How Levy's political star began falling

A year ago, Suffolk County Executive Steve Levy courted political stardom. Several of New York State's top Republicans had embraced him as their choice to seize the governor's office for the GOP.

Levy was a political lifer seemingly built for the moment. With harsh fiscal realities facing government, he had built a career by positioning himself as a self-styled maverick Democrat, a fiscal conservative who was a combative crusader for the middle class.

Now that star has fallen -- although Levy suggested in an interview last week that he might not be done with politics.

Levy's announcement last month that he would not seek re-election to a third term in November and that he was handing over $4.1 million in campaign funds to District Attorney Thomas Spota -- whose investigation had found "serious issues" with Levy's fundraising practices -- marked a reversal rarely seen in Long Island politics.

"He went from kind of untouchable to damaged goods very quickly," said Suffolk Legis. Jay Schneiderman (I-Montauk).

But in the first months of 2010, there were no signs of what was to come.

Levy's campaign fund was brimming. He had strong support from voters who admired his tight way with a dollar, and he didn't have a serious challenger for the 2011 county executive election in sight.

But on March 19, 2010, Levy, who had spent almost his entire adult life in elected office, announced he was switching to the Republican Party in a bid to win the GOP gubernatorial nomination.

Levy was backed by some Republican heavyweights, including state party chairman Edward Cox, who saw in Levy's fiscal conservatism a candidate who could appeal to voters worried about the impact of the recession and their economic well-being.

Two weeks later, Newsday reported that Levy had collected more than $200,000 in campaign contributions from law firms and title companies doing business with Suffolk County. Levy denied that he pressured vendors to donate.

The newspaper also reported that on Levy's recommendation, Ethan Ellner, an old friend who had been convicted of tax evasion, was awarded more than $85,000 in county title work.

"I just tried to give a guy a second chance in life and no good deed goes unpunished," Levy said at the time.

Nomination bid faltered

At the same time, Levy's nomination drive was hitting roadblocks. Powerful political leaders, including Nassau GOP chairman Joseph Mondello and state Conservative chairman Michael Long, gave Levy's candidacy the cold shoulder.

On June 2 at the Republican state convention, Levy lost his bid to get on the ballot to challenge Rick Lazio in a primary. At the time, the county executive said he had been given a rare chance to become governor and would have forever regretted not vying for the job.

"Does it put me in a more vulnerable position down the road if I'm unsuccessful? Sure it does," Levy said. "But you know what, if you're not willing to take a risk, you're not going anywhere."

Despite the loss, there was little indication that a political downfall was in the offing. Levy had angered Democrats by switching parties, but he had $4 million in campaign money, and if anything the bid for governor had cemented his rebel appeal.

Some, however, suggested Levy may have overreached in pursuing the governor's mansion.

"Levy opened himself to more intense scrutiny when he upped the ante of who he wanted to be," said John Gallagher, a former Republican Suffolk deputy county executive and police commissioner.

Others say Levy's take-no-prisoners style had angered too many people.

"It's just gotten worse in the past several years because his ego got in his way," said County Comptroller Joseph Sawicki, a Republican who had considered a GOP primary run for county executive against Levy. "He has been unable to work with . . . people in a productive way."

When he switched parties, Levy also lost the support and guidance of a key backer, county Democratic chairman Richard Schaffer.

"For eight years, Rich Schaffer was there to put out fires for Levy with the Hispanic community, the legislature and political adversaries," said Suffolk Independence chairman Frank McKay. "Without Schaffer, he had no one to help him navigate through land mines."

Just after Levy lost the nomination at a high-profile convention, George Guldi, a former Democratic Suffolk legislator who was convicted last month of larceny and fraud, privately told the district attorney's office that Ellner, Levy's friend, said he had paid kickbacks to a public official. Testifying at Guldi's trial, Ellner would say that he told investigators last summer he had made cash payments or campaign contributions to the unidentified official to get work.

DA subpoenaed records

While Spota said his examination of Levy's fundraising had begun in the summer of 2009, the first public indication of his interest in Levy came on June 7, 2010, when he subpoenaed Levy's financial disclosure records. The move followed Newsday inquiries about why the executive had filed a form different from the one that county employees are required to complete each year.

As the prosecutor's probe moved forward, Levy battled with the county legislature over the independence of Suffolk's Ethics Commission, which had allowed him to file the less detailed form. Levy also continued to clash with the Suffolk police union on issues ranging from the overall cost of the police department to the number of officers needed to staff shifts.

In Levy fashion, he took on all comers, sometimes issuing as many as a half-dozen news releases a day.

"Rumors had been going around that Levy could be in trouble with the district attorney," said Schneiderman, the Suffolk legislator. "But I saw no change in his behavior at all. If anything, he appeared even more confident."

In January of this year, Guldi's trial began, and with it Ellner's accusations of what he characterized as bribes paid to the unidentified public official.

Levy and his staff insisted publicly that the testimony was baseless. That's what he was telling political insiders, too.

Suffolk GOP chairman John Jay LaValle, who was in regular contact with Levy, said Levy dismissed the court testimony and the whispers of a corruption investigation.

Just weeks before Levy's decision not to run again, he transferred $100,000 from his campaign fund to the Suffolk GOP. LaValle said the money was for general party operations and had no connection to Levy's deal with Spota.

In fact, up until the end, those who know Levy said he gave no indication of what was coming.

"I think he was in denial," said Democrat Patrick Halpin, a former Suffolk County executive. "Even though he knew all the stuff was bearing down on him, I have to feel he never thought it would touch him personally."

But on March 24 Levy issued a news release saying he would hand over his campaign war chest to district attorney Spota and not seek a third term. Minutes later, in his own statement, Spota said that Levy did so to resolve a corruption probe.

Levy's statement made only a brief mention of questions "concerning fundraising through my political campaign."

Levy didn't return to work until Friday, telling Newsday that earlier in the week he was in Boston with his wife, Colleen West, and his stepdaughter, who is attending medical school there. He did not rule out a future political career, saying only "time will tell," but vowed to focus on getting the county through its current financial problems without raising taxes. He declined to answer questions about Spota's investigation.

"He was not very good at building bridges," said Kevin Law, Levy's former chief deputy and now president of the Long Island Association, the Island's largest business group. "I spent a lot of time trying to build relationships for him because he was focused on taxes, the budget and looking after the taxpayer. After two terms, you accumulate enemies heading into a third term, and unfortunately, he doesn't appear to have a deep reservoir of support.

"A year ago he's a guy who was almost a gubernatorial candidate, and now it's all over," said Law, adding, "The guy in the street probably thinks Steve is the best county executive he ever had."