WHITE PLAINS, N.Y., Nov 9 Reuters) - Former New York police commissioner Bernard Kerik pleaded not guilty to federal corruption charges on Friday in a case that could further embarrass friend and one-time boss Rudy Giuliani as he campaigns for president.
Kerik, 52, was released on $500,000 bail and defense lawyer Kenneth Breen said he will move to dismiss major parts of the indictment.
"I am disappointed that the government has brought forth this case. ... This is a battle I'm going to fight," Kerik said outside the federal courthouse in White Plains, just north of New York City.
The charges include lying to investigators who were looking into his personal finances and business dealings and hiding more than $500,000 in income, much of it gifts from firms trying to do business with the city.
The indictment does not help Giuliani, the former New York City mayor who polls say leads the race for the Republican nomination in the 2008 U.S. presidential election.
Kerik stood by Giuliani's side on worldwide television following the September 11 attacks and the two became business partners after Giuliani's term ended.
Giuliani's campaign did not immediately return calls seeking comment. Giuliani was campaigning on Friday in Nevada.
Kerik, a former detective, was Giuliani's driver who later became head of the city jails and, in 2000 and 2001, the head of the largest police department in the United States. Prosecutors allege he conducted the illegal business while in charge of the jails and concealed it while he was the top cop.
"Time and again Kerik was asked specific questions about his financial dealings, and time and again he lied," said Michael Garcia, Attorney for the Southern District of New York.
In 2004, disclosures about unpaid taxes for a nanny undermined Kerik's nomination for Homeland Security Secretary, which President George W. Bush made on Giuliani's recommendation. Kerik withdrew from consideration.
DAMAGING TO GIULIANI?
Experts said the indictment could prove problematic for Giuliani if his political opponents used it to question his judgment and management decisions. Campaigning in New Hampshire, Republican rival John McCain did just that.
McCain noted Kerik's stint training local police in Iraq after he left the police department.
"Supposedly his mission was to train Iraqi police ... He stayed a couple of months and up and left. That should have been part of anyone's judgment before they would recommend that individual to be the head of the Department of Homeland Security," he said.
Last year, Kerik pleaded guilty to state charges over the home remodeling, but the federal investigation goes much further.
The indictment unsealed on Friday accuses Kerik of receiving $255,000 worth of renovations to his apartment from a construction firm that was suspected of organized crime ties and attempting to win city contracts.
It alleges Kerik took steps to convince city regulators the contractors were free of mob ties and should be approved to do business requiring city permits.
Kerik is also accused of falsely claiming $80,000 in charitable donations he did not make, creating a company to hide taxable income, and failing to pay taxes on the nanny.
"A beat cop accepting a free cup of coffee ... is properly viewed by the public as wrong. ... If a free cup of coffee is wrong, Kerik's long list of alleged crimes is repugnant," said David Cardona, the agent in charge of the New York FBI office.
If convicted, Kerik faces a maximum aggregate sentence of 142 years and $5 million in fines and forfeitures.
(Additional reporting by Daniel Trotta in New York and Josh Rogers in Concord, New Hampshire; Writing by Daniel Trotta, editing by Doina Chiacu)