August 30, 2004 12:00 PM

The mood was tense at the New Jersey governor’s mansion Aug. 12, as Jim McGreevey and his closest advisers worked on the speech that, later that day, would stun the nation. In the previous 24 hours, McGreevey, 47, twice married and with two young daughters, told aides he was gay. Incredibly, say staffers, he had only told his wife, Dina, the night before. Suddenly she appeared at the door. “The governor was very worried about Dina, and hurting her and causing her embarrassment,” says real estate developer Curtis Bashaw, who was there. But the First Lady was calm. “She looked very pulled together and came into the room where we were sitting,” says Bashaw of Dina, 37. “She hugged everyone, and there were some tears. Then she pulled up a chair and said, ‘If you want me to be there today, I’ll be there.’ ”

Hours later Dina McGreevey stood by her husband’s side as he delivered one of the most singular confessional speeches in American political history, during which he admitted to having a consensual affair with another man. He also announced his resignation, effective Nov. 15—without explaining why. That became clear within hours, when lawyers speaking on behalf of a former male aide, Golan Cipel, 35, said the governor had sexually harassed Cipel between 2001 and 2002. McGreevey’s aides countered that Cipel was trying to extort up to $50 million in hush money—an allegation Cipel, who claims to be straight, in turn denies.

Worse, say the governor’s critics, is the fact that McGreevey tapped Cipel for a sensitive $110,000-a-year post as a homeland security adviser just months after the 9/11 attacks—even though Cipel, an Israeli citizen, lacked security clearance for the job. McGreevey still says he will resign in November—but Republicans, and even some fellow Democrats, now want him out of the statehouse immediately. Supporters have also questioned his judgment. “I was aghast when he put Golan in that position,” admits McGreevey’s friend George Zoffinger, president of the state’s sports authority. “Jim realizes he’s wrong, and he’s paying a huge price for it.”

As pundits ponder the governor’s future, those who know him are sifting through his past for evidence of the sexuality he kept hidden. The son of a nurse and Marine drill sergeant, McGreevey grew up in blue-collar Carteret, N.J., and climbed up the political ladder, serving in the state assembly and senate and as mayor of the town of Woodbridge. Gossip that he was gay circulated as early as 1997, when McGreevey, by then divorced from his first wife, librarian Kari Schutz, with whom he has a daughter, Morag, now 11, ran for governor and lost. “There were always rumors,” says David Twersky, former editor of the New Jersey Jewish News. Five years later, when Twersky questioned the governor about his sexuality, “He said, ‘That old thing. I can’t believe they’re bringing it up,’ ” says Twersky.

When McGreevey made another run for the office in 2001, Dina, an activist in New Jersey’s Portuguese community whom he had met at a Newark fund-raiser, was at his side. Wed in 2000, the couple seemed genuinely attracted to one another, and Dina, who was soon pregnant with their daughter Jacqueline, now 2, plunged into her husband’s campaign. “They were a happy couple, they were always holding hands, always smiling,” says Maria Avila, who runs a Newark youth sports program and has known Dina for 20 years. Adds friend Helena Goncalves: “It was legit.”

Yet around the time of his marriage, McGreevey befriended Cipel, then a public relations rep for an Israeli mayor, during a trip to that country and asked him to join his campaign. Once in New Jersey, Cipel moved into an apartment less than a mile from McGreevey’s home. Cipel has now returned to Israel; he has yet to file a harassment suit. In a sense, says his attorney Rachel Yosevitz, he doesn’t really have to. “Golan’s view is that, by resigning, the governor is saying, ‘The action I committed was so outrageous I had to resign.’ ”

Back at the governor’s mansion, aides are still trying to put the best face on a marriage that has been changed forever. Both husband and wife plan to enter counseling as they ponder an uncertain future. “Dina’s having her ups and downs,” says state senator Ray Lesniak. “But I think the relationship is better than it has ever been—it’s based on truth.”

J.D. Heyman. Sharon Cotliar, Hope Hamashige, Diane Herbst and Fannie Weinstein in New York City.

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