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Archive for the ‘Public Corruption’ Category

My friend Michele ( btw – it’s pronounced ‘mik-kelly’ – he’s Italian. Just like Michael Corleone was called ‘Michele’ in Godfather while he hid out in Italy after shooting the police captain in the Bronx. “Try the veal, it’s the best in the city” ) had this great series of observations about the movie Star Wars. And since I began my blog posts about the DRPA with a Star Wars theme, it seems only appropriate that I bring it back to that.

So, Michele ( who was once introduced to someone actually named ‘Mick Kelly’…I wasn’t around for that college-era encounter but I hear it was pretty memorable ) theorizes that despite dressing up the movie characters in space garb, they are more or less wearing 70’s fashions. This despite the fact that the great adventure took place “a long time ago in a galaxy far, far away.” After all, Han Solo is wearing a vest. The haircuts on he and Luke Skywalker are pure 70’s ‘let it be’ look. And if you slow down the video you will notice that Chewbacca’s furry legs are actually shaped into bell bottoms. Swear to God. Check it out.

Anyway, no matter how hard you strive to achieve authenticity, what we do reflects who we are. What our culture is, what are values may be and even ( in the case of George Lucas’ 1977 film classic ) what we are wearing.

When NJN News first reported on a troubling culture within the DRPA back on June 30th, the agency’s first instinct was denial. They sent out a 6-page missive to every Senator in the state of New Jersey basically denying everything. They put the same report on their website where it laughably remained until just a couple of weeks ago. We all know what has happened since. There has been a complete about face. Just like alcoholics go through stages such as denial, anger and ultimately acceptance…so too has the top management at the DRPA. Although I was slightly baffled by John Matheussen’s comments before the cameras last week when he said “you guys know me as someone who never shies away from the media. Really?? Don’t we have you on camera in that first report refusing to speak with us?? Oh, right. We do.

And that brings me back the True Up – which is the way insurance commissions were split evenly between the two states ( see earlier posts ). I have enclosed this email exchange amongst the DRPA and Graham and Willis – the two companies involved in the McGreevey-era True Up arrangement. As you can see, as late as August 10 the Willis group is still demanding that they make the arrangement so that the company can get it’s share of commissions. This was long after Governor Christie and others questioned the practices of the DRPA. Documents are below, the exchange began on July 8 ( just click on them to enlarge ). And by the way, why on earth is former Public Safety Director Mike Joyce cc-ed here??? He’s the guy who was forced out for misusing an EZ-pass. Joyce also served as Solicitor for Pennsauken, and as Vice Chair Jeff Nash’s Assistant.

So, to tie in the movie metaphor ( Alright, alright…so I might be reaching a bit on this one ), no matter how much you try and change the appearance, ultimately who we are shines through. The actors and costume designers of the 70’s made a product that reflected their time despite efforts to overcome it. And as late as one month ago the current DRPA leadership team seemed incapable of breaking from the practices of the past. Can they be trusted to transform the agency now? The force is not with them.

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There were a coupla things Christie said outside the DRPA last week that deserve further amplification. the first is that these guys “need to get religion.” Without the authority to fire the top management at the DRPA, he is basically putting them on notice that they need to completely disavow the old ways, and embrace the new. Otherwise it’ll be death by a thousand vetoes, essentially rendering the DRPA useless.

But asking these guys to not only recognize the problems of the past but also completely disassociate themselves from their complicity with that past might be a tall order. They may indeed find religion, but isn’t it a little too little, a little too late? It’s like how Daryl Strawberry used to hit most of his homeruns – in like, the 8th inning when the Mets were already up by seven.

The other comment that slipped under the radar was the Governor’s contention that the True Up arrangement regarding insurance commissions is what he finds “most disturbing.”

The Pennsylvania Treasurer has already questioned the legality of this arrangement ( see earlier posts ). Basically it comes down to this: two firms Willis on the Jersey side and Graham on the Pennsylvania side were charged with finding insurance policies for the DRPA’s various projects. All commissions for finding the best policies were split 50-50 between the two companies ( and by extension the two states ). However, Graham claims that his firm was doing all the work. And he was still forced to split the payouts, which of course come from toll payer money.

The True Up was a McGreevey era ( do you think he also had a hand in Watergate, since all roads seem to lead back to him ??!! )   arrangement, so it predates CEO John Matheussen. But it continued through this past Summer; meaning it happened on Matheussen’s watch.

Here is Matheussen’s letter to DRPA Commisioner John Dougherty from last month saying that he basically has no information about the True Up. See the last paragraph, particularly the highlighted portion. ( just click on all of these documents to enlarge )

Here is an agreement about a True Up payment from September 2009 ( a year ealier ) from the Graham company. Note that Matheussen was cc-ed, meaning he personally received all the relevant information about the arrangement.

And here is a letter from Graham to Dougherty laying out the amount that has been paid out in the True Up dating back to 2004. As you can see, the check numbers are included ( just in case Comptroller Matt Boxer happens to read the Zachary Fink Blog…what’s up, Matt? How you doin? Talk soon ). It adds up to more than half a million dollars of public money.

So, as you can see once again, the record doesn’t paint a very flattering picture. The DRPA might need more than a towering homerun into the parking lot after the Mets already have the lead.

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There is a scene in the movie “Ghostbusters” where Bill Murray tells Harold Ramis that he is still  “a little fuzzy on the whole good-bad thing.” Ramis proceeds to lay out the ultimate doomsday scenario they face which involves imagining all life as they know it stopping instantaneously and every molecule of their bodies “exploding at the speed of light.” Suddenly, it’s quite clear. I mean, how couldn’t it be with that explanation?

Unfortunately, I’m still a bit fuzzy on the pot of economic development money at the DRPA. And the interview we did yesterday ( see below ) with CEO John Matheussen didn’t make it much clearer.

In a taping of NJN’s On The Record, Matheussen told NJN Senior Political Correspondent Michael Aron that in 2008 the DRPA approved a resolution ending the practice of spending toll money on those controversial economic development projects. But as we pointed out in the last post, The DRPA actually continues to spend that money including committing $1.5 million to the Army-Navy game over the next six years. That was voted on in 2009, long after the resolution supposedly stopping the practice was passed.

But wait, there is more. According to internal documents, the board approved 62 resolutions authorizing economic development spending since the resolution ( which supposedly outlawed it ) was passed on 8/15/08. That’s right, 62.

Matheussen explains that they are merely spending what was left over…not new dollars. Fine, but couldn’t that money have been be redirected back to the DRPA’s core mission? After all, wasn’t the intent of the ’08 resolution to end that controversial practice once and for all??? Or was it merely window dressing? Something doesn’t add up here. And it’s particularly noteworthy since there was a long, spirited debate during the DRPA special board meeting on August 25 about whether to continue toll discounts for seniors and others. we heard dire warnings that if the senior discount continues the loss of revenue could affect the agency’s bond rating. Apparently no one was worried about that bond rating when the agency spent money on clean energy wind turrbines on top of the aquarium that apparently do not spin.

Wednesday’s story. Be sure to watch the interview after the taped piece.

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My friend Dinny used to have this brilliant theory about how Disney World is like the American Vatican. Much the way Vatican City operates autonomously within the city of Rome, Disney World does the same within the confines of Orlando. That includes Their own municipal services such as garbage collection, and even their own security/police force.

However, the Vatican is home to a monotheistic religion that appeals to millions of people world wide…Disney encourages the worship of life-sized stuffed animals making it more like Neo-Paganism.

Well, autonomy has it’s benefits and it has it’s drawbacks. In the NewYork – New Jersey region and the Philly-New Jersey region there are numerous authority’s that operate independently. It’s a Robert Moses concept – create a Tri-boro Bridge And Tunnel Authority ( for example ) that can float it’s own bonds, has it’s own cops and even has the power of eminent domain. That way, these authority’s can do unpopular things, but aren’t really answerable to taxpayers.

The DRPA was created by an act of Congress and while both New Jersey and Pennsylvania have some say, there does not appear to have been a lot of scrutiny by either state.

At the August 18 DRPA board meeting, Pennsylvania Auditor-General Jack Wagner asked why the DRPA spends $250,000 each year for the Army-Navy game. It’s worse than we thought. According to documents obtained by yours truly, on 12/12/09 the board approved a six-year commitment on the part of the DRPA to the football game at a cost of $1.5 million. This is money that will be paid out of that now infamous economic development fund  ( the spigot of which was supposedly shut off in 2008 ).

In addition two other contracts from economic development money caught my eye. Two payments to Bellevue Communications. One is for a PR buy in March of 2009 worth $25,000, the other is to the same firm for $99,000 in July of the same year. Trying to get some clarification on what this money was used for, but it should be noted that the President of Bellevue Communications is Kevin Feeley, the former Deputy Mayor for Communications under Ed Rendell.

It’s like Disney World…the fun never ends.

Friday’s story without comment.

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In the 1980’s, America had a brief love affair with continent of Australia. “Crocodile Dundee” was all the rage. Foster’s Lager capitalized on our new found romance and began aggressively marketing it’s oil can sized beer here with clever ads about the rustic people of Australia ( clearly Australia was the man in this relationship and America was the woman ). And Outback Steakhouses began popping up in strip malls all over the United States.

But like many torrid affairs, this too quickly came to an end. While we remember it fondly, in the end we just weren’t a good match. I see now Australia is flirting with the European Union which makes us a tad jealous, although we’d never admit it.

Well, it sounds like New Jersey and Pennsylvania had a bit of a dalliance through it’s joint venture the DRPA. It’s been stormy at times ( including a 17-month period where the board didn’t meet due to an inter-state squabble ), but for the most part the spoils were split 50-50 between the two states. An equitable distribution, so Everybody won.

Let me give you a great example of what I am talking about. Sources tell me that in the early 2000’s, Governor McGreevey ( ever notice all roads seem to lead back to him??? ) made a a deal with John Matheussen’s predecessor Manuel Stamatakis. In order to purchase insurance, the DRPA would hire a Pennsylvania broker to go find the best rate, and a Jersey broker. The two brokers would get commissions worth hundreds of thousands of dollars to find the policy. And at the end of the year, according to the true up, all commissions were split evenly between the two states. This was btw – a verbal agreement ( of course it was ) and there are supposedly no records.

Anyway on the Pennsylvania side, the broker was the Graham Company which actually has contracts all over the country. Three guys then split off from Bill Graham and formed a Jersey company called “The Willis Group.” Kinda like Halliburton created KBR to do all that other contractual work the US government needed for the war in Iraq.

Well, last year was the first year these two companies didn’t automatically get the contracts. An RFQ was sent out and there were all sorts of problems and fights.

And since Graham was doing most of the work…his company was also paid a retainer on top of the commissions. Matheussen has told me he knows nothing about the true up. But from what I understand, Graham was annoyed because his firm did all the hard work and actually had the skills to do it, then they had to hand over half the money to Willis. Could NJ and PA break up over something like this???? Unlikely, since there is too much money to be made.

But in regards to this insurance collusion, one official told me they “don’t understand how this is legal.”

This reminds me of what other sources told me on day one about how legal work is handled at the DRPA. Take a proforma IBEW contract for electrical work. The contract needs to go to outside counsel in both New Jersey and Pennsylvania. Who gets the legal work in PA? Why, Ballard Spahr of course. Ed Rendell’s old firm.

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To understand what has happened at the DRPA, we need to go back a few years. So, I am going to get a little James Michener ( yet another sophisticated literary reference…Aw yeah ) and go through some of the history ( yes, I know Bob Ingle did this already ).

The year was 2003, and Democrats wanted control of the state Senate. Republican John Matheussen was offered the job as DRPA CEO by Governor Jim McGreevey, and he agreed to take it. Fred Madden the Democrat was elected to the old seat forcing the Senate out of  a 20-20 tie ( Btw – You gotta wonder where the Republican party was to allow this to happen???!!! ). I was actually at Madden headquarters that election night covering for NJN News. Anyway, as part of the agreement, Matheussen and a handful of others were permitted to stay in the NJ pension system, which required a change in the law.

Here it is.

Law Change

Law Change2

And here is the list of New Jersey pension keepers at the DRPA with their salaries. Mike Joyce is one of them. He resigned two weeks ago as Public Safety Director after he gave an E-Z pass which did not belong to him to his daughter. ( Just click on it to enlarge )

Well, as CEO Matheussen was given his $219,000 salary plus his more than $16,000 annual car allowance. And apparently, on at least one occasion that we know about, he didn’t want to use his car ( despite that allowance ) to attend a meeting. Here is an email exchange with DRPA Corporate Secretary John Lawless from 2008. Lawless apparently had the nerve to question whether Matheussen and others needed a pool car to travel. Point of clarification: Matheussen was cc-ed on this email chain but the exchange was not directly from him. It was  Bill Shanahan on Matheussen’s behalf.

From: John Lawless
Sent: Friday, October 17, 2008 2:41 PM
To: John Matheussen; Robert Gross
Cc: William Brooks; William Shanahan
Subject: Company Car

John and Bob,

I am not sure the Company policy regarding Employees who receive a car allowance obtaining an Authority car for Authority Business.

Bill Shanahan has requested a car for all of you to travel for a meeting.

I assume since you are both going you have approved of this trip with an Authority vehicle.  If I am wrong in this assumption please let me know.

Thanks

John

From: William Shanahan
Sent: Friday, October 17, 2008 2:56 PM
To: John Lawless; John Matheussen; Robert Gross
Cc: William Brooks; Dawn Whiton
Subject: RE: Company Car

All: John brought up a good point so I investigated it and there is no policy that prohibits anyone with a car allowance to use a fleet pool car for company business. I checked the following sources: 1) Policy and Procedures Manual – Series 200, Policy #209 DRPA Vehicle Policy; 2) HR Rules 3) Finance Rules. Bill


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There is a scene in Godfather where Michael Corleone heads out to Las Vegas to buy out Moe Green. Michael explains that the casino loses money, and perhaps the Corleone family can do better.

“You think I’m skimming off the top??!!” Exclaims Green ( who later landed a recurring role on”The Facts of Life” as Jo Polniaczek’s father ).

To which Michael simply answers without skipping a beat, “You’re unlucky.”

There are a lot of accusations flying back and forth at the DRPA, so rather than accuse anyone of malfeasance, perhaps we can just chalk up some of the decisions that were made to simple misjudgments. It is however, a bit disingenuous for the folks in charge to accuse people like the Treasurer and the Auditor General of the state of Pennsylvania of somehow being in the wrong here. Yes, they are now loudly demanding reforms. But for years, their representatives claim they have quietly advocated for those same reforms only to be ignored. Well, I guess you can’t blame them for finding their voice now when everyone is taking a closer look.

Here is Pennsylvania Auditor General Jack Wagner’s letter to DRPA Chairman John Estey.

Wagner Letter to Estey 8-9-10 (2)

In the original June 30 story, we reported that the DRPA lacks a sound ethics policy. In 2003 a 19-page policy was drafted, but never implemented. A source tells NJN News that it was not adopted because the board wanted to exempt themselves. At which time, those who wanted it said in essence ‘if you are going to exempt the board, there really is no point.’ the policy was shelved. Here is a copy of that policy from 2003.

2003 DRPA Ethics Policy

One could fairly argue that if this had been adopted, there might have been fewer questions about conflicts.

Glad to be back from my unfortunately timed vacation.

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