MANHATTAN

ATTORNEYS ARGUE CASE INVOLVING NYT REPORTERS The New York Times and a top federal terrorism prosecutor squared off in federal court in Manhattan yesterday afternoon as a federal judge heard arguments on whether the telephone records of two Times reporters should be turned over to the government.

The Times contends that the Justice Department is violating the First Amendment by seeking telephone records that might show who told reporters Judith Miller and Philip Shenon about planned federal raids on two Islamic charities, the Global Relief Foundation and the Holy Land Foundation.

Judge Robert Sweet heard arguments on the issue for more than an hour yesterday afternoon and made no immediate ruling, according to a lawyer for the newspaper, Floyd Abrams. A spokesman for the prosecutor, Patrick Fitzgerald of Chicago, confirmed that the hearing took place but offered no details.

In an interview, Mr. Abrams said he argued that the prosecutor’s “effort would reveal dozens upon dozens of sources of Judy Miller and Philip Shenon who had nothing to do with the investigation.”

Mr. Abrams said the arguments in the case closely tracked those in a similar dispute in Washington in which a grand jury is seeking the sources of a leak of a CIA officer’s identity. Ms. Miller could face jail time in that legal fight if a federal appeals court turns aside her appeal.

– Staff Reporter of the Sun

GUGGENHEIM CHAIRMAN RESIGNS

The largest donor to the Solomon R. Guggenheim Museum, Peter B. Lewis, resigned from its board yesterday, the New York Times reported on its Web site last night.

Mr. Lewis is reported to have disagreed with the museum’s director, Thomas Krens, about the direction of the museum and management of finances, the newspaper reported. Mr. Lewis, the chairman of an auto insurance company in Cleveland, has donated about $77 million to the museum and has served as trustee of the museum since 1993. He was most recently the chairman.

– Staff Reporter of the Sun

CITYWIDE

YANKEES PAY $3.6M BILL FOR BACK RENT

The Yankees have paid the city in back rent what could be the going rate to keep a player on the bench for a single season: $3.6 million. City Comptroller, William Thompson Jr., said yesterday that the Bronx Bombers had made good on the payment after an audit last month revealed that the organization had underreported revenue by $9 billion between 1997 and 2002 and overstated a deduction against revenues by $34.5 million. When the audit was announced last month, the Yankees said they would pay $2.5 million, but disputed that it owed the rest. That dispute was resolved.

“Not only are the Yankees a great team, but they are fine corporate citizens,” Mr. Thompson said in a statement. Under its lease agreement with the city, the Yankees are required to pay the Parks and Recreation Department either a minimum rent of $200,000 or a percentage of revenues from transactions from tickets sales, concessions, and parking.

– Staff Reporter of the Sun

TOP DOI INVESTIGATOR TO STAY OUT OF PROBE OF KERIK

To avoid the appearance of a conflict of interest, the Department of Investigations’ top inspector will not take part in the investigation of Bernard Kerik, officials said.

Michael Caruso has been inspector general of the Department of Investigation since 1990 and is also an assistant commissioner at the Department of Correction and is responsible for corruption investigations there. His removal from the Kerik probe was announced Tuesday by a Department of Investigations spokeswoman, Emily Gest. The agency did not explain why Mr. Caruso would not participate, but it is known that he attended Mr. Kerik’s wedding reception in 1998, and Mr. Kerik wrote in his autobiography that Mr. Caruso helped him prepare for a job interview in 2000 with then-mayor Rudolph Giuliani.

– Associated Press

BLOOMBERG CREATES OFFICE TO OVERSEE MANUFACTURING

Mayor Bloomberg announced a new city office yesterday to oversee the manufacturing sector and to create new “industrial business zones.” The former chief of staff and special counsel to the city’s Department of Small Business Services, Carl Hum, will run the mayor’s Office of Industrial Manufacturing Businesses.

The city will invest about $17 million in the initiative through 2009 in addition to lost revenue from $9 million in proposed tax breaks, which need state approval. The program is part of the Bloomberg administration’s long-term goal to “diversify” the city’s economy by expanding beyond the confines of Wall Street.

The mayor says the city’s industrial base has declined over the last 50 years. As part of the initiative, the city will designate specific IBZ boundaries, which will not include any residential development. East New York, Red Hook, Long Island City, Hunts Point, and several other neighborhoods have been identified for IBZs. The city is also working to create a one-time tax credit for industrial companies relocating to an IBZ or to the Brooklyn Navy Yard.

– Staff Reporter of the Sun

ALBANY

KENNEDY WOULD FACE CROWDED FIELD IN ATTORNEY GENERAL RACE

Should Robert Kennedy Jr. enter the race for state attorney general in New York, he could face not only his estranged brother-in-law, Andrew Cuomo, but a crowded field of other Democrats who have been raking in campaign donations at a fast clip.

Some potential competitors said yesterday a Kennedy entry could make things difficult on fund-raising for the others. State Assemblyman Michael Gianaris of Queens leads the field of Democratic attorney general aspirants with more than $1.4 million in the bank, according to state Board of Election records reviewed yesterday. While Mr. Cuomo, who is separated from Mr. Kennedy’s sister, Kerry Kennedy Cuomo, isn’t officially in the attorney general’s race, the elder son of the former governor, Mario Cuomo, does have more than $1.1 million left in his campaign account from his unsuccessful run for the Democratic nomination for governor in 2002.That money can be used in an attorney general campaign.

– Associated Press

STATEWIDE

PATAKI ATTENDS BUSH INAUGURATION

For a prolific fund-raiser and possible presidential candidate like Governor Pataki, the nation’s capital is a great place to be right now. The city is packed with deep-pocketed Republicans, and Mr. Pataki could use a little spending cash. His national political action committee, 21st Century Freedom, reported just $4,000 available in its last filing. So the three-term Republican governor came to the nation’s capital yesterday to cheer President Bush’s election victory – and pass the hat. Arriving yesterday, Mr. Pataki said the inauguration was a time for people on opposite sides of the political spectrum to come together. Democrats should not stay away from the event, the governor said.

“I came for President Clinton and I thought that was appropriate,” said Mr. Pataki.

– Associated Press

POLICE BLOTTER

SUSPECT ARRESTED IN CRIME SPREE

His crime spree began just before the stroke of midnight on New Year’s Eve and, according to prosecutors, ended on Tuesday. Roy Williams, 32, of Hollis, Queens, was arrested Tuesday in connection with at least nine crimes in all: the purse snatching of 60-year-old woman on a Hollis, Queens street; the pistol-whipping and assault of a 69-year-old nun; the knifepoint robbery of a 37-year-old woman; three bank robberies; three stolen cars, and the rape, assault, abduction, and robbery of a 34-year-old woman, police said.

Less than two weeks after he was released from Queensboro prison, where he had served six years for criminal sale of a controlled substance, Williams carried out a one-man crime spree. Detectives located Williams, who has prior convictions for burglary, robbery, and grand larceny, after tracing calls he made from a cell phone. If convicted of the latest charges, prosecutors said he could face a 50-year prison sentence.

– Special to the Sun