Ex-Jail System IG: Honor Was My Undoing;
Caruso Charges His Refusal to Frame Kerik Cost Him

By RICHARD STEIER

MICHAEL J. CARUSO: Claims DOI retaliated.

The longtime Inspector General of the Correction Department has sued his former bosses, alleging that he was forced from the position because he refused to give false grand jury testimony to help incriminate ex-Correction and Police Commissioner Bernard B. Kerik.

Michael J. Caruso, who served nearly 28 years as the jail system's watchdog, said he fell out of favor with his superiors at the Department of Investigation six months ago because he testified truthfully during the probe that eventually led to Mr. Kerik's conviction of improperly accepting money from businessmen who did business with the city, including two who were linked to organized crime.

Invitation to a Frame?

In a suit filed in U.S. District Court in Manhattan, Mr. Caruso asserted that DOI First Deputy Commissioner Walter Arsenault, who was cross-deputized as an Assistant District Attorney in The Bronx during the Kerik investigation, tried to persuade him to testify that Mr. Kerik "vouched for Larry Ray" during a 1999 meeting with Raymond V. Casey, who was then the chief enforcement officer for the city's Trade Waste Commission.

BERNARD B. KERIK: Made watchdog his friend.

Mr. Ray, who was the best man at Mr. Kerik's wedding a year earlier and paid a major share of its cost, had been hired by Interstate Industrial Corporation at his recommendation when it was seeking a waste-hauling license from the commission. Mr. Kerik arranged the meeting between Mr. Ray and Mr. Casey, a cousin of former Mayor Rudy Giuliani who is currently the head of the city's Off- Track Betting Corp., at Walker's restaurant, not far from the Correction Department's lower Manhattan headquarters.

According to Mr. Caruso's court brief, however, "he could not truthfully testify that Kerik vouched for Larry Ray at the Walkers' meeting" and did not do so when he appeared before the grand jury in late March.

Casey: Kerik Vouched

In December 2004, shortly after Mr. Kerik's nomination to be U.S. Secretary of Homeland Security was aborted, Mr. Casey told the New York Times that the former Correction Commissioner had described Mr. Ray as "a good honest person" who could be responsive to the Trade Waste Commission's concerns about Interstate, which had been linked to the Gambino Crime Family.

SID SCHWARTZBAUM: Don't cry for Caruso.

In March 2000, Mr. Ray was indicted in a stock fraud scheme allegedly operated by organized crime figures. Mr. Caruso's lawsuit alleges that after his grand jury testimony, he was summoned to a March 24, 2006 meeting with several top DOI officials, including Mr. Arsenault, Deputy Commissioner Dan Brownell, General Counsel Marjorie Landa and Chief of Staff Robert Roach. He claims they told him that if he did not resign his position, he would be fired. The reasons Mr. Caruso was given, according to the suit, involved "the relationship between Plaintiff and Kerik and because of the existence of certain telephone calls in December 2004 between Kerik and Plaintiff, and between Jeannie Pinero and Plaintiff."

A Public Affair

Jeanette Pinero is a Correction Officer with whom Mr. Kerik conducted an extended sexual relationship that began while he was at the agency and continued after he became Police Commissioner. While the affair was an open secret, it first received extensive publicity in a series of Daily News articles that appeared shortly after Mr. Kerik withdrew from consideration for the Homeland Security position - about the same time that those calls were made.

Mr. Caruso's legal brief charged that Mr. Arsenault accused him of concealing those conversations from DOI until they were discovered during a review of phone records. The former Correction IG insisted that he told his superiors about the calls during the same month that they took place.

Asked last week who had initiated those calls, Mr. Caruso's attorney, Brian G. Cesaratto, replied, "I'm not going to have any comment at this time."

When Mr. Caruso refused to resign, DOI Commissioner Rose Gill Hearn fired him on March 31.

Cites High Marks

As evidence that his dismissal was retaliatory because he had not altered his grand jury testimony to Mr. Arsenault's specifications, Mr. Caruso cited his "numerous excellent performance evaluations," and said that just three weeks before he was fired Ms. Hearn was making arrangements for him to transfer to a new job as the IG for the Sanitation and Parks departments while retaining oversight for some other city personnel, including those employed at the Office of Emergency Management.

He is seeking reinstatement to his old job or its equivalent, with full back pay and seniority rights, as well as compensatory damages and lawyer's fees. A spokeswoman for Ms. Hearn declined to respond to the specific claims made in Mr. Caruso's lawsuit, but issued a statement saying, "The complaint is factually and legally baseless, and, sadly, is a desperate attempt at retribution by a disgruntled former employee. DOI is confident that it will prevail in court."

An even harsher assessment came from Deputy Wardens'/Assistant Deputy Wardens' Association President Sidney Schwartzbaum, who since the late 1990s had charged that Mr. Caruso compromised his integrity by doing Mr. Kerik's bidding, to the degree that the latter gentleman in his autobiography described him as one of his "closest friends and colleagues."

Lawsuit 'A Joke'

"It's a disgrace and a joke for him to be suing claiming his rights were violated," Mr. Schwartzbaum said. "He buried his head in the sand and didn't do his job while other people's rights were being violated." In fact, he said, the friendly relationship between Mr. Kerik and the man who was supposed to keep at arm's length from top department officials because of his position as the agency's watchdog "created an environment not conducive to reporting corruption."

Mr. Schwartzbaum also questioned whether Mr. Caruso hadn't subverted DOI's probe of Mr. Kerik to prevent him from being charged with misuse of agency personnel for personal business. A similar violation - in a case Mr. Caruso assisted in preparing - earned one key Kerik associate, former Correction Chief Anthony Serra, a prison term for his own abuses. Mr. Schwartzbaum cited the reports in the News 21 months ago that staffers from Correction's Emergency Response Unit provided security at Mr. Kerik's November 1998 wedding while being paid by the agency.

The DOI spokeswoman noted that Mr. Caruso had recused himself from the probe of Mr. Kerik because of their prior relationship.

"Mike Caruso was walled off from the Kerik investigation, and thereby had no access to records, information, or anything else pertaining to DOI's investigation," said the spokeswoman, Emily Gest. When a reporter noted that he nonetheless had contact with two subjects of that investigation, Mr. Kerik and Ms. Pinero, and might have spoken to others who might have had information regarding security at Mr. Kerik's wedding, Ms. Gest responded, "No comment."

If, as Mr. Kerik claimed, none of the ERU staffers were detailed that day to assist at his wedding, Mr. Schwartzbaum asked, "Why were 33 of them paid overtime for that day, when there was no major incident in the jails, no rapid response or inmate disturbance?"