Seaport's Carter asks for leniency

John S. Carter, the disgraced former head of the Independence Seaport Museum in Philadelphia, admits he abused the museum. But he says he wasn't the only one.

In court documents filed last week, Carter charged that board members and wealthy donors were enmeshed in what his lawyer called a "culture of corruption and self-dealing."

They exploited the museum for questionable tax breaks and stuck it with the bill for lucrative no-bid contracts, expensive parties and pricey boats, he charged.

Carter, 57, had a heart attack Friday morning and was hospitalized, according to people who have been briefed on his condition. His health may delay his scheduled sentencing today on charges of massively defrauding the museum he led for 17 years.

Carter's accusations were contained in a long and rambling letter to the judge in the case. His lawyer, Mark E. Cedrone, pleaded for a sentence of no more than four years.

Federal prosecutors, by contrast, think he should go away for up to 19 years, saying he was a defiant fraud artist "in a class by himself." Prosecutors say he looted Independence Seaport of $1.5 million; Carter admits to almost $1 million.

Peter McCausland, board chairman for the museum on Penn's Landing, vigorously defended the board on Friday and castigated Carter, who pleaded guilty to the federal charges in June.

"I can't help but believe that the judge is going to see this for what it is: more lies," McCausland said.

In his plea for mercy, Carter says he simply set out to get "my fair share" after watching other museum insiders operate. Carter said:

Board members and donors used the museum's resources to get boats for their own use, even docking them at their "private marinas."

No-bid contracts went to the firms of board members for insurance, legal work, and a multimillion renovation job.

Board members used the museum to store their personal artworks and artifacts - and tapped the staff to care for them.

McCausland, who fired Carter after becoming board chairman in 2005, acknowledged that the museum had given contracts to board members' firms, but defended the members as "good people who have given of their time and a considerable amount of money to help the museum grow and prosper - on a volunteer basis."

He said he was unaware of any instances in which board members had improperly used museum resources for their benefit.

He agreed that the board should have been a better watchdog. But McCausland also noted that the museum opened its books to federal investigators "as soon as John's treachery and dishonesty came to light" - and that no one but Carter has been accused of wrongdoing.

In his letter to U.S. District Judge R. Barclay Surrick, Carter alternates among stinging criticisms of the board, expressions of remorse and bewilderment, and self-pitying reminisces, chronicling a journey from rags to riches and back to rags.

Carter says he built a national reputation in the maritime museum field, despite growing up in a family where both parents were alcoholics and his father physically abused him.

Now, he said, his health and his finances are in ruins and his wife is divorcing him. His heart attack Friday was his third in recent years. He said he also suffers from diabetes and glaucoma. At one point, he says he's ashamed of what he called his "museum antics."

"Obviously, a lot of nasty things are being said about me," he wrote, "many of which are true."

Carter's broadside is the latest embarrassing episode for the museum, which is supposed to be a tourist draw celebrating the city's seafaring heritage.

In 2004, The Inquirer reported on the museum's plummeting endowment, falling attendance, massive losses on luxury yachts, and the extremely generous compensation package the board bestowed on Carter - who was paid $350,000 a year, more than the director of the Philadelphia Art Museum.

For years, a leading board member was State Sen. Vincent J. Fumo. In a separate indictment, the U.S. Attorney's Office has charged Fumo, in part, with defrauding the museum by cruising free on the museum's luxury yachts.

In a filing, Cedrone said the board knew all about Fumo's yacht vacations and said Carter had talked to federal investigators about Fumo's cruises. Prosecutors won't use Carter to help build their case against Fumo, Cedrone said, but he asked the judge to take that into account in the sentencing.

Fumo is just one in a series of prominent Philadelphians active in society and business as well as politics who have served on the museum board.

Until McCausland took command, the board was chaired for many years by M. Walter D'Alessio Jr., a Fumo ally and a leading real estate executive in Philadelphia.

D'Alessio did not return calls seeking comment Friday but he has declared he would not comment on the board's treatment of Carter.

Cedrone said the board was more interested in perks than in running a good nonprofit.

"From what I can tell, this museum was more of a club for people who want to be around yachts," Cedrone said. "It was part and parcel to the lifestyle of the rich and famous."

In his letter, Carter depicted the board as greedy, focused on helping themselves to boats, contracts and other goodies while the museum foundered.

Carter said the board was rife with conflicts, pointing out that the museum awarded legal and insurance work to the firms of board members.

He did not identify the board members, but museum officials did say that some contracts went to such firms.

In one case, the museum hired the law firm Saul Ewing for a variety of legal issues - including a current suit seeking to recover money from Carter.

Lawyer John Meigs of Saul Ewing has been on and off the museum board since at least 1986. Meigs, who was out of the country Friday, did not return a phone call or an e-mail message.

Also, museum insurance work has gone to an agency, Mather & Co., that has had three family members serve on the museum board between 1960 and 1993, officials said. A call to the insurance agency office requesting comment was not returned Friday.

In addition, Carter said millions of dollars went out to board members or their friends in construction contracts in about 1995, when the museum was moving from Chestnut Street into the old Port of History building on the waterfront.

In her own letter to the judge, Carter's wife, Karen, said one board member who owned a mechanical services company was given a $4.8 million no-bid contract as part of those renovations.

"The trustee then resigned from the board in order to not have a conflict of interest," she wrote. "John and the architect protested the awarding of this no-bid contract but to no avail."

Her letter does not name the contractor, and museum officials said Friday they did not know to whom the Carters might be referring.

The museum's boats also were abused by board members and at least one donor, the Carters asserted.

Without naming names, the Carters said board members kept museum boats in their own marinas. In particular, the Carters raised questions about the museum's relationship with one extremely wealthy benefactor, former Wall Street financier Peter Kellogg.

They alleged that Kellogg would make tax-deductible donations to the museum to build boats.

"In return, he was granted exclusive use of the boats produced by the boat shop," Carter said in his letter to the court.

By the time Carter was fired in 2006, Kellogg was using museum boats worth a total of $1.7 million, Carter said.

Kellogg did not return repeated calls to his home and office seeking comment. Last year, Forbes magazine listed him among the 400 richest Americans.

McCausland praised Kellogg, saying he had used the crafts to provide a boating experience to scores of underprivileged youngsters.

According to McCausland, Kellogg leased boats built by the museum for his own use "at favorable rates," but then paid for their maintenance, insurance and storage. Last year Kellogg ended the leases and bought the boats outright.

In his bid for leniency, Carter submitted letters of support from his 24-year-old daughter, a dozen other relatives, and more than 50 friends and business associates.

His supporters said they were confounded by Carter's criminality. Carter said he can hardly believe it himself.

"Like all schemes," he wrote, "it started out discreetly and grew. . . . I soon realized that the business office at the museum was pretty lenient when it came to submitting expenses and began to take advantage of that lack of scrutiny."

Carter acknowledged that the museum's endowment fell dramatically during his tenure but blames that on poor investment decisions, not his own looting.

And he asks, in the face of the financial crisis, "Why wasn't I summarily fired?"

"The trustees were asleep at the wheel," he said.

McCausland says all the allegations amount to nothing more than Carter's victimizing the museum one last time.

He said: "John trying to blame the directors for being 'asleep at the wheel' while he robbed the museum blind is the most laughable, pathetic statement that anybody could make."

Read court documents and previous articles at http://go.philly.com/carterEndText