As we just noted below, it now seems much more likely than not that Kerik's "nanny" never existed. But there was some other big news today on the Kerik front that seemed to go largely unnoticed -- an article in the New York Post of all places.
There was a good deal of attention to Andrea Peyser's piece chock full of torrid and melodramatic details about the Kerik-Regan power-fling. But that's not what I'm talking about. I'm referring to the piece in the business section by Christopher Byron.
Here's the story ...
At the end of October, right about the time Kerik probably realized the DHS appointment might be coming down the pike, he resigned from the "advisory board" of a Long Island company called Defense Technology Systems, Inc. He wouldn't give any explanation to the company. And then three weeks later (about mid-November) he sent back 400,000 shares of the company's stock and coughed up a bunch of stock options they'd given him too.
Philip Rauch, who serves as the company's COO and CFO, didn't know what to make of it. And, like we said, Kerik wasn't talking. All Rauch could think of was that Kerik was trying to distance himself from Defense Systems' connections with another company called Georal Inc., a security door company in Queens. And the reason he might want to get some distance is because the head of Georal, Alan Risi, just plead guilty to padding invoices for work he'd done for the city.
(Here's a press release put out today by Defense Technology Systems, Inc., which confirms most elements of the story but seems to dispute the timing.)
So let's review. Kerik quickly cuts his ties with Company A because it does business with Company B, and the owner of Company B got caught over-charging the city and is probably going to do time.
So far so good.
But Kerik seems to have had some other connections to Georal.
When he was running the NYPD the department bought a few of Georal's security doors for pretty good money. But there was apparently no use for them; they never got installed and were eventually sent over to Riker's Island. Kerik has always insisted he had nothing to do wtih that purchase. But this summer, his successor, Ray Kelly, opened an investigation into the purchases.
And there's more.
It seems that the "advisor" who put Defense Technologies together with Georal was ... take a guess. Right: Bernard Kerik. And Rauch says he heard from folks at Georal that Kerik had a "very similar" arrangement there as he had with Defense Technologies. So, in other words, sign on as an "advisor" and get dealt in for about a kajillion shares of penny-stocks in the company.
Now, I'm just getting my footing here in the Big Apple. But I'm told by some pretty knowledgable people that big runs of penny-stocks are not infrequently used by some of your shadier business elements to cleanly move ... well, let's say 'thank you money' to politicians for services rendered. Pump the stock up a bit and there you go.
Such unfortunate manipulations of stock prices certainly do happen. Remember, for instance, that Lawrence Ray, Kerik's financial benefactor, who worked for the allegedly mobbed-up construction company in New Jersey, later got indicted in that "$40 million, mob-run, pump-and-dump stock swindle."
And the funny thing is, Mr. Ray's name comes up in this story too. According to the Post, SEC filings show that a man by the name of Lawrence Ray recently held more than 200 million shares of stocks and options in another penny-stock company called FINX Group Inc. And FINX lists Georal and our friend Mr. Risi (owner of Georal) as the sole supplier of the most of the products it sells.
Small world, isn't it?
This piece in tomorrow's Newsday has more details on Kerik and Georal, and other purchases on Kerik's watch as correction commissioner that "left [the Deputy Warden] scratching his head."