QUICK & DIRTY
 The Hidden Treasures Behind Lazio's Stock Deal
   BY WARD HARKAVY

                   U.S. Senate candidate Rick Lazio not only personally profited from trading stock
                  in 1997 in Quick & Reilly just before it was sold to Fleet, the Boston-area banking
                  giant, but he raked in sizable campaign cash on a single day in the same period
                  from Boston financiers, including the Fleet official who engineered the deal.

                  Lazio's profit-taking on his first venture into the world of stock options has prompted
                  suspicion that he had inside information that the deal was about to go down, but he
                  has denied receiving any improper tips from Q&R officials, who also were major
                  contributors to his campaign before, during, and after the sale to Fleet. He has also
                  refused to name his broker.

                  The Boston big shots, who had previously donated only a handful of coin to Lazio,
                  shoveled more than $14,000—almost as much as he made on the stock
                  options—into Lazio's campaign on July 1 of that year, just one week after he made
                  a crucial purchase of Q&R shares. In October, less than a month after Fleet
                  completed the purchase of Q&R—the nation's third largest discount
                  brokerage—Lazio got another clump of campaign funds, much of it from officials of
                  a Q&R subsidiary, U.S. Clearing, which makes money processing stock trades.

                  An analysis by the Voice of Lazio's campaign records indicates that the Boston
                  bankers gathered on July 1 at a Lazio campaign "event." Those records show that
                  at least part of the tab was picked up by Michael Gladstone, an official of Boston
                  Financial Group, a powerful housing industry firm. He contributed $387 in "in-kind"
                  money to Lazio's campaign as an "event sponsor" on July 1.

                  Among the other big cigars who gave Lazio dough on July 1 was H. Jay Sarles,
                  Fleet's vice chairman, who was later credited in press reports as having "guided"
                  the purchase of Q&R. Sarles, a heavy spender on politicians, gave Lazio $500; it
                  was his first and only reported contribution to Lazio. Besides Sarles and Gladstone,
                  26 other Boston-area bankers and housing-finance muckety-mucks gave checks to
                  Lazio's campaign that day. Most of the checks came from the lawyer-lobbyists of
                  Peabody & Brown and employees of Boston Financial Group. Some came from
                  Boston Capital Ventures, a real estate investment group whose chief was a major
                  donor to Democrats. Both Boston Financial and Boston Capital did business with
                  Fleet. If they were all gathered together with the Long Island Republican, you'd think
                  somebody would have gossiped about whether Fleet and Q&R were wooing each
                  other.

                  Lazio is the only House member to serve on both the Commerce and Banking
                  committees, and he chairs the subcommittee that oversees HUD and other
                  housing-finance machinery, with which the Boston bankers and developers make
                  their money and then give morsels to politicians.

                  Lazio's lucrative 1997 actually began in December 1996, not with American banking
                  matters but with a furor over Swiss banks and Nazis. The banks, accused of storing
                  cash and gold that the Nazis looted from Holocaust victims, were trying to clean up
                  their image so they could expand their U.S. business interests.

                  But lawyers for World War II survivors urged the Federal Reserve Bank to revoke the
                  charters of the Union Bank of Switzerland and two other Swiss banks. Even Al
                  D'Amato, still a senator at that time, blasted the Swiss banks, releasing a report
                  detailing their purchase of looted gold. But Lazio said it would be unfair to single out
                  the Swiss banks. He told Jewish Week, "I'd be very reluctant to scapegoat a
                  couple of banks."

                  His sympathy for the foreign banks paid off. The next month, he got three campaign
                  contributions totaling $700 from three officials of the Institute of International
                  Bankers—his first reported money from the Long Island-based group that
                  represents foreign banking interests in the United States. D'Amato, the leading
                  moneymaker from institute officials until he shot his mouth off, never got another
                  penny from them according to reported contributions. Lazio continued to rake it in,
                  garnering $750 in 1998 and $750 in 1999. His pals at Q&R and in New England
                  must have been happy with his gentle handling of Union Bank of Switzerland: The
                  bank was Fleet's financial adviser in 1997 during the Q&R purchase.

                  Also in early January, Lazio introduced his "reform" measure, the Housing
                  Opportunity and Responsibility Act, one section of which called for public housing
                  tenants to perform "community service" in return for their federal subsidies or face
                  eviction. (Critics pointed out at the time that he wasn't requiring—or even
                  asking—heavily subsidized oilmen, peanut farmers, developers, or bankers to work
                  for free in exchange for their subsidies.)

                  Then Lazio took off on January 10 for a trip with his wife to Orlando, Florida, for a
                  speaking engagement. It was no coincidence: Bankers and developers have made
                  millions off tax credits and housing subsidies, and the Lazios' trip was
                  all-expenses-paid by Novogradac & Co. LLP, a San Francisco-based accounting
                  firm specializing in housing finance. On February 10, the company's chief, Mike
                  Novogradac, a steady contributor to Lazio over the years, sent him a $1000 check.

                  Lazio's campaign money from New England didn't start arriving, however, until the
                  next day. On February 11, according to The New York Times, he made his first
                  purchase of Q&R stock. That same day, according to a Voice review of Lazio's
                  campaign records, he got $500 from a Boston Capital executive. Exactly a week
                  later, he got $500 from Boston Financial chief Fred Pratt, $1000 from a second
                  Boston Financial official, and $500 from another. On February 25, he got $1000
                  from Boston Capital's chief, Herb Collins.

                  By June 24, his Q&R investment was showing a loss, according to the Times, but
                  he bought more Q&R stock that day. Exactly seven days later, on July 1, the
                  Boston bigwigs rained money on Lazio. Some of the donors, including Collins of
                  Boston Capital and Ned Epstein of Housing Partners Inc., testified that very spring
                  before the House and regularly make campaign contributions. But for some of the
                  donors, it was their only reported campaign contribution to a Republican. For
                  others, it was their only reported contribution to any congressional candidate during
                  1997.

                  Whatever happened on July 1, Lazio bought his now infamous options on Q&R
                  stock exactly one month later. Fooling with options is riskier than just buying
                  regular shares, and records indicate that it was his first stab at it. The Times
                  reported that the stock was trading at about $27 and his options entitled him to buy
                  Q&R for $30 at any time until October 17. Of course, as the paper pointed out, the
                  $1396 he spent on the options would disappear if the stock didn't rise above $30
                  before the deadline. It wasn't until August 1 that public speculation began that Q&R
                  might be purchased, thus increasing the stock's value. Three days later, the paper
                  reported, Lazio spent $905.48 on more Q&R options.

                  On September 17, Q&R officials announced the sale of their company to Fleet.
                  That day, Lazio sold the options for $15,944.46, lining his own pocket with a 600
                  percent profit.

                  The Quick family acted quickly to spread even more joy to their pal Lazio. Only five
                  days after the sale, on September 22, Christopher Quick wrote two checks for
                  $1000 each to Lazio's campaign. Fifteen days later, five employees of the Q&R
                  subsidiary U.S. Clearing each sent $250 checks to Lazio. On the same day,
                  Pascal J. Mercurio, the head of U.S. Clearing (and a resident of West Islip, only a
                  moneybag's throw from Lazio's home in Brightwaters), wrote him a $500 check.
                  Mercurio was a steady contributor to Lazio before this, and still is.

                  By January 1998, Lazio had sold his Q&R stock. But his campaign, thanks in part
                  to his Boston pals, had lots of options. On January 30, 1998, Lazio reported that he
                  had $1.3 million of cash on hand.