be established under the predecessor of $200.35.

Consistent with this policy, if there were any

doubt as to the possible application of $200.35 to the benefits extended to Mr. Logue, those doubts must be resolved through a construction of the statute in accordance with all previous New York decisions. This is particularly true in the present case where, both upon his arrival from Massachusetts and during the ensuing year, Mr. Logue in no way expected or intended to receive any unlawful or improper payment, whether for the performance of his official acts, for the making of his personal decision to leave Boston or otherwise.

IV. Conclusion

For reasons stated above, it is clear that

neither Mr. Logue's agreement to receive the 1968 gifts and the 1969 loans nor his actual receipt of such gifts and loans conflicted in any respect with either the specific terms, purpose or spirit of New York Penal Law $200.35.

[Information relating to a question raised during Mr. Logue's testimony, subsequently supplied the committee by Mr. Logue, is as follows:]

Hon. HOWARD W. CANNON,

NEW YORK STATE,
URBAN DEVELOPMENT CORP.,

New York, N.Y., November 22, 1974.

Chairman, Committee on Rules and Administration,

U.S. Senate, Washington, D.C.

DEAR SENATOR CANNON: I am attaching a quick report on a question raised during my appearance before your Committee.

I am concerned that you and your colleagues understand two facts:

1. The underwriters contract to buy and then attempt to resell what they buy. That is the heart of the securities underwriting business.

2. The Chase Bank underwrote less than 7% of our bonds. The First National City Bank underwrote an approximately equivalent amount.

I would like this made unequivocably clear, since I believe that there was at least an inference that the Chase Bank was preferred, and as this makes clear, nothing was further from the truth. Thank you for your courtesies. Sincerely,

EDWARD J. LOGUE,

UDC's eight outstanding bond issues may be owned in either a registered or coupon form, as provided in our General and Series Bond Resolutions. The coupon bonds are inherently "Bearer Bonds", which does not require nor provide for the identification of the owner of the bond.

On the other hand, bonds that are held in a registered form are identifiable as to ownership. Generally speaking, the vast bulk of municipal bonds are held in coupon or "Bearer" form.

In 1973, as part of our effort to amend the 1971 Series A Resolution we sought to identify the ownership of those bonds. The purpose of the effort was to permit an amendment that would allow UDC to invest the Debt Service Reserve Fund for a maturity greater than one year. The results of that effort indicated that approximately 7% of the holders of the 1971 issue were in registered form and were therefore identifiable. A subsequent inquiry to the Trustee of our outstanding bonds indicates that the same patterns, i.e., 7% registered and identifiable, and 93% “Bearer" and not readily identifiable, holds true for all of our bond issues. Precise percentages will be developed by the Trustee and will be available shortly.

The attached is a schedule of the purchasers amongst the Underwriting Management group of our bond issues. It is to be noted that these purchasers were for the purposes of underwriting rather than for investing. The underwriting activity of commercial banks is distinct from their investment activity. A commercial bank may underwrite an issue but not invest in the same issue. The converse is also true. Therefore, there is no relationship between the extension of underwriting and any present holdings on the part of the investment activity of any commercial bank.

MICHAEL G. CAREW.

Senator HUGH SCOTT. Mr. Logue, I just want to say that we know of your service in Philadelphia as well as everywhere else. I regard you as a public servant of the highest merit. I really have nothing else to add. I think you ran for mayor in Boston?

Mr. LOGUE. Yes; that is what led to the debt which this matter refers to.

Senator HUGH SCOTT. As a Democrat?

Mr. LOGUE. No, sir. I don't want to get into the potential delaying of your proceedings in this wav, but Governor Rockefeller and many others do not quite understand that system in Boston.

Senator HUGH SCOTT. Neither do I. But there is no use going into it, I guess.

Mr. LOGUE. It is a nonpartisan system. We were all Democrats except one Republican. Well that is another story for another time. Senator HUGH SCOTT. That is all right.

The CHAIRMAN. Thank you very much, Mr. Logue.

Mr. James W. Gaynor.

Do you solemnly swear that your testimony before this committee will be the truth, the whole truth, and nothing but the truth, so help you, God?

Mr. GAYNOR. Yes.

The CHAIRMAN. Mr. Gaynor, would you first state your name, dress, and your occupation, sir?

TESTIMONY OF JAMES W. GAYNOR, NEW ROCHELLE, N.Y.

ad

Mr. GAYNOR. I am James William Gaynor. I live at 24 Lord Kitchner Road, New Rochelle. I am an investment advisor. I am a management engineer by profession.

The CHAIRMAN. Did you hold a position in New York State government, and if so, will you tell us what the position was and when you held it.

Mr. GAYNOR. I held the position of commissioner of housing and community renewal from 1959 to 1969, a period of almost exactly 10 years.

The CHAIRMAN. That was under Governor Rockefeller?

Mr. GAYNOR. Yes, it was.

The CHAIRMAN. Would you advise the committee of the dates and amounts of any gifts or loans you received from Governor Rockefeller and for what purpose you received them?

Mr. GAYNOR. On December 31, 1958, I received a gift of $3,000. No indication of the reason for the gift. But I can only presume that it might have assisted me, and I might say, Senator, only in part for me to move from Denver, Colo., to New York State.

The CHAIRMAN. Was that a part of an understanding with the Governor that you would be reimbursed?

Mr. GAYNOR. No, sir. I had no understanding with the Governor, except it was his, I am sure, understanding that, having moved to Denver only 4 years before, and having established myself there as an independent contractor, and having purchased a home and remodeled it at considerable expense, it would be a problem for me to leave Denver and come to New York.

But I had no understanding with the Governor that he was reimbursing me for the move. I was delighted to receive his gift on the 31st of December.

The CHAIRMAN. Was that prior to your move to New York?

Mr. GAYNOR. Yes, sir. I moved to New York in 1959. I was sworn in on January 15, 1959. I received the gift in December 1958. There was a question, too, Senator, with respect to a $7,000 gift of which I was not aware. But it was brought out by one of your staff representatives last week, week before last, when he interviewed me in New York City.

I checked with the Governor's office and found that in negotiations to purchase my home in Denver, which the Governor through his representatives had effected, on the resale of that home, there was a loss of $7,000 which I am told the Governor reported as a gift to me. I did not know this until 10 days ago when I had to find out from the Governor's office the nature of the $7,000 gift.

The CHAIRMAN. I do not quite follow that.

Did the Governor's office take care of selling your home, is that it, in Denver?

Mr. GAYNOR. Yes, sir.

The CHAIRMAN. So that was handled by Governor Rockefeller's office and not by your own people?

Mr. GAYNOR. That is right, sir.

The CHAIRMAN. You received a net figure from it which was actually $7.000 more than apparently the sale price?

Mr. GAYNOR. That was my understanding, yes, sir.

The CHAIRMAN. So the $7,000 then was treated by Governor Rockefeller as a gift to you?

Mr. GAYNOR. Yes, sir.

The CHAIRMAN. Did you consider the $3,000 gift compensation to assist you in paying for vour moving expenses to New York?

Mr. GAYNOR. No, sir. It would have helped. It would not have covered my moving expenses, it wouldn't cover the moving van, actually, Senator.

40-185 - 74-65

But I accepted it as a gift in good faith from the Governor who appreciated the problem that I had in leaving Denver and leaving my home there and my business.

The CHAIRMAN. Was any representation made to you that if you would come to New York, that part of your expenses would be taken care of over and above your salary in New York?

Mr. GAYNOR. No, sir.

The CHAIRMAN. There was no understanding along that line at all! Mr. GAYNOR. No, sir.

The CHAIRMAN. What was the form of the loans that you received? Mr. GAYNOR. The loan I received was dated January 3, 1963. It was a 5-year non-interest-bearing note in the amount of $50,000. On March the 17th, 1965, another note for 5 years, non-interest bearing, also for $50,000.

The CHAIRMAN. What was the purpose of those loans?

Mr. GAYNOR. I believe the Governor was aware of some of the problems that I had in staying in public administration, inasmuch as it was eroding my own personal estate. We had some sickness in Mrs. Gaynor's family. And I had the problem of a young family of school age, and the, really, the erosion of my own personal estate to cover these was a problem.

And I am reasonably certain that the Governor was aware of it. I did not ask for the note; the Governor gave me the note and I signed it.

The CHAIRMAN. You didn't ask for either one of the loans?
Mr. GAYNOR. No, sir.

The CHAIRMAN. Isn't that unusual, that a man would come to you and make you a loan if you didn't actually ask for one?

Mr. GAYNOR. I think Governor Rockefeller understood quite well, Senator, the problems that I had faced. The problems that I faced also, even then I was in my midfifties, in facing post-retirement years, because understandably, in that particular age bracket, I would have to look forward to self-employment. I didn't entertain any illusions about the labor market taking me on at that particular time and that particular age.

The CHAIRMAN. What did you do with the funds from these two $50,000 loans?

Mr. GAYNOR. I used it in my own investment accounts.

The CHAIRMAN. Was that in your own portfolio maintained by you, or was that conducted through the Rockefeller family?

Mr. GAYNOR. The Rockefeller family had nothing to do with it, sir. It was my own. That is my own investment port folio.

The CHAIRMAN. And you just went out and invested in the stock market?

Mr. GAYNOR. Stocks and bonds and notes.

The CHAIRMAN. Both of those loans were secured by non-interestbearing notes?

Mr. GAYNOR. Yes, sir.

The CHAIRMAN. Is that correct?

Mr. GAYNOR. Yes, sir.

The CHAIRMAN. Five-year notes?

Mr. GAYNOR. Yes, sir.

The CHAIRMAN. And there was no collateral?

Mr. GAYNOR. No, sir.