"Give Me Back My Reputation!"

By GEORGE J. CHURCH

At the time it seemed a daring gamble: the defense rested its case without calling a single witness, relying entirely on cross-examination and closing arguments to make its points. But as it turned out, it was no gamble at all: several jurors had already decided that the prosecution had no case, and once the nine-month trial ended, the rest of the twelve-member panel agreed. Only one vote was needed to acquit all ten defendants of each of the ten charges against them. All that remained after 9 1/2 hours of deliberations was for Jury Forewoman Rosa Milligan to pronounce the words not guilty 100 times.

Thus ended the long ordeal of Raymond Donovan, the first U.S. Cabinet member to be indicted while in office. Almost from the time of his confirmation as Secretary of Labor in 1981, Donovan was plagued by allegations that he had maintained close ties with mobsters while he was a construction executive in New Jersey. A special prosecutor investigated him twice and concluded each time that there was "insufficient credible evidence" to indict Donovan for anything. Nonetheless, in 1984 Bronx District Attorney Mario Merola persuaded a grand jury to indict Donovan and the other defendants on charges of larceny and fraud in connection with a subway-tunnel deal. The next year, after a judge refused to dismiss the indictment, Donovan felt obliged to resign. Small wonder, then, that after his acquittal Donovan, rigid and pale, called out to Prosecutor Stephen Bookin, "Give me back my reputation!"

Donovan's onetime boss, Ronald Reagan, contented himself with a perfunctory announcement: "I have always known Ray Donovan as a man of integrity, and I am happy to see this verdict." But several newspapers once critical of Donovan turned on Merola for bringing an unsupportable indictment. Said the New York Daily News: "Donovan's entitled to his clean sheet -- and a lot of anger. Mario Merola deserves his black eye."

The essential charge was that Schiavone Construction Co., a Secaucus, N.J., firm in which Donovan served as executive vice president before his Cabinet appointment, had defrauded the New York City Transit Authority of $7.4 million on a contract to construct a subway tunnel. Schiavone was obliged to give 10% of the work to a minority-owned enterprise. The enterprise it chose was Jo-Pel Contracting and Trucking Corp., a firm set up by New York State Senator Joseph Galiber, who is black, and William (Billy the Butcher) Masselli, who has been identified by the FBI as a Mafia soldier. Merola charged that Jo-Pel was a mere front and that Schiavone had siphoned cash out of the contract by leasing Jo-Pel heavy equipment and receiving rental fees. Donovan, Schiavone and the other defendants contended that Jo-Pel was a legitimate firm, the leasing deal had been proper and, since the construction job had been finished for less than the contract price ($186 million), the Transit Authority had lost nothing.

A number of New York State legal experts said Merola and his assistant Bookin simply failed to substantiate their charges. Says Columbia University Law Professor Gerard Lynch: "The general feeling is that this is one of the dullest, longest and least persuasive presentations ever made." Joy Fennel, a juror who says she once leaned toward conviction, agrees: "I was frustrated the D.A. didn't do a better job." Several jurors also indicated sympathy with a defense contention that Merola, a Democrat, brought the charges just before the 1984 election in a politically motivated attempt to embarrass the Reagan Administration. Countered Merola: "In the Bronx, you need a smoking gun or a knife to convince a jury a crime has been committed."

The prosecution's efforts were further damaged, perhaps fatally, in April when Judge John Collins felt it necessary to clarify for Merola the legal theory on which the case would be presented. Merola wanted to broach two theories of what the jurors could consider to be larceny; Collins allowed them to weigh only one. Says a retired Manhattan judge who followed the trial: "It is pretty embarrassing for the prosecutor to have the judge straighten out for him the indictment and the legal theory behind it." The sensation of what was primarily a dozy trial came just after the jury began deliberating. One juror apparently suffered an attack of panic; she locked herself in a bathroom chanting, "The Lord is my shepherd." Judge Collins rejected appeals by several defendants to declare a mistrial. He seated an alternate juror, who concurred in the verdict of acquittal.

Donovan is expected to rejoin Schiavone, which is paying a $13 million legal bill. Ronald Schiavone, the firm's chairman, was named in Merola's original indictment, but after he suffered a heart attack last June, the prosecution agreed to try him at a later date. That trial is scheduled for July, but it is unlikely it will ever be held. For his part, Theodore Geiser, attorney for the Schiavone company, is reviving a suit for damages he filed two years ago against Merola, accusing the D.A. of publicly making prejudicial statements about the defendants beyond what was charged in the indictment.*

For Donovan and his family, however, this particular nightmare is over. In late 1984, two months after his indictment, Donovan drove to the public library near his home in Short Hills, N.J., to read the newspaper clips about his career. As he thumbed through the stories about his legal troubles, he grew increasingly angry. "That's what people will read forever," Donovan complained. It may be small comfort to him, but now that folder will contain a sheaf of clips headlined DONOVAN ACQUITTED.

FOOTNOTE: *Ronald Schiavone also is pursuing a libel suit, against TIME (Donovan is not a party) involving an article published in 1982. New Jersey Federal Judge H. Lee Sarokin dismissed the suit last November. A Schiavone appeal of the dismissal is expected to come up for argument in the Third Circuit Court of Appeals this fall.

With reporting by Jenny Abdo and Raji Samghabadi/New York