The Jersey Sting

Anonymous

Thu, 05/12/2011 - 11:28

Book Reviews

Two months ago, a book was published called <a href="http://www.amazon.com/Jersey-Sting-Crooked-Money-Laundering-Informant/d…; target="”_blank”">The
Jersey Sting</a>, by two Star-Ledger reporters, Ted Sherman and Josh
Margolin. It provides the history of an enormous federal sting
operation which led to the arrest of dozens of government officials,
most of them from local governments, on July 23, 2009 (see <a href="http://www.cityethics.org/node/815" target="”_blank”">my blog post of that date</a>).
It's a real page-turner that shows how things work and how easy it can
be for anyone with money to make deals with elected officials, at least
in New Jersey. 
 
The actual sting operation is not really a local government ethics
story, but rather a tale of an ethics environment that is so poor,
criminal conduct is just waiting for the money to start it going. 
 
If nothing else, this book should make it very clear to local
government officials all over the country how valuable a good,
independent ethics program is. The books shows very clearly what can
happen when there is nothing to prevent an ethics environment from
getting this bad.

Here's the story in a nutshell, or at least how it appears. In the
midst of a serious investigation into corruption, the New Jersey U.S. Attorney
decides to run for governor. His associates turn the heat up and
institute a sting operation, whereby a "developer" offers bribes to
numerous government officials in return for help in speeding up the
approval process. Nearly all the government officials are with the
party against which the former U.S. Attorney is running. The "developer" is wired, and officials' phones are
tapped. One day, early in the morning, right in the middle of the
gubernatorial campaign, they are all arrested at the same time. The
governor from their party loses to the former U.S. Attorney. 
 
This isn't what happens in the world of government ethics, if it is
done right. Ethics commission members are not politically involved, so
they have no incentive to help their party or their former colleagues, nor are they perceived to have any incentive.
There are no stings, and no one is tempted to act unethically. No one
is wired, and no phones are tapped. No one is arrested. No one goes to prison. Enforcement is
not undermined by the belief that it was done for partisan purposes or
to further the career of the enforcers. 
 
Instead, ethics training and advice are offered (criminal authorities
don't offer much that is positive), and EC members keep a low profile
and have no ethics or political career objectives. 
 
Why would any sane official prefer politicized criminal enforcement to
an independent ethics program? And yet there are very few good,
independent ethics programs in the United States. Go figure. 
 
The Pressures of Fundraising 
More than anything, it seems, the cause for all the bribe-taking is the
enormous pressure placed on getting campaign funds. Local elections
don't attract the money of people who feel strongly about issues. These people
give to congressional and presidential candidates. Local elections
attract the money of people who can benefit from local government
decisions, who work for local government, or who are involved with
political parties. 
 
Therefore, local elections practically require that elected officials
owe something to a lot of people who do or want to do business with
them. And tough races can sand away the ethics of many individuals. In
the midst of fundraising, an offer of a few thousand dollars can seem
like millions. When people say they wouldn't sell themselves for
$5,000, like most of the Jersey officials did, they probably have not
run in a tight local race. 
 
Professionals tend to give more than anyone, because in most places
professional contracts do not have to be bid out. This is also true of
those who do emergency repairs, those who enter into at-call contracts
for electrical, plumbing, and other work, and sometimes insurance
brokers. 
 
Reading this book, my feeling grew much stronger that public campaign
financing is most important at the local level, where it scarcely
exists (I administer one of the few local programs). It would improve
the ethics environment of any city or county to have the pressure of
fundraising taken off of candidates' backs. 
 
Schemes and Observations 
For the rest of this blog post, I want to share with you some of the
schemes Sherman and Margolin uncover in their book, and some of the
observations they make. 
 
The authors portray the state's League of Municipalities annual
convention as three days of developing relationships between officials
and vendors. In fact, one county official, set up by the FBI, takes a
payoff in an Atlantic City hotel room. Caught, he does a deal to bring
in more officials. Another year, a sewer contractor who wrapped $100
bills around his business cards hired scantily clad women to attract
attention to his booth. After getting a series of no-bid contracts, and
getting caught, he too helped the feds. 
 
The most surprising catch in the Jersey Sting was an attorney
specializing in, of all things, election law. Despite knowing the
election laws inside out, this first-time mayoral candidate allegedly
had a campaign contributor pay his campaign manager's salary, and he
did things illegally that he could have done legally by setting up
PACs. He also put the worst sort of lawyerly arrogance on display for
the informant's tape recorder:<ul>

We're breaking down the world into three categories. There's the people
who were with us, and that's you guys. There's the people who climbed
on board in the runoff. They can get in line. And then there are the
people who were against us the whole way. They get ground into powder.</ul>

He was arrested three weeks after he took his place in city hall. 
 
Arrogance and incompetence are what most differentiate those who accept
bribes and those who don't. Many officials think a developer who seems
to be a neophyte
is someone ripe for the picking, so they don't stop to think, or
investigate,
what the "developer" is actually talking about. If they stopped to
think, or actually asked a question or two, they would realize that
something was up. Some officials did, and they are still in office, not
necessarily because they're more ethical, but because they're more
astute and not so quick to take advantage of what appears to be a
stooge. 
 
Patronage 
Jersey is full of valuable patronage positions, not just for friends,
but also for low-paid elected officials and for retired officials. An example is a county undersheriff. Another is the position of Jersey City
deputy mayor, a part-time job with great exposure that pays well and,
since the deputy mayor never votes, but has lots of influence, can do
many things other officials can't. 
 
One guy got on a regional sewerage commission, and gave a job to his
brother and his wife. The commission is characterized by the authors as
"a patronage pit." 
 
Fixers 
A lot of unethical conduct is facilitated by bagmen, fixers,
go-betweens, whatever you want to call them (they often themselves
"consultants" or even fancier names). These people explain to the
uninitiated how things work, they open doors, they navigate procedures,
and they bring people together, so that deals can be made. They are
hired by developers, contractors, and grantees, as well as by law firms
and investment firms. They advise officials, party committees, and
campaigns. Some are ward bosses or party officials. They are also
made great use of by the FBI. 
 
But since they usually hold no office, they are completely ignored by
government ethics. Imagine an ethics training session tailored to
bagmen. Or even better, one run by bagmen! 
 
One big-time fixer told the FBI informant, "You don't need to know how
I do something. All you need to know is whether it got done." A classic
ends vs. means statement. 
 
Campaign Finance Schemes 
Straw donors seem to be used a lot in New Jersey. It works this way.
Someone doing business with the local government wants to give a
campaign contribution over the limit, so he gives money to an
intermediary, who gives it to friends who, in turn, make "legal"
campaign contributions. This is illegal to do, but it is almost
impossible to catch, even harder than bribes. 
 
Another way to help a candidate without directly giving him money is to
give contributions to his allies. In return, his allies will have their
contributors do the same. It's a great way to get around contribution
limits and hide both pay to play and influence peddling. 
 
And then there is the legal defense fund, which one of the officials in
the sting used. The fund's purpose was to sue anyone the official felt
was responsible for political attacks on him. This official was smart
enough not to deposit the check that would have got him arrested. 
 
A past Jersey City boss, Frank Hague, had a partner's desk custom built
with a two-way lap drawer "that could be pushed outward like a bank
drive-thru window, ostensibly to allow visitors to deposit cash-stuffed
envelopes." The desk was passed on to the city clerk and then the
corporation counsel as a nice relic, at least until the Jersey Sting
gave it new meaning. 
 
Billboards placed where they are prohibited are worth more than others,
so there is a lot of incentive to get around local rules and
restrictions, and opposition from locals. Political operators have what
it takes to get around rules and restrictions, so it is in their
interest to get into the business of selling space to the big outdoor
advertising firms. And the same connections can bring in advertising on
those billboards, from those doing business with local governments. One
firm that handled political fundraising did their ad pitches right
after doing their fundraising. It would be hard to say no, for the very
same reason it's hard for many to say no to political fundraising
appeals. Talk about piggybacking! 
 
Of course, developers involved in numerous businesses can make numerous
contributions anyway. 
 
Using and Spreading Influence 
An unusual form of favoritism: a mayor has a favorite restaurant, and
someone wants to open a place across the street. Not wanting his
favorite restaurant to have such direct competition, he makes sure the
city inspector doesn't okay the plans. 
 
A good way for an appointee to spread his influence is to force
subordinates to purchase tickets to political events and make donations
to, and work on campaigns of, candidates he wants something from.
One parking authority director even made his employees pay for a
billboard advertising his civic association. 
 
Parting Thoughts 
When New Jersey instituted nonpartisan elections in an attempt to
undermine the power of the parties, the parties got the first election
moved to May, when no one else was running and, therefore, few people
would turn out other than those involved in the parties or directly
affected by government decisions. And with the increased uncertainty of
nonpartisan elections, raising funds became that much more important. 
 
One of the first responses to the sting was a bill to amend the
constitution to require indicted officials to be replaced. This is
hardly a solution. But it sounds good. Meanwhile the arrested officials
were insisting they were innocent or entrapped, and many other
officials were probably thinking there wouldn't be a sting for a few
more years at least, and that they'd know how to handle it when it came. 
 
Robert Wechsler 
Director of Research-Retired, City Ethics 
 
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