IN A DECISION that Police Commissioner Charles H. Ramsey called "disappointing," an arbitrator on Wednesday moved to reinstate fired Philadelphia narcotics cop Jeffrey Cujdik.

Ramsey booted Cujdik from the force in May, following a long-running Internal Affairs investigation into allegations that the veteran cop lied on search warrants and had an inappropriate relationship with an informant - and then lied about both to investigators. The allegations were first unearthed in the 2009 Daily News series "Tainted Justice."

The series, based on interviews with dozens of victims, detailed incidents of misconduct among a group of undercover narcotics officers, including phony search-warrant applications, the looting of bodegas and even sexual assault.

The city has paid out at least $1.7 million to settle 33 lawsuits filed by bodega owners and two women who said they'd been assaulted by a member of Cujdik's squad.

Federal and local probes of the officers were triggered by the Pulitzer Prize-winning series.

Ramsey said Thursday that the arbitration hearing centered on whether he had just cause to fire Cudjik.

After hearing opening statements from city attorneys and lawyers for the Fraternal Order of Police Lodge No. 5, the arbitrator made a recommendation: reinstate Cujdik, without giving him back pay, while ensuring that a 30-day suspension prior to his firing remain on his record.

"The rationale behind it, I'm told, was the age of the case, the fact that the District Attorney's Office and the U.S. Attorney's Office had declined prosecution, and the credibility of the witnesses in this case," Ramsey said.

"I had a conversation with the city's attorney, and her opinion was that we accept the arbitrator's recommendation," he said.

"It's disappointing, no question, but the reality is the city stood to lose not only the case, but pay [Cujdik] significant back pay."

The Daily News series, which began with the story that a longtime drug informant had accused Cujdik of lying on search warrant applications to gain access to suspected drug homes, led to the creation of an FBI-directed task force in 2009.

The probe mushroomed when the paper reported allegations that the squad took cash and merchandise from corner stores during raids. Some 22 merchants, from all four corners of the city, told the Daily News that the officers had sliced the wires to their surveillance cameras before they stole cash and merchandise. None of the merchants had criminal records. In one instance the Daily News acquired a video showing the officers cutting the wires to a surveillance camera.

But the FBI investigation ground on for five years. Investigators didn't interview some of the merchants. At least one store owner asked for a translator who never came. None were called to testify before a grand jury. Although no criminal charges were filed, five officers including Cujdik faced serious internal charges.

Internal Affairs found that Cujdik made "false entries into a departmental record or report and failed to comply with police rules and directives." He was charged with failing to maintain professional objectivity for renting a home to his longtime drug informant.

The investigation also found that Cujdik gave gifts, money, cigarettes and cellphones to informants.

FOP president John McNesby said Cujdik will soon return to the job - but not in a narcotics squad.

"He doesn't want to go back to narcotics, not that I blame him," McNesby said.

Cujdik will work in the 9th District, headquartered at 21st and Hamilton streets.

The union leader said Cujdik, a 17-year veteran of the force, is "elated, and his family is elated. It was a good present to give to somebody right before the holidays."

The victims of the rogue squad had a different view.

Danilo Burgos, past president of the Dominican Grocers' Association in Philadelphia, said he was outraged that Cujdik got his job back.

"It's disheartening and a big blow to the credibility of the system that is supposed to be protecting the citizens of Philadelphia," he said last night.

"It's so disheartening that with all the evidence they had, they were not able to take down a corrupt police officer and protect the people of this city."

"It's [also] a slap in the face to members of the Philadelphia Police Department who counted on them doing the right thing. There are a lot of really good police officers and they don't want this type of character within their ranks."

"I'm shocked and outraged but somehow not surprised," said attorney Daniel McGarrigle, who represented a Jordanian smoke shop merchant who told investigators that Cujdik's squad destroyed his surveillance cameras and stole money and merchandise.

The FOP's McNesby, however, long maintained that the narcotics officers - who spent five years on desk duty while the various investigations unfurled - had never done anything wrong.

Cujdik wasn't the only officer to be disciplined by Ramsey after the lengthy investigations ended.

Officers Thomas Tolstoy and Robert McDonnell Jr. were suspended for 30 days, and Cujdik's brother, Officer Richard Cujdik, was suspended for two.

A supervisor, Capt. Joe Bologna, was suspended for three days, as well.

Ramsey, who had been scheduled to testify as a witness at Cujdik's arbitration hearing, lamented the resolution.

"It is what it is," he said. "We just have to deal with it."

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