Kerik's case could prove to be an ongoing embarrassment for Giuliani, who is seeking the Republican nomination for president.
The indictment accuses Kerik, the former New York City police commissioner, of conspiring while a public official with a mob-connected construction firm to accept tens of thousands of dollars in renovations to his Bronx apartment, and then lying to cover up the scheme. It also claims he made false statements during his failed bid to head the nation's homeland security department.
"This is a battle," Kerik said, fighting through a media crush as he left court. "I'm going to fight."
Kerik surrendered earlier Friday to the FBI in suburban White Plains, where he was fingerprinted and processed before his court appearance.
Standing before the judge, Kerik appeared calm and spoke only to say, "Not guilty, your honor," and answer a few personal questions. He was ordered to surrender his passport and any firearms, and to have no contact with potential witnesses. He was to be released on $500,000 bond, secured by his home in New Jersey.
Giuliani appointed Kerik police commissioner in 2000 and endorsed his 2004 nomination to head the Department of Homeland Security. Days after President Bush introduced Kerik as his nominee, however, Kerik announced he was withdrawing his name because of tax issues involving his former nanny.
Prosecutors had been presenting evidence to a federal grand jury for several months.
The investigation of Kerik, 52, arose from allegations that, while a city official, he accepted $165,000 in renovations to his Bronx apartment, paid for by a mob-connected construction company that sought his help in winning city contracts.
U.S. Attorney Michael J. Garcia said some of the payments detailed in the indictment took place after Kerik became police commissioner.
"During the time that Kerik secretly accepted these payments, he lobbied city officials on behalf of his benefactors - in effect selling his office in violation of his duty to the people of this city," Garcia said.
David A. Cardona, head of the criminal division of the New York FBI office, noted that the public considers "a beat cop accepting a free cup of coffee" improper.
"If a free cup of coffee is wrong, Kerik's long list of alleged crimes is repugnant," he said.
If convicted, Kerik could face up to 142 years in prison and $4.75 million in penalties.
Kerik pleaded guilty last year to a misdemeanor charge in state court, admitting that the renovations constituted an illegal gift from the construction firm. The plea spared him jail time and preserved his career as a security consultant, but his troubles resurfaced when federal authorities convened their own grand jury to investigate allegations that he failed to report as income tens of thousands of dollars in services from his friends and supporters.
Kerik's efforts in response to the Sept. 11 attacks helped burnish a career that came close to a Cabinet post.
Two White House officials said Mr. Bush long ago moved past the debacle over the ill-fated choice of Kerick to be Homeland Security Secretary, CBS News White House correspondent Peter Maer reports. One official who was present at the time, said, "Withdrawal (of a nominee) is not something you set out to do." The official said the president "moved on quickly" from the situation.
Another official said Mr. Bush and Giuliani have a pretty good relationship, Maer added. The official insists the president never felt burned by Giuliani for recommending Kerick for the post. Mr. Bush likes to recall that Giuliani helped him win re-election in 2004. The official says Mr. Bush and Giuliani "bonded" after the 9/11 attacks.
Giuliani frequently says he made a mistake in recommending Kerik to be Homeland Security chief, but that might not be enough to avoid the political damage of a drawn-out criminal case involving his one-time protege.
said Friday that Kerik did an irresponsible job training police in Iraq and cited Kerik's relationship with his Republican presidential foe as a reason to doubt Giuliani's judgment.
"I don't know Mr. Kerik. I do know that I went to Baghdad shortly after the initial victory and met in Baghdad with (Ambassador Paul) Bremer and (Lt. Gen. Ricardo) Sanchez. And Kerik was there. Kerik was supposed to be there to help train the police force. He stayed two months and one day left, just up and left,".
"That's why I never would've supported him to be the head of homeland security because of his irresponsible act when he was over in Baghdad to try and help train the police. One of the reasons why we had so much trouble with the initial training of the police was because he came, didn't do anything and then went out to the airport and left."
During a campaign stop Thursday in Dubuque, Iowa, Giuliani was asked whether he still stood by Kerik. He sidestepped that question and said the issue had to be decided by the courts.
"A lot of public comment about it is inconsistent with its getting resolved in the right way in the courts," Giuliani said.