Mark Mueller Journalism

(Published Nov. 7, 2004)

This story was reported by Josh Margolin, Jeff Whelan and Mark Mueller. It was written by Mueller.

On election night in 2001, James E. McGreevey ascended the stage in a hotel ballroom, a crowd of 2,000 elated supporters arrayed before him, his dream at hand.

In that giddy, optimistic moment, a close friend of the governor-elect predicted McGreevey’s political star one day would rise beyond New Jersey, perhaps even to the White House.

“From here, he becomes a national figure,” state Sen. Ray Lesniak said. “He will get it done in the right way, and that will project him nationally.”

Three years later McGreevey, as Lesniak suggested, is known across the country and beyond, but not for his vision or his governance. McGreevey leaves office next week a scandal-scarred figure, forced to acknowledge in his now-famous August news conference that much of his life was a lie.

Not only was the 47-year-old married father of two a homosexual who had put his lover on the state payroll, but the man, former aide Golan Cipel, was accusing McGreevey of sexual harassment and sexual assault.

To understand the forces behind McGreevey’s undoing, The Star-Ledger interviewed more than 50 people, including most of his closest friends and advisers. Several revelations emerged, among them that McGreevey’s private behavior had threatened to destroy his political career long before he met the man who led to his downfall.

Specifically:

• Despite his clean-living image – and confounding those who believed he was a closeted homosexual – McGreevey visited traditional, female-staffed go-go bars so frequently before he became governor that his advisers admonished him to stop, warning that he risked political immolation. At least twice leading up to the 2001 election, McGreevey also spent time at a gay nightclub in Atlantic City.

• McGreevey benefited in his rise to power from a small circle of loyalists who came to be known in political circles as his personal cleanup squad. The political guardians quashed rumors, reassured supporters fearful of lurid revelations and, in their most brazen act, shipped a female prostitute out of state just before the 1997 gubernatorial election after she claimed McGreevey regularly paid her for sex.

• Cipel was a far more pervasive presence in McGreevey’s life than previously believed, both in the Statehouse and at Drumthwacket, the governor’s mansion in Princeton, where the aide was twice seen emerging from the private residence early in the morning.

• Cipel’s remarkable access to the governor helped him win at least five high-paying jobs in the 13 months after he left the administration. In one previously undisclosed case, he was hired by a leading construction firm just before the governor approved a lucrative state contract for the company.

• In the final, desperate days before McGreevey made his resignation announcement, his closest advisers devised a plan to secretly pay Cipel to keep silent. The payoff would have been masked from public view through a legal defense fund, ostensibly created to help McGreevey counter the myriad investigations into his administration.

McGreevey plans to leave office next week, more than a year early, his longtime dream of running the state prematurely undone. He has denied all requests for interviews about his private life, leaving friends to speak for him. Questions sent to his office late last week also went unanswered.

“I sincerely hope he ultimately comes to peace with this and grows as a human being,” said Jim Kennedy, the mayor of Rahway and McGreevey’s closest friend for two decades. “I think it will take quite some time to filter through the whole emotional process.”

‘KNOCKING ON DOORS’

From his earliest days, McGreevey seemed destined to land on a big political stage. He had an Ivy League education and the backing of powerful figures in the state Democratic Party, and he was developing a single-minded ambition to one day control the Statehouse.

But the aspiring politician also had a habit that, if exposed, might have troubled the voters of New Jersey.

He liked to spend time at go-go bars. After work. In the middle of the day. On the campaign trail.

“There were a lot of go-go bars,” one longtime senior adviser to the governor said. “It was very common.”

Like many people interviewed for this story, the adviser spoke on condition his name be withheld. Those requesting anonymity cited the danger of damaging their careers in politics.

McGreevey’s taste for go-go bars already was well-established when he made his first run for political office, winning an Assembly seat in 1989 at age 32.

Indeed, aides say he wasn’t especially secretive about the strip club visits, which continued with regularity even after his 1991 marriage to Kari Schutz, a librarian he had met on a singles cruise to Bermuda, and even as he began a run for mayor of Woodbridge.

Three long-standing political allies said McGreevey sometimes broke away from campaigning for hours at a time to visit go-go bars in Sayreville, South Amboy, Old Bridge and Rahway. The trips were common enough to merit their own euphemism around the mayoral campaign: “McGreevey is out knocking on doors in Sayreville.”

Associates familiar with these trips said they were typical macho outings: McGreevey drank beer, flirted with dancers, tipped them sometimes and was just one of the guys. Frequently, McGreevey or members of his entourage recounted the go-go bar outings around the office the next day.

At times, McGreevey was accompanied by his friend Kennedy or mayoral aide Kevin McCabe, whom he later appointed state labor commissioner.

“As far as I’m concerned, he was like every other guy that I knew,” Kennedy said when asked about the visits. “It’s funny: Sometimes when people are in politics, they want to give the impression to everybody that they are a regular guy.”

GROWING CONCERNS

The visits struck some McGreevey aides as risky – two advisers characterized the trips as politically “reckless” – but they didn’t intervene.

“The problem is this guy liked to go out a lot,” one longtime senior adviser said. “He worked real hard, day and night, seven days a week. So he liked to blow off steam, and this was his way of doing it.”

By 1997, McGreevey had won a second term as mayor of Woodbridge. He also was a state senator and well on his way to capturing the Democratic nomination for governor.

His name and face were on television and in newspapers across the state, and he had cultivated an image tailor-made for politics: proud son of a Marine Corps drill sergeant, champion of the middle class, policy-wonk- conversant in the most esoteric details of government.

Early in the 1997 campaign, McGreevey still was visiting go-go bars so frequently his advisers believed an intervention was necessary.

The task fell to Doug Heyl, a Georgian brought in to manage McGreevey’s gubernatorial campaign, and to Gary Taffet, who served as McGreevey’s chief of staff in Woodbridge.

Heyl said there was tension between outside recruits, like himself, and McGreevey’s Woodbridge friends over the candidate’s fondness for strip clubs. At one point, Heyl said, he ordered Taffet, the deputy campaign manager, to confront McGreevey about strip clubs.

“Y’all clean up your mess,” Heyl recalled telling Taffet. “I gave a directive for Kennedy and McCabe to not be around him after 8 o’clock at night.”

Taffet, who later served as chief of staff in the governor’s office, has declined comment, as has McCabe.

In the months that followed, former campaign officials say, they no longer got phone calls from worried supporters reporting McGreevey sightings at go-go bars in and around Middlesex County.

That fall, in a surprisingly strong showing, McGreevey came within a percentage point of unseating Gov. Christie Whitman, virtually assuring he would run again in 2001.

He did, campaigning with the kind of tireless enthusiasm that became his trademark. But he had not given up his strip club habit, McGreevey’s advisers said, and once again they feared it would undermine his political promise.

During that 2001 race against former Jersey City Mayor Bret Schundler, McGreevey made frequent stops at a Paterson go-go bar, City Lights, owned by the son of a political ally, Alan Levine. A bar employee and a Passaic County official both said they saw him there.

Two Democratic officials said they worried at the time that the visits would short-circuit McGreevey’s candidacy. The fear mounted after one official received a call from a Passaic County Democrat who had seen McGreevey and McCabe in the Paterson bar for hours, drinking in plain view of other customers.

Inside the club, now known as Hi Beams Gentlemen’s Club, hang two 8-by-10 photos of McGreevey posing with Levine and other supporters at a fund-raiser.

Nonetheless, Levine said McGreevey never visited the establishment.

“He never was there,” Levine said. “He was my friend. You understand, you must have friends.”

OUT WITH THE BOYS

That McGreevey would engage in such an obvious display of heterosexuality in the years before announcing he was gay rings a familiar note to Steven Goldstein, who runs the gay-rights group Garden State Equality.

A former campaign manager for Sen. Jon Corzine and press secretary for Sen. Frank Lautenberg, Goldstein said such behavior is typical of the “coming-out journey.”

“To the lay person, it might seem he was gay or bi (sexual) or he was struggling with it,” Goldstein said. “But it shouldn’t come as a surprise to anyone that a gay man would engage in a flurry of straight sexual activity in the immediate years before coming out of the closet.

“For many gay men, including myself, you begin to date women and have sex with women as if to establish a final test for yourself as to whether you are gay indeed.”

It wasn’t just strip clubs McGreevey visited.

During the 2001 campaign, he also spent time at Studio Six, known as Atlantic City’s hottest gay nightspot. On a typical Saturday night, hundreds of people, mostly men, dance until dawn beneath flashing, multicolored lights.

Two employees said they saw McGreevey in the club at least twice, both times on Saturday nights, with owner John Schultz, a former Atlantic City councilman who is openly gay.

The employees said the two men went directly to the upstairs VIP room, a quieter setting with mirrored walls, Roman columns and crescent-shaped booths upholstered in plush yellow fabric.

One supervisory employee, who spoke on the condition his name be withheld, said workers took note of McGreevey but didn’t place him as the Democratic candidate until his victory that November.

“When he was elected, we’d say, ‘Oh, my God,’ and we’d just laugh about it,” the employee said.

Schultz, the owner, referred inquiries to Gary Hill, a spokesman for the club. Hill confirmed McGreevey’s presence, saying, “We know the governor.” But Hill said the appearances were likely related to political or charitable events.

“He might have been a guest of somebody else,” Hill said.

THE LAVENDER HILL MOB

Rumors about McGreevey’s sexuality go as far back as his 1989 Assembly bid and bubbled up with increasing intensity in succeeding campaigns. An official who worked on both of McGreevey’s gubernatorial campaigns called the rumors a “major distraction” that worried staffers and diverted attention from strategy and core issues.

McGreevey’s divorce from Schutz in 1995 fed the speculation. So did the cadre of young male aides with whom McGreevey surrounded himself. Democrats outside his inner circle derisively referred to the young aides as “the Lavender Hill Mob.”

The name didn’t stick, but the pattern of hiring did. During the 1997 run for governor, the dearth of women in campaign positions stoked controversy.

“It just didn’t look right,” a Democratic official unconnected to the campaign said. “You’ve got to have women around you.”

At the urging of Taffet and McGreevey’s top political strategist, Steve DeMicco, the campaign hired Kathy Ellis, an experienced press aide, to travel with the candidate. Inside campaign headquarters, the stated reason for the hiring was diversity. But a campaign official acknowledges now that Ellis served another purpose.

“In the backs of our minds were the gay rumors,” the official said.

In 1997, Ellis was in the press office of the state Senate’s Democratic caucus before going to work for the Democratic State Committee and then the McGreevey campaign as the No. 2 person in the communications department. Since early last year, she has been communications director in the governor’s office.

“I’ve always assumed then – and, given my credentials, I continue to assume – that the jobs I was given on the campaign were based on professional competence,” Ellis said.

No matter what moves the governor’s handlers made, the rumors about his sexual orientation continued. One was especially sordid: It suggested McGreevey had been caught having sex with a man in a town- owned car parked in a Woodbridge cemetery. The rumor had surfaced two years earlier, during McGreevey’s re- election bid for mayor. Now it was back, more dangerous than ever.

In a recent interview, the Woodbridge police officer rumored to have caught McGreevey in the act put the political legend to rest, saying it never happened.

“Something was said at one point and it grew legs,” Sgt. Joseph Nisky said, marveling at the story’s rapid spread and staying power. Nisky said he had no idea how or where the rumor began.

Though it was false, the story was gaining traction during the Democratic primary in 1997. Lesniak, a political mentor to McGreevey, said one Democratic county chairman warned him not to support McGreevey in the primary fight against Rob Andrews, a congressman from Camden County.

The chairman claimed the State Police had photos of the cemetery incident, Lesniak said, and that they undoubtedly would come out.

Lesniak said he confronted McGreevey with the rumor, bluntly asking if he was gay. McGreevey, Lesniak said, reacted calmly, without any display of anger or frustration.

“He just dismissed it and moved on to the next thing,” Lesniak said. “He wanted to talk about automobile insurance. . . . He was always interested in the next thing he was going to be doing.”

THE CLEANUP SQUAD

Lesniak and Taffet were accustomed to putting down rumors about McGreevey. They had been doing it for years. Together with then-state Sen. John Lynch, another McGreevey mentor and one of the state’s most formidable Democratic leaders, they formed the core of McGreevey’s cleanup squad.

Augmented at times by consultants and lawyers loyal to the Democratic Party, McGreevey’s protectors engaged in heavy phone work and face-to-face contacts, assuring county chairmen and others crucial to their candidate’s advancement that the gay rumors were false and that his go-go bar outings would not become a major issue.

But individual members of the damage-control team also took more aggressive action as needed. During McGreevey’s first gubernatorial run, a prostitute from Perth Amboy merited their attention.

As a character witness, Myra Rosa was suspect. The 5-foot-1, 105-pound woman had been arrested more than two dozen times in Perth Amboy and surrounding communities, mostly for offenses related to drugs and prostitution.

But in October 1997, as McGreevey threatened to upset Whitman, Rosa, then 26, began repeating a claim she first made to Sayreville police in 1995 after an arrest. It was a claim some in McGreevey’s camp viewed as a potential candidate-killer.

McGreevey, Rosa told police in a tape-recorded statement, had been a client off and on for two years. She made similar statements to her mother and to employees of Lucky 7 Bail Bonds, the Perth Amboy business that routinely secured her release from jail.

“She used to yell that in the office,” said Robert L. Hand, Lucky 7s president at the time. “Wed be bailing her out, and shed blab that McGreevey was her man.”

For two years, Rosas assertions lay dormant. Now, with McGreevey in the spotlight, they were reverberating far beyond Perth Amboy. Late in the McGreevey-Whitman race, tips came in to The Star-Ledger and other news organizations.

Interviewed by a Star-Ledger reporter in the Middlesex County jail in October 1997, Rosa insisted her story was true, saying McGreevey first picked her up on Smith Street in Perth Amboy, her usual haunt, and paid her $90 for sex. The relationship continued, she said, with trysts at hotels.

Inside the campaign, the staff was rattled. Were Rosas allegations to air publicly, regardless of whether they were true, McGree veys candidacy could collapse.

“The race had tightened up real close, and this was right in the middle of crunch time,” recalled Lynch, then the Democratic coordinator for several campaigns in the state. “It would have been a big distraction had it come out, and it certainly would have pushed the media away from the issues. That would have been damaging.”

At the request of the campaign, Lynch said, he launched an investigation, using a network of associates gained through decades in politics and law. He said he learned that the Republicans were hunting for Myra Rosa, too.

“They were clearly trying to do something about this in terms of the campaign,” he said.

On Oct. 21, 1997, after a gubernatorial debate, a Star-Ledger reporter confronted McGreevey about Rosas allegations. He burst into tears and said he knew about the claims, but he vehemently denied them.

Two days later, a Jersey City lawyer, Daniel Welsh, faxed the newspaper a letter saying he represented Rosa and that she was re tracting her story.

The Star-Ledger tracked down Rosa on Oct. 29, 1997, at Lucky 7 Bail Bonds, where she had purportedly found a job. The company, she said, was sending her to Florida for a seminar. Crying, she asked to be left alone.

Given Rosas retraction through the Jersey City lawyer and the proximity of the election, The Star-Ledger did not print the story. Four years later, on April 26, 2001, Rosa died of a drug overdose in Philadelphia.

Today, former campaign officials and others with knowledge of the operation say Rosas removal from New Jersey was orchestrated by McGreeveys political guardians.

Lynch, while not providing specific names, said he learned that “people associated with the McGreevey campaign and the Woodbridge-Perth Amboy nexus were able to get her away for the balance of the campaign.”

One source with detailed knowledge of the incident said Lucky 7s manager, John W. Ostrander, was provided with $5,000 in cash to take Rosa on a Florida “vacation” until after the election. Ostrander, the source said, took Rosa to Daytona Beach for two weeks, with a side trip to Disney World.

Ostrander declined repeated requests for comment.

Rosas mother, Aurora Gomez, said in a recent interview that her daughter told her seven years ago, as she prepared to leave for Florida, that it was the “McGreevey people” who provided her bail money and who were responsible for her sudden trip, organized in a single day.

When Rosa returned, she told her mother she went to the beach and had a good time.

“They went dancing,” Gomez said. “They stayed in a hotel.”

Lesniak called Rosas claims of sex with McGreevey a fabrication. Asked whether McGreeveys backers removed her from New Jersey for the election, he said “Im not going to comment on sending her down to Florida. But I will comment in general that nobody wants that type of story, whether its credible or not, to come out shortly before an election.”

Four years later, when McGreevey made his second run for governor, Rosa remained a concern.

Lynch said her name came up as campaign officials talked about the potential stumbling blocks to a successful candidacy.

“It came up in the course of going through the issues,” Lynch said. “Who had to be vetted? What were the problems? Were McGree veys finances in order? In that context, stories from 1997 were raised, and someone said, Shes not going to be an issue here. She died in Philadelphia of an overdose.”

GOLAN AND THE GOVERNOR

While much has been reported about McGreevey and Cipel, the governors associates have shed new light on the intensity of the re lationship.

McGreevey met the 36-year-old Cipel while on a trade mission to Israel in March 2000, three weeks after proposing marriage to the woman who would become his second wife, Dina Matos. Cipel, then a spokesman for the mayor of Rishon LeZion, began working on behalf of McGreeveys gubernatorial campaign within months.

In January 2002, a newly elected McGreevey named the public relations man his homeland security adviser, a move that troubled some of the governors aides, given Cipels lack of experience for such a sensitive post in the wake of the Sept. 11 attacks.

Anthony Caldwell, an executive with the state Commerce and Economic Growth Commission at the time, was among many who noted Cipels special access to the governor.

“They were very close,” said Caldwell, who worked with Cipel to plan a McGreevey trade mission to Israel. “Wed be having a meeting and hed say, Let me check with Jim on that. Hed call and hed get right through. When that number popped up on the governors cell phone, he picked up.”

To many observers, even more remarkable than Cipels access to the governor in public was his frequent presence at Drumthwacket at unusual hours.

A former administration official recalled twice arriving at the governors mansion for a 730 a.m. meet ing and finding Cipel there, dressed in sweat pants.

“It was very obvious that he spent the night,” the official said. “You dont go to the governors mansion with a sweat suit on. His hair was not combed. His face did not look like he washed it.”

On two other occasions, a member of the Drumthwacket staff watched as Cipel emerged from the governors private residence early in the morning, dressed and ready for work, the employee said.

A Democratic Party official recalled arriving at the governors home at about 930 one night in May 2002 for a private meeting with McGreevey. After entering, he saw Cipel walk out of the kitchen, dressed casually and eating soup from a bowl.

“McGreevey gave him a look like, Get out of here,” the official said. Cipel quickly retreated to the kitchen, staying there for the remainder of the meeting.

To no avail, McGreevey sought to limit the glimpses into his private life. Shortly after moving into the mansion in 2002, he ordered his State Police security detail out of the main building and into a retrofitted garage out back. He also re quired estate staff to sign confidentiality agreements, an unprecedented move, and he ended a record-keeping practice in which the names of visitors to the 19-room residence were recorded.

Those measures werent enough to squelch burgeoning rumors about the two men. The media reported extensively on Cipels lack of experience, and Republicans demanded hearings on his qualifications.

McGreevey resisted calls to fire the aide, instead reassigning Cipel in March 2002 to the position of “special counselor.” He also refused to describe to reporters Cipels new duties.

By August 2002, as the rumors swirled with greater intensity and as a radio talk show host lam pooned McGreevey with references to Liberace, the late flamboyant pianist, the governor relented.

At a breakfast meeting with Cipel and the aides friend, lawyer Timothy Saia, McGreevey told Cipel he would have to go.

“The general discussion was that there was continued criticism of the governor as it related to the appointment and that the media attention was not going to die down,” Saia said in a recent interview. “Though it wasnt said in so many words, the general gist I got was that Golan was going to have to resign.”

McGreevey softened the blow with a promise. Saia said McGree vey told Cipel “Ill help you find a job.”

PAYCHECKS KEEP COMING

For Cipel, what followed was a succession of private-sector posts, all high-paying and all linked either to McGreevey or to contacts Cipel made while in the administration.

Federal investigators are looking into those jobs as part of their probe into a claim by the governor that his former aide sought to extort money from him. In particular, investigators are trying to determine whether McGreevey or his emissaries used political influence to secure posts for Cipel.

The Star-Ledger previously has reported that McGreevey personally arranged jobs for Cipel with the MWW Group, a lobbying and public relations firm in East Rutherford, and with State Street Partners, a Trenton lobbying firm where Jim Kennedy is a partner.

The others were with Zeiger Enterprises, a Trenton import-export company run by Shelley Zeiger, a McGreevey supporter whom Cipel met while arranging a trip to Israel for the governor, and with Touro College, which was seeking government approval to open a medical school in New Jersey.

In all four cases, company officials parted ways with Cipel – or fired him outright – because of his performance.

Cipel’s final job before threatening his sexual harassment lawsuit against McGreevey was with Tishman Construction Corp., an internationally known firm based in New York. At the time, the company was seeking a contract with the New Jersey Sports and Exposition Authority as construction adviser on the $1.3 billion Xanadu entertainment complex planned for the Meadowlands Sports Complex.

Cipel met Dan Tishman, the company’s president and chief executive officer, and Jay Badame, its executive vice president, at a charitable event while still working for McGreevey, according Howard Rubenstein, a spokesman for the company. McGreevey was also at the gathering, in Lakewood in 2002.

“They just met and chatted a bit,” Rubenstein said. “Then, a year later, where Dan Tishman was being honored, he (Badame) sat next to Golan.”

At the second event, Cipel told Badame he had left the administration and was doing lobbying and consulting work. Badame and Cipel worked out an arrangement for Cipel to earn $7,500 a month to drum up private- sector business for the construction company.

“He seemed to know a community of people we were interested in working with,” Tishman said.

Rubenstein said Cipel was hired in late August or early September 2003. Rubenstein said he could not pin down the exact date.

On Sept. 10, 2003, the sports authority’s board voted to grant Tishman the contract based on the recommendation of the agency’s chief executive, George Zoffinger. McGreevey, who can approve or veto the board’s actions, allowed the contract to go through.

In a recent interview, Zoffinger acknowledged the timing of Cipel’s hiring “looked funny,” but he called it a coincidence.

“There is absolutely no connection,” he said, adding that he learned of Cipel’s role with the company only recently.

While the contract pays Tishman $50,000 up front, it also provides that the company, as construction adviser, be paid a percentage of the “hard construction costs” associated with the Xanadu project, slated for completion in 2007. Such “hard costs” could run well into the hundreds of millions of dollars.

Over 11 months, however, Cipel brought no new business to the firm, according to Rubenstein.

“It did not pan out,” Rubenstein said. “He wasn’t able to get them business.”

The company severed its relationship with Cipel, Rubenstein said, after learning of his involvement in the McGreevey scandal.

THE FINAL DAYS

In late July, Cipel contacted the McGreevey administration through New York entertainment lawyer Allen M. Lowy, saying he planned to file suit against the governor for sexual harassment and sexual assault.

McGreevey called Lesniak for help. The cleanup squad was back on active duty.

Lesniak and McGreevey’s lawyers claim Lowy demanded as much as $50 million in what they characterize as an extortion attempt. Lowy called the contact between the parties legitimate settlement discussions and denies demanding such an exorbitant sum.

In the days that followed, Lesniak says, he and McGreevey’s advisers considered keeping Cipel quiet with a $500,000 settlement payment. The money could be raised through a legal defense fund for McGreevey without drawing public scrutiny of its true purpose, they believed, because the governor faced a series of other investigations into his associates.

McGreevey’s top campaign contributor, Charles Kushner, was facing charges that have since led him to plead guilty to cheating on his taxes and making illegal political donations.

Another donor, David D’Amiano, pleaded guilty in September to engineering a deal to sweeten a land-preservation offer for a Middlesex County farmer in exchange for $40,000 in campaign contributions.

And McGreevey’s former top aides, Taffet and Paul Levinsohn, remain under federal investigation into whether they illegally profited from political connections by earning millions of dollars from a private billboard business while running McGreevey’s gubernatorial campaign.

Lesniak said of using the legal defense fund, “It would be a normal thing to do because of all the other investigations going on.”

Under state law, Lesniak said, the payment’s true purpose would not have to be disclosed, and Cipel, the thinking went, would sign a nondisclosure agreement in return. If the plan worked, the public would never know.

But Cipel was asking for too much, far more than Lesniak could raise and conceal. The defense fund plan was abandoned.

THE FINAL HOURS

For hours leading up to his Aug. 12 news conference, McGreevey resisted advice to quit. According to three advisers huddled with him in the governor’s mansion that day, McGreevey wanted desperately to believe he could withstand the storm that would arise when Cipel’s claims went public.

While McGreevey understood early on that re-election was out of the question, he told those assembled he believed he could at least ride out his term, the advisers said.

The political consultants in the room told him otherwise, suggesting “every rumor, every innuendo” that had ever come up in his political career would be grist for the media. There was no need to elaborate – many in the room knew of the Myra Rosa matter and McGreevey’s past fondness for strip clubs. Any indiscretion, past or present, would be fair game.

“It would be floodgates,” one adviser said.

Lesniak, among those in the room, said in an interview that if Cipel filed his threatened lawsuit, it almost certainly would allege salacious details – however contrived – from which no politician could recover.

“How would you like to be charged with rape?” he said. “That’s what they were saying. As long as the lawsuit was in place, the only thing (the media) would be doing is asking questions about the lawsuit. Not about the Highlands. Not about auto insurance.”

The consultants laid it out again.

“An affair, okay, not bad,” one adviser told McGreevey. “A gay affair, that’s a little bit worse, but okay.

“You hired your lover as the homeland security adviser without credentials, four months after 9/11 – that’s it. You can’t withstand that. You’ll be impeached. Democrats will join Republicans.”

Were hearings to be called, the advisers continued, the entire Democratic Party could suffer, losing seats in the Legislature.

It wasn’t until 1:30 p.m., 2 1/2 hours before his scheduled news conference, that McGreevey set about writing his resignation speech, his resolve gone.

Negotiations with Cipel’s lawyer would continue until nearly 4 p.m., yielding a last-ditch settlement offer of $2 million. McGreevey summarily rejected it.

“I’m done,” he said, according to those present. “I’m not going to hide anymore.”

Cipel returned to his native Israel a few days after McGreevey’s resignation announcement. Two weeks later, he announced he would not file suit. He declined to be interviewed for this story.

The FBI, called in by McGreevey’s lawyers, continues to investigate the case, and agents interviewed Cipel at his childhood home in Rishon LeZion, a community outside Tel Aviv, for four hours on Oct. 27.

Tomorrow McGreevey plans to make his farewell to his friends and supporters with a brief speech at the State Museum in Trenton. He moved out of the governor’s mansion last week and is settling into a two-bedroom apartment in Rahway, where his best friend, Kennedy, is mayor. He will work as an attorney in the law firm of Ray Lesniak, his mentor and a longtime member of the cleanup squad. It will be his first job out of government in 15 years.

SIDEBAR — THE CREW

During Gov. James E. McGreevey’s long climb to power, his personal behavior – and the rumors it triggered – often threatened to derail his ambitions. The key advisers who came to be known as the governor’s clean-up crew often were left to protect his image as a buttoned-down policy wonk and family man.

Those key players:

RAY LESNIAK

The powerful Union County Democratic boss has been a key McGreevey adviser since backing his first Woodbridge mayoral bid in 1991. The state senator is the only person among this group still close to the governor. McGreevey plans to work for Lesniak’s law firm after his resignation later this month.

Lesniak on McGreevey: “There is no doubt he was driven by the need for acceptance, and a lot of that was to compensate for how he felt about his sexuality. … He had to overcompensate and sought acceptance through his political achievements. No matter what he did, he still had that feeling inside of him, and every time it came up, he felt there was something wrong. … There is no more denial left in Jim McGreevey.”

JOHN LYNCH

The Middlesex County Democratic boss and former state senator is McGreevey’s mentor and guided him up the political ladder and into the Statehouse. He and McGreevey had a falling out this year, and Lynch tried to force him from office immediately after the governor’s August announcement that he had engaged in a gay extramarital affair and would resign this month.

Lynch on McGreevey: “This guy’s got some serious pathology. He tells everybody everything they want to hear. He’s a retailer. It’s his biggest strength and biggest weakness. He loves doing that, instead of public policy.”

GARY TAFFET AND DOUG HEYL

Taffet was McGreevey’s trusted adviser for more than a decade, serving as his chief of staff at Woodbridge Town Hall and the Statehouse. Heyl was campaign manager for McGreevey’s 1997 gubernatorial bid. Taffet confronted McGreevey about the whispers that he was gay and both men helped quiet rumors circulating among reporters and party leaders. At Heyl’s direction, Taffet warned McGreevey that his taste for go-go bars and strip clubs could derail his political ambitions.

Heyl on McGreevey: “Jim McGreevey has as much political talent as anybody that I’ve ever worked around besides Bill Clinton. If you are in this business long enough, most people who come with that much talent and ability have their own little personal stuff. God knows Clinton does. … Guys that are this smart, have this much ability, they’ve got things that aren’t like the rest of us.

“That’s the sad part about this: The guy has as much ability and as much talent as anybody who I’ve ever worked for.”