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PBA fixture’s legal troubles

July 7, 1997

Here are some of the details in last month's superseding federal indictment of the former Patrolmen's Benevolent Association great, Richie Hartman. The indictment arises from the government's corruption investigation of the Transit PBA and its lawyers and consultants, and provides an indication of where it may be heading.

In December, 1988, after Manhattan District Attorney Robert Morgenthau decided not to prosecute Hartman for gambling away hundreds of thousands of dollars of PBA escrow funds in Atlantic City, union President Phil Caruso retained Hartman as a "labor consultant."

His retainer was for two years, 1989 and 1990; he was paid $1.98 million a year.

Morgenthau has contended he never prosecuted Hartman because Caruso would have testified that the PBA had loaned Hartman the money he blew. Instead, Hartman agreed to surrender his law license. He then launched a new career.

In 1989, Hartman obtained his New York state insurance license and began acting as a broker for the Metropolitan Life Insurance Company. That September, the PBA entered into an agreement with MetLife, allowing it to sell PBA members life-insurance policies, the premiums automatically deducted from members' payrolls and paid to the company.

That November, Hartman and MetLife agreed he would receive commissions of 55 percent of premiums purchased during the first year of the PBA policies, 9 percent for years two through five, and 3 percent during years six through 15.

In March, 1990, MetLife entered into similar agreements with the Housing PBA and the Housing Superior Officers Association, allowing it to sell life-insurance policies to their members. This time, Hartman's commission was only 20 percent the first year, and as in the original PBA agreement, 9 and 3 percent subsequently.

In 1990, Hartman received $2.2 million in MetLife commissions. In his 1990 tax return, he reported business income of $4.77 million. This included the $2.2 million from MetLife, his $1.98 PBA labor consulting contract and another $156,000 under a separate "labor consultant" agreement with the Transit PBA.

According to his 1990 return, Hartman owed $1,331,551 in taxes, of which he paid $320,000 prior to his filing the return.

Printable versionIn late 1990, Deborah Martz - the wife of Jim Lysaght, to whom Hartman turned over his law practice and who succeeded him as the PBA's chief attorney - and Linda Nunziato - the wife of Lysaght's law partner, Peter Kramer - obtained their New York state brokers' licenses to sell life, accident and health insurance.

On Jan. 10, 1991, Hartman sold his business Richard Hartman Inc. - which included all future commissions due him under the PBA and Housing agreements - to Martz and Nunziato, under the name Deblin Planners, for $2.5 million. Of this, $717,000 was to be paid at closing, the remainder within three years. The agreement also provided the purchase price would escalate to $4 million if commissions exceeded $1.8 million within three years.

In August, 1991, Deblin Planners received a New York state license to sell life, health and accident insurance. In December, Hartman directed MetLife to pay Deblin all commissions owed him under the PBA, Transit PBA and Housing agreements. Beginning in late 1991 or early 1992, MetLife began making those payments. Meanwhile, Hartman continued to act as an insurance broker and still ran the business.

These details and more of Hartman's finances are spelled out in the indictment, which charges Hartman - although he was earning $4.77 million in 1990 - with defrauding the IRS out of $1 million in taxes.

Question One that the indictment raises but does not answer: Why was Hartman, with his $4.77 million earnings in 1990, unable to pay his income taxes? Was he still burning holes in his pockets in Atlantic City?

Although during the 1970s, Hartman produced the largest salary and benefits packages for Long Island police departments in the country, he never produced corresponding raises for city police's rank-and-file as PBA counsel. Question Two: Why, then, after Hartman looted the PBA escrow funds, was Caruso so generous to him?

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© 1997 Newsday, Inc. Reprinted with permission.