When the RSA bought a skyscraper, smashed the mob, and launched an empire
Updated Mar 07, 1:35 PM;
Posted Jan 27, 12:00 PM
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By Casey Toner
rsainvestments.zip
The glittering jewel of the Retirement Systems of Alabama real estate portfolio, 55 Water Street in New York City. Last year, the investment was worth about $1.52 billion. (
www.55water.com)
Alabama's pension system bought a 3.8 million-square-foot skyscraper in New York City in 1993 for a fraction of its worth and needed an honest man to run it.
So they turned to an undercover detective who was working under a fake name in concert with a legendary New York City district attorney to take bribes from mobsters.
The ensuing investigation helped lead to the downfall of two of the nation's largest crime families, the end of a multi-million dollar garbage collection racket, and helped launched an unlikely second act for a New York cop. This time under his real name.
As for the Retirement Systems of Alabama, the building was a windfall investment.
Purchased for about $202 million, the 53-story floor is now worth an eye-popping $1.5 billion. It rents at $58 per square foot and leases to some of the biggest names in fashion and business. Millions of dollars of proceeds from the skyscraper flood into the RSA coffers annually.
Perhaps more importantly, the building's success gave them a seat at the table for bigger business deals to come.
It cleared the path for future RSA investments in resorts, office buildings, golf courses, a media conglomerate, and other businesses that now color the Alabama landscape. Today, the RSA has more than $38 billion in assets and its CEO David Bronner is one of the most powerful businessman involved with state government.
"It's definitely the best investment the Retirement Systems of Alabama in its history has ever made," said Marc Reynolds, a longtime RSA deputy director who was fired from the RSA in 2012.
"It was like someone going to the dog track and winning big money and you're hooked and you think it can do it every time."
Going undercover
Talk about fake it until you make it.
That's exactly what Harry Bridgwood did at 55 Water Street.
A New York City undercover detective, Bridgwood's corporate experience was limited. He co-owned a sporting goods store with two other police officers, shared a franchise for a Tropicana juice delivery route, and never graduated from college, according to a New York Times story.
But what he lacked in his business background, he made up with his courage and believability, according to former New York City District Attorney Robert Morgenthau.
Morgenthau, a celebrated World War 2 veteran, said that Bridgwood had the right character to do the job.
"Nobody suspected him," said Morgenthau, now 96. "He played the role of a corrupt owner's agent really well."
The idea was that Bridgwood, wearing a wire and using the fake name "Paul Vassil," would coordinate bribes and rig bids with V. Ponte & Sons. Morgenthau has deep Alabama ties and had previously collaborated in the past with Bronner, who signed off on the project.
In 1992, Bronner and the RSA led a bankruptcy takeover of the 53-story building after its former owners defaulted on $548 million worth of loans on the building.
The RSA was the largest single holder of the loans, with $100 million worth, and put together a deal to buy out the other loan holders for 29 cents on the dollar.
At the time, the building was in desperate need of repair and beholden to a number of criminal forces.
None was bigger than the garbage collection firm that had the contract at the building for more than two decades.
At their height, the Gambino and Genovese crime families that controlled the garbage cartel overcharged their clients up to $500 million a year, prosecutors alleged. This wasn't the only scam either.
In an interview with AL.com, Bronner recalled a tiny flower garden in the building that one man was paid $50,000 a year to water. There was also a ghost payroll scheme where 15 union members were charging the building for the work of two non-union immigrants.
"Everything had a scam to it," Bronner said. "You name it, there was something going on."
Cracking the case
Wearing one of three suits Morgenthau purchased for him from a prominent New York City designer, Bridgwood made his debut in October 1993 at 55 Water Street under the name Paul Vassil, according to a New York Times story. As the CEO, Bridgwood's first job was to oversee a $150 million renovation that would turn the run-down building into a first class property.
Part of the process of renovating the building included rebidding the building's costly service contracts, That meant the mob-controlled garbage enterprise - which was overcharging the skyscraper by $1 million annually - might be out of work.
Bridgwood met with Vincent Ponte, the son of Angelo Ponte, the former head of what once was New York's largest garbage-hauling company. During their meetings, Ponte slipped Bridgwood two envelopes containing $5,000 worth of cash to keep the contract with the skyscraper, and later to see the bids at the last minute so that his firm could undercut them.
Then, the police swooped in. A total of 34 people, 34 companies, and four trade waste associations were indicted as part of the five-year investigation.
"We know the cartel functioned because we infiltrated it," Morgenthau said in a June 1995 press release announcing the indictments. "We attended their meetings. We dealt directly with their leadership. We saw and experienced first-hand how the cartel used its coercive powers and its organized crime connections to ensure that no one would challenge their control. In short, we became an accepted member of the established criminal enterprise."
Interestingly, Morgenthau noted that it "took the Retirement Systems of Alabama to stand up and do the right thing."
Ponte pleaded guilty to accepting $10,000 in bribes, got five years on probation, and now has a job with Ponte Equities. He did not respond to multiple messages. His father, Angelo Ponte, was sentenced to two to six years in state prison.
'It made us a player'
In the end, Harry Bridgwood became who he pretended to be.
Harry Bridgwood
When the investigation wrapped up, Bronner kept the former undercover police officer as the head of 55 Water Street.
In his permanent role, Bridgwood helped attract big name tenants such Standards and Poor's, the NYC Department of Transportation, and communications firm Bowne & Co.
In 2013, the building had a payroll of $2.8 million. Tax records show the building generated a profit of nearly $41 million that year after generating an $80 million profit a year earlier.
Bridgwood received a total compensation of $285,648 two years ago, making him one of 14 employees there that received a six-figure salary, according to the last available tax records.
He was an employee of New Water Street Corp, a non-profit that was created to funnel the building's proceeds to Alabama's pension fund.
But if he were paid as a state employee, Bridgwood would have been the fourth-highest paid Alabama state employee that year, right behind the late RSA senior counsel William Stephens ($314,672), RSA deputy secretary Donald Yancey ($325,000), and Bronner ($562,494), the state's highest-paid employee.
With his ties to Bronner and the RSA's vast business network, Bridgwood expanded his clout in Alabama. He is a board member for Raycom Media, the media conglomerate that the RSA now has a $2.7 billion stake in, and Hope for the Warriors - a veteran's charity whose board treasurer is the Raycom Media CEO.
Bridgwood, who was unavailable for immediate comment, retired from the job in July 2014.
Today, the skyscraper is the jewel of the RSA's eclectic real estate portfolio which includes a number of high-rise office buildings in Mobile and Montgomery.
It all started with a fake persona and the mobbed up skyscraper that the RSA bought on the cheap.
"We're in Alabama, the fifth poorest state in America," Bronner said. "Who cares about Alabama besides you and me and a handful of other people? The point is the world didn't care about us. It made us a player."