A rocky road to riches

On June 22, 2004, Rudolph W. Giuliani made a bold promise in the fight against terrorism.

The former New York mayor told reporters that his newest business venture, called Bio-ONE, would swiftly eliminate deadly anthrax from a tabloid newspaper office. The site still stood padlocked, more than 2 1/2 years after the worst biological terrorism attack in U.S. history.

“You will see me walk through those doors,” pledged Giuliani, who is now seeking the Republican presidential nomination.

But Giuliani never entered the building.

Health authorities did not lift the quarantine until February 2007 -- long after Bio-ONE had quit the cleanup in a dispute over how to disinfect photos of Bigfoot and other tabloid targets. A rival company was hired to finish the job.

The episode left local officials disappointed.

“I figured the home of the National Enquirer was going to be the home of a national hero,” said Steven Abrams, Boca Raton’s mayor. “That obviously didn’t happen.”

The case marks a little-known setback in Giuliani’s high-powered business career. He has earned tens of millions of dollars over the last six years from speeches, investments and business deals. But he also has foundered at times, despite his political firepower.

Now his once-promising White House bid is in trouble. After near-bottom rankings in every electoral contest so far, Giuliani is staking his candidacy on Tuesday’s Florida primary. His campaign probably cannot survive a loss here.

Giuliani’s celebrity as a leader who rallied New York after Sept. 11 has been key to both his past business success and his current political ambitions.

In 2001, his last year in office, Giuliani claimed a net worth of about $1 million. In 2006, according to campaign records he filed last summer, he reported more than $17 million in income and about $50 million in stocks, business interests, real estate and other assets.

He earned $11.4 million that year giving speeches to trade conferences, business associations, schools and other groups. He delivered hundreds of such speeches over the last six years, including at least 30 overseas, charging fees of $100,000 to $300,000 each.

The topic rarely varied. As the keynote speaker for the Cosmetic, Toiletry and Fragrance Assn.’s annual meeting in Boca Raton in March 2005, Giuliani focused on “leadership during crises,” especially his own role during New York’s “darkest hour,” according to the group.

Giuliani also capitalized on his fame by heading Giuliani Partners, a management consulting group he founded with former aides. Based in New York, the boutique firm reportedly has earned more than $100 million with contracts to help clients improve corporate governance, financial planning and crisis management.

But progress came in fits and starts.

Giuliani and his team bought and later sold an investment banking unit that saw a sharp drop in revenue the first year. Another subsidiary, set up to focus on safety and security, lost clients after the director, Bernard B. Kerik, was forced in 2004 to withdraw from consideration as secretary of Homeland Security. Kerik, who served as police commissioner under Giuliani, is awaiting trial on federal charges of fraud and tax evasion.

The Giuliani group’s first client, Purdue Pharma, showed the limits of his celebrity.

Purdue Pharma produced OxyContin, the nation’s No. 1 prescription painkiller. Abuse of the narcotic analgesic, known on the street as hillbilly heroin, had exploded to nightmare levels. The U.S. Drug Enforcement Administration director declared that OxyContin had caused or contributed to 465 deaths in two years.

In May 2002, Michael Friedman, Purdue Pharma’s chief operating officer, called Giuliani “uniquely qualified” to save his company’s battered reputation.

“The management experience, law enforcement background, leadership and integrity of Giuliani Partners and its CEO Rudolph W. Giuliani are tremendous assets to our company,” Friedman said in a press release still posted on the Giuliani Partners website.

Over the next two years, Giuliani appealed to members of Congress, federal and state prosecutors, and the head of the DEA to keep OxyContin on the market while seeking ways to curb prescription abuse. After the DEA documented theft at Purdue Pharma’s manufacturing plants, Giuliani Partners sought to improve security and record-keeping.

“We believe that government officials are more comfortable knowing that Giuliani is advising Purdue Pharma,” Howard Udell, the company’s chief lawyer, said in a statement issued by Giuliani Partners.

But John L. Brownlee, the U.S. attorney in western Virginia, made plans in 2006 to indict Purdue Pharma and three of its top executives -- including Friedman and Udell -- for misleading the public about OxyContin’s dangers. Giuliani met or spoke by phone with Brownlee six times to argue for his client, according to the prosecutor’s office.

Giuliani managed only to keep company officials out of jail. In a plea agreement in May 2007, Purdue Pharma and the three executives pleaded guilty to misleading doctors and patients. They paid a total of $634.5 million in penalties and fines.

Even thornier legal challenges may lie ahead for Giuliani.

In spring 2005, he joined a politically connected Houston-based law and lobbying firm as senior partner. He opened a New York office for the firm, which changed its name to Bracewell & Giuliani, and began representing clients.

Federal records show the firm is paid to lobby Congress, key regulatory agencies and the departments of Defense, Justice, Energy and State on behalf of defense contractors, oil and gas conglomerates, tobacco companies and other clients. The firm is registered to lobby on nuclear waste disposal, trade policy, stem cell research and other concerns.

Overseas, Bracewell & Giuliani operates a satellite office in oil-rich Kazakhstan. The firm has helped rewrite the country’s tax code to lure foreign investment, officials said. The U.S. State Department last year described the ruling regime’s human rights record as “poor,” with reports of arbitrary arrests, torture, press censorship and other abuses.

If elected president, Giuliani could face conflicts of interest when those issues cross his desk. He has declined to discuss his work for the firm that bears his name.

“People are going to ask questions about what he was paid for,” said Sarah Dufendach, vice president of Common Cause, a nonpartisan government watchdog group.

The anthrax case in Florida remains a sore point for Giuliani.

Shortly after Sept. 11, letters laced with anthrax spores arrived at the offices of media companies in New York and of two U.S. senators in Washington. But the first such letter had gone to the Boca Raton headquarters of American Media Inc., publisher of supermarket tabloids.

An AMI photo editor and four people in other states died of anthrax infections. The bio-attack closed Senate and other government offices for weeks, crippled mail service for months, and terrified a nation still traumatized by the Sept. 11 attacks.

The crime remains unsolved.

AMI sold the quarantined building to a local developer, David Rustine, for $40,000 -- a fraction of its previous value. The new owner searched for a company to handle the estimated $5-million cleanup.

In January 2004, Giuliani Partners formed Bio-ONE as a joint venture with an environmental company, Sabre Technical Services, to do the job. They planned to pump anthrax-killing chlorine dioxide gas into the building through giant pipes, then suck it back out and convert the gas into harmless salt water.

At a news conference here, Giuliani hailed the fumigation system as a “symbol” of America’s fight against terrorism. He said Bio-ONE would turn the site into a national center to fight chemical and biological attacks, and he promised to attend a gala opening.

In July 2004, teams in gas masks and protective moon-suits pumped the microbiocide into the sealed offices on schedule. The gas killed anthrax inside the building, according to initial tests by state and federal environmental officials.

But the effort stalled over the fate of 8,000 boxes of files and photos, showing everything from Elvis in his coffin to the legendary Bat Boy in his cave. Under the contract, Bio-ONE was supposed to incinerate the boxes. But under pressure to preserve the photographs, the company built a special chamber to decontaminate them one by one.

“They only completed a very small percentage [of the photos] after a couple of months,” said Tim O’Connor, spokesman for the Palm Beach County Health Department. “Then they ran out of time and just walked away.”

Bio-One officials said they pulled out because their contract expired in May 2005 and the owner refused to renegotiate. The owner instead hired Maryland-based MARCOR Remediation to disinfect as many photos as possible and burn the rest. MARCOR finished the work in three months, according to project manager Lynn Dewees.

Bio-ONE officials won’t say how much money they lost in the dispute, and the developer, Rustine, did not respond to repeated phone calls.

“We did not get paid,” said Karen Cavanagh, chief counsel for Bio-ONE. “We committed our senior science staff and all our major equipment there for over a year. Was it ever resolved? The answer is no.”

The building reopened last spring and now is occupied by Applied Card Systems, which processes credit cards. Nothing in the lobby suggests the site’s sad history.

Nor does anything on the Giuliani Partners website, which still posts celebratory notices from 2004 announcing Bio-ONE’s plan to remove all the anthrax.

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bob.drogin@latimes.com