Unauthorized municipal expenditures - Record - Christie subpoenas Paramus records

Published in the Bergen Record, Monday, October 6, 2008

[Funds transferred without Council approval; Christie subpoenas]

Affordable housing funds shifted

Monday, October 6, 2008
Last updated: Monday October 6, 2008, EDT 6:43 AM

BY MICHAEL GARTLAND

STAFF WRITER

 

Paramus Mayor James Tedesco authorized the transfer of nearly $4 million in affordable housing funds without obtaining the Borough Council's approval, an apparent violation of affordable housing rules, public records show.

Council approval for borough expenditures is required under state guidelines, said Chris Donnelly, a spokesman for the New Jersey Department of Community Affairs.

Tedesco, a Democrat who became mayor in 2003, ordered the largest transfer — $3.6 million — from the affordable housing fund to the Paramus Affordable Housing Corp. in January 2004, according to municipal records. The rest of the money was allocated in three smaller transfers over several years.

Tedesco, who also is president of the non-profit PAHC, offered only a written statement conveyed through Keith Furlong, the borough's spokesman.

"If the borough did not adopt any specific resolutions, this was an oversight," Tedesco said.
His Republican predecessor, Cliff Gennarelli, ordered a similar transfer, but for a much smaller sum, $100,000. Gennarelli did not respond to requests for comment.

The U.S. Attorney's Office has served at least two subpoenas related to the borough's affordable housing program. The non-profit received one in August and the borough received one in July.

It is unclear what specifically drew federal attention.

Much of the overall $4 million transferred to PAHC eventually went to contractors, whose role in building affordable housing in Paramus is unclear.

The money eventually made its way to Paramus Affordable Development LP, a for-profit company that disbursed borough, county and state funds to contractors for a 46-unit project completed in 2005.

A significant portion of the project's funding — $3.6 million — came from the borough itself. Bergen County paid $900,000, and the state provided about $4.4 million.
The state guidelines also bar a mayor from formal involvement in releasing affordable housing funds, Donnelly said.

"The town council authorizes expenditures," he said. "The CFO would ultimately execute them."
The borough did not provide any council resolutions authorizing the transfers, despite several public records requests by The Record. Instead, it provided four resolutions that did not specifically authorize the transfers.

$3.6M mystery

Council members who served in 2004 also did not recall voting to release the $3.6 million. Former council members Sandra Gunderson, Joe D'Ambrozio and Connie Wagner, who is now an assemblywoman, said they did not remember allowing that sum for affordable housing.
"When it came to affordable housing, I saw virtually nothing," Gunderson said.

The current council president, Frank Ciambrone, also served on the council at the time. He did not respond to several calls for comment.

In a letter to Paramus Chief Financial Officer Joseph Citro on Jan. 6, 2004, Tedesco requested that $3.6 million be moved from the borough to the PAHC account "as per the agreement approved by Dennis J. Oury LLC."

Oury was Paramus' borough attorney in 2004. State records also list him as the registered agent for PAHC.

State records held by the Department of Community Affairs show that $3.6 million was transferred, but federal tax records show no record of $3.6 million coming into or going out of PAHC in 2004.

Tax law experts could not reconcile the contradiction. Victoria Bjorklund, former chairwoman of the IRS Advisory Committee on Tax Exemption, said that if the non-profit received $3.6 million — as state records indicate — then, by law, the money would have to appear on the tax form.
"All the contributions should be shown," she said. "It should show up at least on the balance sheet as funds that came in. If it came in and went out the same day, it should still show up."

Oury involvement 

Oury resigned as counsel for the Bergen County Democratic Organization last month after he and BCDO Chairman Joseph Ferriero were indicted by a federal grand jury on eight counts of fraud conspiracy not related to Paramus.

The indictment accuses them of using political influence to gain contracts for a consulting firm in which both had financial stakes. Oury's attorney, Gerald Krovatin, did not return calls for comment.

The accountant who handled PAHC's 2004 tax return, as well as the returns in 2003 and 2006, was William Katchen, according to the tax records. He, too, did not respond to several requests for comment.

46-unit project 

The U.S. Department of Housing and Urban Development slapped Katchen with a one-year suspension from federal housing work in 1990 after the Passaic Housing Authority misspent $1.7 million in taxpayer money. He was the authority's accountant.

After money was released to PAHC, state records show it went into an escrow account held by the New Jersey Housing and Mortgage Finance Agency.

The mortgage agency then released the money to Paramus Affordable Development LP, the for-profit company that disbursed funding for the 46-unit project.

Eugene Walsh is president of Paramus Affordable Development LP, a company that shares an address with four of those contractors:

* Penwal Affordable Housing Corp. (non-profit): Walsh and Laury Pensa, directors.
* Canyon Capital Corp. (for profit): Pensa, president, incorporator, agent.
* Summit Capital Corp. (for profit): Pensa, president, incorporator, agent.
* Steamboat Corp. (for profit): Walsh, president; Pensa, agent and incorporator.

Steamboat received a $976,500 development fee from Paramus Affordable Development for a project with an $8.1 million budget, according to records provided by the state. Canyon received at least $44,000, and Summit took in at least $5,000.

Development fee 

In a financial disclosure form filed with the state's Housing Mortgage and Finance Agency, Walsh wrote that Penwal — which, according to its tax form, has "implemented and developed low-income housing projects in Dumont, Garfield, Jersey City and Paramus" — would get the development fee. He did not mention his interest in Steamboat on the form.

Other records obtained from the state mortgage agency show that the development fee went to Steamboat.

A financial disclosure form submitted to the state for Steamboat does not list Walsh or Pensa's interest in Penwal or Paramus Affordable Development LP. Pensa's signature appears on that financial disclosure statement.

In addition, a public records request submitted to HMFA by The Record showed that disclosure statements for Penwal and Canyon Capital were not filed with the agency.
Walsh and Pensa did not return calls about the payments.

Bergen County's United Way President Tom Toronto, who has experience with state-funded affordable housing projects, said development fees are a common cost of such projects. He also said any changes regarding development fees would have to be approved and recorded by HMFA.

"HMFA has to bless it each step of the way," he said. "Otherwise, the money wouldn't flow."

E-mail: gartland@northjersey.com

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Christie - Westfield Leader - Union County pols need to worry

Published in the Westfield Leader, June 26, 2008

[Christie wants to hear about Union County misconduct]
He's Going to Jail July 29, Christie Says of Sharpe James

By HORACE CORBIN
Specially written for the Westfield Leader

WESTFIELD -- ­ U.S. Attorney Chris Christie said, "He's going to jail, July 29" referring to the sentencing of former Newark Mayor, and State Senator, Sharpe James, in an interview last Thursday with publisher, Horace Corbin, of The Westfield Leader and The Scotch Plains-Fanwood Times.

"We're asking for ten to 15-year sentencing from Judge [William] Martini who presides over the case," Mr. Christie said. "That sends a message to all other politicians in New Jersey who think they are untouchable." Unlike in state prison, federal prison inmates are not eligible for parole. 72-year-old James would likely be spending most, if not all, of the remainder of his life in jail. When asked about James' two Silver Cloud Rolls Royce's, yacht andshore estate, and if the taxpayers will ever see any of their money back, Mr. Christie said, "Unlikely. What we've convicted him of is relatively small in the context of what you're talking about."

The 40-minute interview with Mr. Christie can be viewed at goleader.com/video.

For seven years, Mr. Christie has served as U.S. Attorney with his office located in Newark and branches in Trenton and Camden. He said even his mother confuses his job with that of state Attorney General (AG). The U.S. Attorney is appointed by the President of the United States, confirmed by the Senate and is responsible for enforcing federal laws.

The AG is appointed by the Governor of New Jersey and is responsible for enforcing state laws. Mr. Christie said he has a close relationship with recently appointed AG Anne Milgram. They confer once a week. He said she is a true professional and clearly understands the basis of prosecution. They often work together, as exemplified by the James conviction. He publicly admitted to not always having a good relationship with the AG's office, so referring to those formerly in the position, Peter Harvey and Zulima Farber. Mr. Christie said his opinion changed when Stuart Rabner was appointed as AG for one year, and now is Supreme Court chief justice. Mr. Rabner had worked for Mr. Christie in the U.S. Attorney's office.

With a 128-0 record of convicting corrupt public officials, Mr. Christie said he is proud of the accomplishments of his office. When asked why he did not press for more convictions, Mr. Christie said his office prepares a case and when they are absolutely sure they can get a conviction, they present the case to a jury. "An indictment damages a person's reputation, so we want to be sure beyond a reasonable doubt," he said.

Mr. Christie said his office pursues cases regardless of political affiliation, a tactic that helps him to avoid the reputation former governor Eliot Spitzer developed as attorney general in New York, with his aggressive style. Mr. Christie said he does not believe the state has turned the corner yet on the culture of corruption; however, the issue is foremost on many minds.

"Invariable," he said. "We're not going to prosecute our way out of corruption. Given 566 municipalities, 611 school districts, 21 counties and a $35-billion state budget, 128 convictions is a small number. "Still, we've shined a very, very bright light on the problem, and now there is enormous discussion of this at every corner. Six to seven years ago, that was not the case."

About the message getting down to all other levels and special interests, he said, "I really do [think so], but that doesn't mean, I'm not claiming we've changed behavior across the board." He added the U.S. Attorney's office has a "zero tolerance" policy. It takes two to three years to investigate a case and obtain a conviction. With his term coming to an end in a few months, he said we have a `very active' pipeline.

"Anyone who's breaking the law in Union County has to be nervous ­and beyond that, I will not be making any comment about any particular individuals," Mr. Christie said. Aside from political corruption, his office handles several other matters, such as drugs and organized crime.

One area of particular concern to him is human trafficking ­ what he said is a "terrific tragedy." His office has prosecuted more such crimes than any other office in the country. He said due to New Jersey's diverse culture; criminals from Mexico, Central America, Eastern Europe, Russia and Asia could find a community in the state where they would not be conspicuous ­ in contrast, say to Oklahoma. His office put two women in Federal prison for the next 17 years for the sex enslavement in Plainfield, of four teenage girls from Mexico.

However, his stance on immigration is somewhat different. "Being without proper documentation is not a crime," Mr. Christie said, pointing out the legal difference between illegal immigration and improper documentation. "I don't make the law, I just enforce it." He said someone could have an expired visa and that is not something a person can be arrested for in this country ­ although they could be deported. However, entering the United States illegally and/or having false documents are a crime and one would be subject to arrest.

On criticism he received was from The New York Times over the hiring of John Ashcroft to oversee compliance of five companies that had been paying kickbacks to doctors; Mr. Christie responded that although Mr. Ashcroft may be a controversial, national figure, no one claimed he was unqualified for the job.

He said these five companies, which manufacture artificial hips and knees, have 95 percent of the market. Mr. Christie said the companies were illegally paying doctors to use only their products. He said this practice has been halted, and $511 million have been recovered to Medicare. Medicare pays for two-thirds of hip replacements in the country. He said several doctors involved in this situation are in his "pipeline," and are soon to come out, which he would not comment on at this time. Mr. Christie said he can't comment on his plans after the November Presidential election, and must focus on the duties of his office.

Asked if Presidential candidates Barack Obama or John McCain requested him to stay on, he quipped that it is unlikely that Mr. Obama would give him a call. Regarding Mr. McCain, he said it would be very difficult to turn down a request from a President, but he could only imagine the conversation that this would generate with his wife.

He advised the press to be diligent, and urged citizens to attend meetings, protest against faulty government and campaign against elected officials that break their promises. "Throw them out," he said.

Further, he said he knows it is possible for citizens in any town in to have a direct impact. When he lived in Westfield early in his marriage, he said he witnessed door-to-door citizen campaigns.

He asked anyone with a complaint of government or suspecting wrong-doing to call him in Newark at (973) 645-2700; or if they prefer, call the FBI in Newark at (973) 792-3000. He said he has e-mail but prefers to talk to people directly. He said they need not be concerned and he doesn't record his phone calls. "I'm here to serve you, the public."

He said he's "incredibly flattered" to be mentioned as a candidate for Governor next year, but said it is presumptuous for him to even consider it at this time.

Mr. Christie was born in Newark and raised in Livingston where he became friends with Senator Tom Kean, Jr., now of Westfield. Mr. Christie lives with his family today in Mendham.

Next year, for the first time in history, New Jersey will also choose a Lieutenant Governor. Mr. Corbin posed, "Could it be 'Christie and Kean, Perfect Together'?"

"LINK" to online story.

(Note: Online stories may be taken down by their publisher after a period of time or made available for a fee. Links posted here is from the original online publication of this piece.)

(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Plainfield Today, Plainfield Stuff and Clippings have no affiliation whatsoever with the originator of these articles nor are Plainfield Today, Plainfield Stuff or Clippings endorsed or sponsored by the originator.)