Back in 1984, Giuliani was U.S. Attorney for the Southern District of New York.  During that time, allegations began to surface about physical and sexual abuse perpetrated on children at the day care center at the U.S. Military Academy at West Point.  The allegations were addressed by West Point officials in a significant manner after a 3 year old girl was seen by a military physician for a lacerated vagina.  With two of the alleged abusers being civilian workers at the day care, the matter was turned over to the FBI to investigate, and Giuliani was in charge of the case.  After Giuliani failed to indict any one for the abuse, some of the parents filed a civil suit and were eventually awarded $2.7 million from the government in 1991.  The Times Herald Record, the local paper, covered the allegations, but the story was picked up nationally after Giuliani failed to indict anyone.  The Washington Post ran a story on how one of the fathers refused promotion over anger that no criminal charges were filed and it seemed like more interest was put towards protecting West Point's image than protecting children or justice.  (if that doesn't typify the Bush administration and what a Giuliani administration would look like I don't know what does)

From the Post story:
Sawyer, Kathy "Army Doctor Turns Down Promotion; Lax Response to Case of Child Abuse Cited," Washington Post, June 25, 1985

An Army doctor rejected promotion to major at a public ceremony yesterday because, he said, officials have failed to respond adequately to charges that his daughter, 3, and other children were sexually abused at the day care center at the U.S. Military Academy at West Point.

Capt. Walter R. Grote, 33, told a gathering at a promotion ceremony at Fort Dix, N.J., "I cannot accept promotion in a system that at first refused to acknowledge and now refuses to deal with the victims of extensive child abuse that occurred at the West Point Child Development Center."

West Point spokesman Col. John Yeagley said the Academy had taken the charges of abuse "very seriously" from the outset, nearly a year ago, promptly referring the matter to the FBI once Army investigators determined that two suspects were civilians.

A federal grand jury has been hearing the allegations that 11 children, from ages 13 months to 3 1/2, were sexually or physically abused at a facility near the Academy athletic field.

One suspect was transferred to administrative duties with the post division that oversees the day care center, Yeagley said. The other has left the Academy work force.

During the civil proceedings, an independent medical team from UPenn was brought in as well to investigate the abuse.  When all was said and done, the army paid 11 families $2.7 million in a settlement.  It seems like Giuliani had the good fortune of his name being kept out of the New York Times article that covered the settlement in 1991 (even though he was a NYC mayoral candidate in 1989 and of course gearing up to run again in 1993).

Hays, Constance L. "$2.7 Million Settles Army Child-Abuse Case," New York Times, May 23, 1991

The Federal Government has agreed to pay $2.7 million to eight children who said they were sexually and physically abused in the early 1980's at a day-care center run by the Army at the Military Academy at West Point, N.Y.

Lawyers for the children said the total settlement was large for a child-abuse case in which no criminal charges were filed.  Two women who worked at the West Point Child Development Center had been accused in the case, but a yearlong investigation by the Federal Bureau of Investigation found "insufficient evidence to prosecute," officials said in 1985. [The official in charge was Giuliani]

... $615,000 to One Girl

In papers filed yesterday in Federal District Court in Manhattan, a $615,000 settlement to a girl who is now 10 closed the five-year case. Her lawyer said an Army doctor had confirmed her sexual abuse at the age of 3. [this was the victim with the lacerated vagina]

The girl will receive $65,000 in personal-injury claims, $100,000 for a college fund and $450,000 in five-year installments from the ages of 25 to 50. The Government must also pay her lawyer's fee, which was $55,115.

... Charges Made in 1984

The charges of sexual abuse first emerged in 1984, when 11 children reported being fondled and abused by the two women who worked at the center between 1981 and 1984.

... Helped by Judge's Ruling

A 1987 opinion in the case, by Judge Whitman Knapp, reinforced the claim of negligence, Mr. Crain said. The judge wrote that "prior to the time the injuries were inflicted upon the infant plaintiffs, several complaints regarding improper treatment of children at the day-care center had been filed with the center itself and with the inspector general at West Point.

"The plaintiffs and other parents had complained to center employees and supervisors about strange marks, bites, blisters apparently caused by burns, and genital and anal rashes, but had been told that all was normal," the judge wrote. "The Government took no action to investigate either the allegations of child abuse at the center or the removal of children from the day-care facility."

Subsequently the Supreme Court ruled that the Government could be sued for negligence by its employees.

Giuliani is not mentioned in the above NY Times piece, but he is mentioned in the Times Herald Record story which came out at the same time after the settlement.

Cunningham, Douglas and Alan Snel "A Legacy of Pain: Settlement Doesn't Ease Abused Children's Fears," The Times Herald Record (Middletown, New York), June 11, 1991.

A LEGACY OF PAIN  
SETTLEMENT DOESN'T EASE ABUSED CHILDREN'S FEARS

WEST POINT
  Seven years have passed since she was sexually abused at West Point's child-care center. Yet today, the 10-year-old girl can't go to the bathroom without her mother waiting by the door.
  The girl - who was 3 when West Point child-care workers were accused of sexually abusing her and 10 other children in 1984 - also asks her mother about whether she will be able to bear children when she grows up.
  "This happened seven years ago, and it's not any better," the girl's mother said. "She's constantly asking, `What if we're out in the store, Mommy, and we see these people? Are they going to hurt me?' . . . But this is constantly on her mind because she knows these people are not in jail for what they did." [And whose fault is that, Mr. 9/11?]
  In the U.S. District Court files in Manhattan, the West Point sexual abuse case is resolved. The government failed in 1985 to indict any suspects in its criminal investigation. But last month, it settled a civil suit brought by the parents of the 11 victims. Nine of the victims will receive $2.7 million, with awards ranging from $25,000 to $625,000.
  But even as the legal dust has settled, the case lingers as a legacy of pain for the families.
  "These people stole our children," the mother said. "(She's) nothing  like she used to be. She's a very angry little girl. She doesn't trust anyone. She's nothing like she was before this happened.
  "It's never going to be over for them, or for us."

...Despite 950 interviews by 60 FBI agents assigned to the investigation, an investigation led by former U.S. Attorney Rudolph Giuliani produced no federal grand jury indictments. The investigation did find "significant indications that children may have been abused" at the center.
  Until now, no official reports or investigations have verified the sexual abuse. The Times Herald-Record, however, has learned that a still-secret, independent report - prepared by one of the nation's top experts on child sexual abuse - confirms the children's accusations of abuse.  The report also played a vital role in ending the seven-year legal ordeal and in enabling the case to be settled without the children undergoing potentially hostile questioning on the witness stand, said U.S. District Judge Whitman Knapp, who heard the civil case.
  The expert, Dr. Ann Wolbert Burgess, a professor of psychiatric nursing at the University of Pennsylvania at Philadelphia and the author of the book, "Child Pornography and Sex Rings," entered the case in 1989.
  She interviewed all the children. She said yesterday that her goal in the case had been to reduce harm to the children because testimony in open court could have triggered symptoms of abuse, prompted by a "resurfacing" of the original incident.
  Knapp said that because Burgess worked for neither the government nor the plaintiffs, but reported directly to the court, her findings carried additional credibility.  Neither Burgess nor others would speak about her specific findings.
  "You can draw your own conclusions from the fact that (the government) paid all this money," Knapp said about Burgess' report. "The government wouldn't have likely paid that money unless the report gave them a basis for doing that."
  The families' lawyer, William E. Crain, who now practices in Elkin, N.C., and formerly worked in Newburgh, said the report is independent confirmation of the children's claims. He received nearly $300,000 in legal fees in the case. The amount, 25 percent of the settlement, is set by law.
  "Just generally speaking, it corroborated the children's allegations they had been sexually abused by day-care center staff," Crain said of the report.
  "That report was sealed and has never been seen by anybody else and I hope it never will be," Knapp said. "That has all the intimate details of what happened to these children. Certainly, they don't want to be plagued by that when they grow up."
  The government, however, admitted none of the allegations in making the settlement. Edward T. Ferguson III, the assistant U.S. attorney in charge of the case, declined to comment on Burgess' role. He said that the settlement was in the best interests of the children and did not require them to testify in court.
  "Everyone involved - the parents, the government and the court - all wished to avoid (the children taking the witness stand), if an accommodation could be reached," Ferguson said.
  Among other things, several of the settlements - made individually with each child's family - provide for medical costs, counseling and a college fund. The actual cost of the settlement is $1.175 million. Much of the money will be invested and paid out during the victims' lives, thereby increasing the total to $2.7 million.
  "They're children. They're going to have to live with what happened to them. So are their parents," Crain said. "But in terms of legal work, the legal end of it is finished."

  ... The Army's reaction to the parents' plight so enraged former Army Dr. Walter R. Grote that the ex-captain refused a promotion to major in 1985  because of the treatment of his child's sexual abuse case at West Point. He was one of the first parents to file the lawsuit, but later dropped out of seeking money from the case.
  "Unfortunately, money can't... undo the trauma incurred by scores of children at West Point... because people with responsibility didn't exercise that responsibility," said Grote, now in private practice in New Jersey. "What the hell is a settlement?... They could have caught these people doing it at the time that they were doing it.
  "We have a tendency to think that everything that's evil and bad is on the other side of the Pacific or the Atlantic.
  "And that's not the case." [the past 6+ years should have jarred people out of that belief]
  The mother of the 10-year-old said the settlement will pay her daughter's college bills.  But the mother said she would have preferred the government kept its money and punished the abusers.  
   Without the prosecution, West Point has retained its polished national image, she said.  Even last month, the government admitted none of the  allegations in making the settlement, a reminder of what parents say was West Point's callous denial.
  "They wouldn't acknowledge what happened," the mother said.  "I'm sure if it was done anywhere else but West Point, it would have been acknowledged."  [And who do they have to thank for that?  Rudy.]

... The monetary settlement, however, did not resolve the parents' bitterness over what they still maintain was a botched FBI investigation.  [This goes along with Giuliani botches like the radios for emergency responders on 9/11 and the placement of a terrorism command center at WTC 7]  In fact, court papers filed by parents showed federal investigators not only refused to believe the children, but, in some cases, also criticized some parents for not keeping their children under control in their homes.
  "When the agents came to the house, they did not appear to have a tape recorder and they were not taking notes during the interview," one parent said in a sworn statement, according to 1984 court papers. "He became annoyed and frustrated and said, `It looks like she's just trying to get attention.'  "
  Recalled Grote: "The tragedy is the abusers could have been caught...  with a little imagination and a lot less chauvinistic narcissism on the part of West Point and the initial FBI investigator."
  Prosecutor Giuliani did not return calls last week. In 1987, Giuliani said his detailed investigations showed only one or two children were abused.  [I mean what's the big deal right Rudy?  One or two children you can confirm were abused?  No reason to indict anyone, right?  No need to protect other children, right?] The federal investigation cleared the center staff members accused by the children.  [If you know that children were abused, and you claim that it wasn't the staff, then who was it?  And why weren't they indicted?  And why were 11 victims awarded so much money?]
  The mother of the 10-year-old girl still tries to cope with the abuse's aftermath.
  "As far as I'm concerned, the government gave them a license to go out and abuse other children," the mother said. "I have to explain to my daughter these people are still out there.
  "And she still has nightmares. She's afraid they're going to come through the window at night to get her."

So we have two staff members who are removed and laid off, to go to who knows where.  Giuliani knew there were multiple children being abused.  And yet he did not indict anyone.  Not receiving justice from Giuliani, the parents pursued civil action.  The government ended up paying 11 victims $2.7 million, but protected its image, thanks to Rudy.