial relations with both Mr. Cornstein and another Republican candidate for Comptroller, Assembly minority leader John Faso of upstate Hudson, N.Y. The Mayor reportedly was less than pleased. “David Cornstein was not authorized to use the Mayor’s name,” a Mayoral aide confirmed.

Mr. Cornstein’s Runyonesque “have I got a horse for you” brand of salesmanship has also gotten him into an uncomfortable situation with another big-shot Republican in New York, Governor George Pataki. As Mr. Cornstein began to lobby for support among G.O.P. county chairmen around the state, he seemed to imply that he had Mr. Pataki’s support. A number of local Republican leaders were offended because they’d understood that the Governor was not backing anybody in the race. “I was surprised,” said Erie County chairman Robert Davis. “I had been told that the Governor was neutral.”

A spokesman for Mr. Cornstein, Jordan Lieberman, said that the would-be candidate simply told the Republican leaders that the Governor “would be supportive. Maybe Bob Davis misunderstood.” Mr. Lieberman didn’t comment directly on the apparently unauthorized use of the Mayor’s name on Mr. Cornstein’s invitation, but said, “David and Rudy are good friends, and the Mayor told David that he would help in every way.”

Such political gaffes may be minor mistakes that could be chalked up to simple inexperience. Potentially more serious are a number of issues resulting from heightened scrutiny of Mr. Cornstein’s business dealings and his tenure at the helm of OTB.

Mr. Cornstein got a taste of what may come at a recent hearing in the State Senate, when his nomination to the board of the Battery Park City Authority came to the floor. Usually, such appointments are rubber-stamped. Not this one. Democratic Senators tried to stall the nomination by pointing out that a company Mr. Cornstein chairs, TeleHubLink Corporation, has been sued by the State Attorney General’s office for “engaging in deceptive, fraudulent and illegal business practices.” Mr. Cornstein eventually was confirmed, but the strict party-line vote indicated that Senate Democrats were and are ready to play hardball with the would-be candidate for Comptroller.

Big Test Coming

The big test for Mr. Cornstein will come with the sale of OTB, which he has nursed back to profitability. In 1994, when he was made chairman, his mandate was to clean up the city agency that Mr. Giuliani famously referred to as “the only bookie operation in the world losing money.” He was then supposed to sell it off to private interests. Mr. Cornstein did well enough with the clean-up, but in 1999 he shocked many in the racing world by declaring that he would like to hold off on selling the city’s OTB until he could merge all the state’s regional OTB’s, along with the New York Racing Authority, into one entity under his control. He has since backed off that plan.

While the Mayor has lavished praise on the job Mr. Cornstein has done, some City Hall insiders now grouse that the chairman has run roughshod over his original mandate. “David Cornstein does not know how to listen,” said a Mayoral aide.

Now, with the sale perhaps mere days from being announced, public-interest groups are raising concerns about a possible conflict of interest. Of the two final groups bidding to acquire OTB, one includes two men who are partners with Mr. Cornstein in a lucrative horse-breeding enterprise. The men, realtors William Mack and Robert Baker, have hired two lobbyists, Mr. D’Amato and Mr. Powers, to help them with the deal. Mr. D’Amato and Mr. Powers are also working for Mr. Cornstein’s fledgling campaign.

While the Mayor will make the final decision on which bidder gets OTB, he’ll do so only after the city’s Economic Development Corporation has vetted the bids and made a recommendation. Mr. Cornstein is the vice chairman of the E.D.C.

(Mr. Lieberman told The Observer that Mr. Cornstein will recuse himself from the selection process.)

“What Mr. Cornstein is doing is more like the selling-off of state assets in the former Soviet Union than anything you normally see in New York,” said Neil Rosenstein, government-reform coordinator at the New York Public Interest Research Group.

A victory for Mr. Cornstein in the Comptroller’s race would cap an inexorable lifelong climb to wealth and prominence. The son of a rug salesman, Mr. Cornstein grew up in Manhattan and got his beginning in business by opening a discount-jewelry counter at a J.C. Penney on Long Island. He eventually parlayed that meager interest into a chairmanship of Finlay Enterprises, now a billion-dollar conglomerate.

To hear his friends tell it, Mr. Cornstein is a natural choice for Comptroller. “David is a bright, aggressive businessman who has done exceptionally well in the world of finance, and I think his skills will make him a great Comptroller for New York,” said attorney David Breitbart, a supporter and friend of Mr. Cornstein.

Other colleagues seem somewhat less sure. “I remember when this guy comes up to me and says he wants to run,” recalled Pat Cooper, a comedy legend and longtime associate of Mr. Cornstein at the Friars Club. “I says, ‘Why do you want to be Comptroller?’ He doesn’t answer. I says, ‘What do you want to control?’ Still no answer. I swear to God, I can’t believe this is the guy that wants to write the checks. I don’t even know why he thinks he should be in politics. It’s like me deciding I want to be a brain surgeon because I’ve got a couple of knives.”

The Nathan Detroit of Candidates, OTB’s Cornstein Is Finally Running