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The Indecider

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From 2002 through 2006, Giuliani Partners raked in more than $100 million from such Fortune 500 clients as Nextel, Delta, and Merrill Lynch. Today Giuliani says the firm has been downsized substantially. “The reality is that it’s about half the size it was before, and it’s doing about half the business it was doing,” Rudy says. “It’s doing very well for a much scaled-down business.” But not well enough to keep key members of Giuliani’s inner circle onboard. Carbonetti, for instance, recently ended his day-to-day duties to become a “strategic adviser” to Home Depot co-founder Ken Langone. In January, Rudy’s spokeswoman since his days as mayor, Sunny Mindel, also left. Rudy says the economy is partly to blame, along with his absence during the campaign. “Some of the clients didn’t have me around, so they left,” he says. One executive at a firm that competes with Giuliani’s suggests there’s more to it: “If you’re paying for someone’s judgment, you might not be as interested in that judgment after such a poorly run campaign.”

Giuliani Partners won’t name its clients, and ceased issuing press releases announcing its new contracts a bit before Rudy started running for president, so it’s impossible to know exactly whom he’s working for today. It’s clear that many of his past clients have moved on: Spokesmen for several companies with previously reported ties to Giuliani Partners—including Entergy, the Greater New York Hospital Association, and Aon Corporation—say their contracts ended long ago. Two senior employees for rival security firms say they never cross paths with Giuliani’s firm nowadays. “Frankly, they’re just not seen or heard from,” says one. (The same security-firm employee recalls working with the Mexico City government shortly after Giuliani Partners completed a 146-point crime-fighting plan at a cost of $4.3 million. Crime rates in the beleaguered city failed to drop substantially. The officials, says this source, “were all just pissed off–slash–laughing that what they got for a product was completely useless.”)

One sign of life did emerge last month, when Giuliani Partners’ security division announced a deal with a little-known New York–based asset-management firm called Nine Thirty Capital. “We do the things that weren’t done,” Giuliani explained in a recent CNBC appearance. “We go check and make sure the transactions are taking place. We make sure the business really has the people that it says it has. We go into their reputations, their background.” The press release announcing the deal promised it would “help restore investor confidence in the financial system.” More likely, it’s about restoring confidence in Nine Thirty. The list of Bernie Madoff’s victims includes numerous references to the firm and its CEO, Stuart J. Rabin.

While Giuliani Partners may be fading, Rudy’s other big moneymaker—Bracewell & Giuliani—is faring better. Rudy now spends about half his time at the firm’s Sixth Avenue offices. While his Bracewell income isn’t public, a financial-disclosure form Giuliani filed during his presidential run showed a guaranteed base pay of $1.2 million per year, plus 7.5 percent of the firm’s New York revenues in 2006. “It’s going to be more profitable this year than it was last year. And last year was our best year ever at the firm,” Giuliani says. Dan Connolly, a Bracewell managing partner (and former Giuliani City Hall aide), says the firm made gross revenues of just under $300 million last year—up a handsome 50 percent from 2006.

When he first opened the Texas firm’s New York offices in 2005, Giuliani’s primary job was recruiting talent to join the firm. Now that Bracewell & Giuliani has a team of 65 in New York, Connolly says, Giuliani spends more time not just building but “work[ing] the business”—attracting and working directly with clients. Connolly recalls one meeting earlier this month, for instance, when Bracewell was a candidate to broker a major debt restructuring for a group of financial companies. Four firms were asked to give short presentations. The Bracewell team included Giuliani, who “played a very active role,” Connolly says. “What he brings to bear is the gravitas of someone with almost 40 years of experience in the law.”

Fortunately for Giuliani, Bracewell was well positioned to profit from a national economic belly flop. The firm’s Connecticut and New York City branches have specialized in bankruptcy cases and work involving distressed companies. During the market meltdown in September 2008, Bracewell announced an “Economic Recovery Task Force” that promised to help guide clients “through the legislative, regulatory, and enforcement challenges” posed by the bailouts. Although Connolly says Giuliani “was not actively involved” in that work, the press release announcing the task force did include a quote from Rudy praising the firm’s lawyers.

And even as Giuliani Partners works to smoke out the next Madoff, Giuliani’s firm is defending a top associate of the man himself: Frank DiPascali, Madoff’s long-serving chief financial officer, who recently testified about the Ponzi scheme that he “knew it was criminal, and I did it anyway.”


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