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NY GOP gov hopeful: Dem rival took post-HUD payoff

By Michael Gormley
Associated Press Writer / September 30, 2010

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ALBANY, N.Y.—The Republican candidate for New York governor -- using a video press release to TV stations statewide -- is accusing Democrat Andrew Cuomo this week of taking a "payoff" while he was housing secretary during the Clinton administration from a man who is a major political donor and now works for Cuomo's campaign.

Carl Paladino, the Republican and Conservative nominee, cites a company sued by the federal government and run by developer Andrew Farkas, who later hired Cuomo as an adviser for $1.2 million and remains a top campaign contributor and is now the campaign's finance chairman.

The Farkas relationship is a complex aspect of Cuomo's career. It yielded millions of dollars to Cuomo and his campaign and gave him a base to mount a previous brief run for governor and then a successful campaign for attorney general, where he built a reputation through investigations of pay-for-play schemes and conflicts of interest. Although the relationship has dogged Cuomo in his political campaigns, government watchdogs have never leveled any charges at him.

"Paladino is rewriting history with a mud pen," said Cuomo spokesman Josh Vlasto.

A request for comment by Farkas made through the campaign wasn't returned. Cuomo and Farkas have said in news reports over the years that although they were adversaries when Cuomo ran the Department of Housing and Urban Development, Farkas grew to respect Cuomo and they became friends.

Vlasto, citing Wall Street Journal stories of the time, said Farkas' company then, Insignia, settled a lawsuit involving claims of kickbacks in federal housing in 1987 with the Justice Department, not Cuomo's HUD. The suit was settled for $7.4 million. Vlasto said Cuomo never personally met Farkas until 2002, which would make any "payoff" impossible.

Cuomo's HUD press releases at the time decried the deplorable conditions in buildings managed by Farkas' company and his case was of the biggest HUD ever took on, targeting con artists living in luxury at the expense of the poor.

The Journal, however, reported that Cuomo signed off on the Farkas settlement, which included no admission of guilt. The allegations involved $7.6 million in federal money investigators claimed was diverted from improving poor conditions in low-income housing. The newspaper reported Farkas sold Insignia in 2003 for $1.3 billion.

Paladino, and publications such as the Village Voice, see it differently.

"Andrew gave him a bye," Paladino told The Buffalo News in an interview published Tuesday. "And then he comes and he pays Andrew off with a $1.2 million salary he gave him and $800,000 in political contributions."

Paladino told the News the Farkas association is criminal in nature.

In a 2006 story about the attorney general's race, The Voice said Cuomo "wants to become the state's highest law enforcement officer, but that hasn't stopped him from attaching himself at the hip to a one-time scandal-scarred kingpin of a housing empire he denounced himself when he was Bill Clinton's secretary of Housing and Urban Development."

Cuomo, who was HUD secretary from 1997 to 2001, said there was nothing inappropriate about going to work for Farkas after he left the federal job.

Farkas, during Cuomo's ultimately aborted 2002 race for governor, said Cuomo never showed his company any favoritism and the Democrat "almost killed me. He was brutal ... our hands were completely clean, but it was just two years of hell."

In 2002, state campaign finance records showed Cuomo's campaign accepted money from the Insignia Financial Group or related companies and donations directly from Farkas among the $200,000 he had collected from companies that did business with HUD when he headed it.

"Where I come from, this is called a payoff," said Paladino, a millionaire Buffalo developer, referring to the Farkas-Cuomo relationship. "The entire sleazy transaction demonstrates why Andrew Cuomo does not have the integrity or the ethics to be governor of New York."

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