Sanctuary Preserved

The Sanctuary, 340 acres of Montauk moorlands with a checkered past, has been acquired by the Nature Conservancy for $4.18 million and will be sold again Tuesday as parkland to New York State, for the same amount. The conservancy's payment to the property's corporate owner will be divvied up in a deal to rid investors of their unwitting ties to the Colombo crime family.

The state's purchase of the Sanctuary means that nearly all of Montauk Point, broadly speaking, will remain green in perpetuity, from the lighthouse to the western boundary of Montauk County Park on the north and to the Sanctuary's western boundary, the old Old Montauk Highway, on the south.

The state now owns more than 1,400 acres at Montauk Point, Suffolk County owns 1,100, and 25 more are preserved by East Hampton Town and the Federal Government.

One Of The First

The only undeveloped land in the easternmost reaches of Montauk still in private hands is the 40-acre Caswell's Point tract between the Sanctuary and the ocean. There are a few developed sections, such as the 24 houses at Camp Hero and along the ocean where Richard Avedon, Peter Beard, and other notables live.

The Sanctuary deal was one of the first to be bankrolled by the state's $1.75 billion Clean Water-Clean Air Bond Act, approved by voters in November. It was announced a month ago that Governor George E. Pataki had agreed to the allocation.

He held a press conference Tuesday morning to announce the long-anticipated deal had finally closed, at the Long Island headquarters of the State Office of Parks, Recreation, and Historic Preservation in Babylon. A handful of East Hampton Town officials and residents, notified by phone the afternoon before, carpooled to the conference. Governor Pataki was joined by County Executive George Gaffney and other state and county officials.

"Spectacular Addition"

The Nature Conservancy, which has preserved a good deal of land to the west through donations, purchases, and easements, mediated between the state and I.C.R. of Montauk Ltd., the property owner.

In a statement faxed to the press, Governor Pataki called the parcel "a spectacular addition to the state park holdings" at Montauk Point and said "the Clean Water-Clean Air Bond Act is returning New York to its proper role as an environmental protection leader, guarding the critically important natural areas on Long Island."

Town Councilman Thomas Knobel, recently appointed to the State Open Space Advisory Committee, said the Governor and the County Executive both recalled during the conference that Suffolk voters had come out in force for the bond act.

Reputed Mob Figure

More than 70 percent of the Sanctuary is covered by freshwater wetlands that took town planners more than a year to flag. The extensive wetlands and the presence of blue-spotted salamanders and other rare species had some officials speculating those obstacles to development would pull the price of acquisition under $3 million.

Brian Vattimo, a state parks spokesman, said there was no management plan in place as yet for the Sanctuary. The land was considered environmentally fragile, and only the most passive uses would be encouraged, he said.

While the Sanctuary is now considered safe from development - the idea of a golf course there was ill-received here and lost its appeal in Albany as a result - the question of who will get the state's money is still in dispute, with Dennis J. Pappas, the reputed Colombo consigliere, at the center of the fray.

Ill-Gotten Money

A lawyer and financial advisor from Oyster Bay, Mr. Pappas was arrested two years ago on Federal charges of racketeering, loansharking, looting pension plans belonging to his clients, and other of fenses. The United States Attorney's office accused him of laundering mob money by pooling it with money invested by his legitimate clients in real estate and other ventures.

Prosecutors said Mr. Pappas and Victor M. (Big Vic) Orena, former Colombo family capo, were principals of International Coordinated Resources Inc., the parent company of I.C.R. of Montauk, and had early on named the Sanctuary as one of the assets it had acquired.

Faced with claims from a multitude of legitimate investors who said they too owned a piece of the Sanctuary, prosecutors later declined to confiscate the land. Instead, they have reportedly reached an agreement with the lawyers for I.C.R. of Montauk that would repay a portion of what they were owed to those who could prove their ownership.

No Documentation

Burton Ryan, the assistant U.S. Attorney prosecuting Mr. Pappas, said many others would not get paid. "Mr. Pappas told many people they had an interest in the property, when there is no documentation," he said.

Roy Cacciatore and Kathleen Delessio, partners in the Freeport firm hired to represent I.C.R. of Montauk after the investors fired Mr. Pappas, did not return phone calls personally. However, a secretary for Ms. Delessio did call back with a brief statement: "The owners are happy that a mutual agreement was worked out for the perpetual preservation of this property."

Mr. Orena is serving life in prison for racketeering and conspiracy to commit murder. Mr. Pappas has not stood trial because of a heart condition and its "psychological effects" and has been forced into bankruptcy.

Distribution Of Money

The sale of the Sanctuary was approved by U.S. Bankruptcy Judge Melanie Cyganowski, as was a deal that put $300,000 of the proceeds into the hands of the bankruptcy trustee. The rest is to be distributed to the I.C.R. investors by Mr. Cacciatore and Ms. Delessio, who are likewise owed a considerable sum.

Mr. Pappas's lawyer in the bankruptcy, Paul Dahlman, said his client will not claim anything from the proceeds of the sale, and Mr. Dahlman said he would ask that the $300,000 go to the investors as well.

"Everything is up in the air right now. Mr. Pappas hasn't seen his own papers in years, and doesn't remember exactly what's on them, but he believes he is entitled to zero from this," said Mr. Dahlman.

Condominium Plan

Among the claims was a $1.4 million mortgage on the property held by Jerry D'Angelo and Vincent Augello, former commodities traders who hired Mr. Pappas in 1979 to rid them of an unwanted partner in the Sanctuary.

In a 1995 interview with The Star, they told the story of how, through dinners and drinks, Mr. Pappas gradually replaced that partner with two new ones, himself and Mr. Orena seem headed toward a townwide solution.

They were all shareholders in a corporation that, in 1982, had proposed 142 condominiums on 70 acres of the Sanctuary, bulldozing a road through the wetlands, and building an observation tower to show prospective buyers the view. Angry Montauk residents, among them Dick Cavett, Peter Beard, and Cheryl Tiegs, hired a lawyer, and the plan went sour.

Dies Before Testifying

Subsequent owners, all corporations, made little more than halfhearted attempts to subdivide. Town records show the property transferred several times over the last 20 years from one corporation to another, with each holding a mortgage for the next. No money changed hands, as the transfers represented partnership restructurings.

Mr. D'Angelo, who told The Star he intended to testify against Mr. Pappas when the time came, died last year.