Defeat of Democrats in New Jersey lifts lid on laxity & ripoffs at South Jersey toller

For sheer chutzpah and audacity at tapping the public till a prize goes not to a Pennsylvanian but to New Jerseyite - to "legal counsel" for the South Jersey (toll) Transportation Authority (SJTA), Michael A Angelini. The guy though clearly an outside consultant managed to persuade someone at SJTA years ago that he should be paid as if he were an employee and enrolled in the state pension system called PERS (Public Employees Retirement System).

And he worked his scheme like a true artist, putting to shame the crude thieves out west in Harrisburg PA.

Angelini managed to talk one state and local agency after another into engaging him as an "employee" working it so each of them was contributing to tax-free pension entitlements now worth a couple of million dollars.

Once SJTA had enrolled him as an "employee" other state and local outfits, like sheep, just went along with his scheme - East Greenwich Township, Monroe Township, Clayton Borough, County of Gloucester, Oaklyn Borough, West Deptford Township, Borough of Paulsboro Township, Gloucester County Board of Social Services, Mantua Township; South Jersey Port Corporation, and Gloucester County Improvement Authority.

In one year 2005 the ubiquitous Michael A Angelini was an "employee" of seven south Jersey public agencies simultaneously with "salaries" totaling $213k. And of course he was receiving generous matching state pension credits from each as well.  By now he has pension credits of almost $2m and is entitled to a New Jersey state pension on retirement of more than $100k/year.

All the time he was lead partner in a little law firm Angelini, Vinnear & Freedman LLP that operates out of a suburban house in Woodbury NJ.

At SJTA Angelini was retained for $30k/year "salary". His position was never advertised. There was no contract. His work at SJTA was less than one full day a month - being present at the monthly board meetings. Two other firms were employed for the same purpose on similar retainers but none of their people were onto Angelini's "pension" scheme or were paid as an "employee."

Angelini broke all the established rules of what constitutes a salaried employee in (1) not being subject to direction as to how, when and where he worked as salaried employees are (2) not working set hours (3) not devoting substantially fulltime work to the "employer" (4) in publicly offering his services to all and sundry via his law firm and its website (5) maintaining separate premises, staff and premises from that of the "employer" (6) in billing "hours" worked as well as the "salaries" (7) handing off "salaried" work to associates his law firm paid by the firm (8) failing to gain permission or report "outside" work to his "employer" as required by state regulations (9) writing official correspondence not under the "employer" letterhead but under the letterhead of his law firm.

Angelini said that his employment at all these agencies was dependent on politicians in power so he worked for multiple agencies in order to spread his risk.

Chairman of County Democratic Party Committee

He has been chairman of the Gloucester County Democratic (Party) Committee going back into the 1990s, so he apparently saw his employment threatened whenever a Republican got elected.

His deal with SJTA to be paid his law firm's retainer in part through the toll authority's payroll and the state pension fund benefits goes back to about 1991, he says. That was when the SJTA was New Jersey Expressway Authority, and operated only the Atlantic City Expressway. (It's merger with the Atlantic County Transportation Authority and transfer of the small Atlantic City Airport in 1993 caused it to be renamed SJTA.)

Angelini admits that he got a big benefit by way of the state contribution to his pension entitlement, but claims he charged lower cost fees in return, though he offers no substantiation of that.

All the above is laid out in excruciating detail in a 66-page report by the state inspector general, the official watchdog of state agencies Mary Jane Cooper.

At the end she writes:

"Despite the evidence that Angelini was not an employee, each of the state, county and local government entities described herein issued Angelini payroll checks, deducted pension contributions from the payroll-issued checks, and made contributions to the pension system on his behalf as if he were an employee enrolled in the state pension system. Novel and contrived arrangements, often proposed by him, were utilized. It is reasonable to conclude that these payment structures were utilized to provide Angelini unwarranted pension benefits."

Angelini's pension benefits according to a spreadsheet total $1,986,000.

Watchdog Cooper concludes Angelini is not entitled to any pension benefits at all, and has referred the case to state tax authorities, the office of attorney ethics, the state ethics commission, and law enforcement.

Companion report on South Jersey toll authority

Cooper and her office wrote a companion report on the South Jersey (Toll) Transportation Authority (SJTA) that was released last week. That was based on investigations between the fall of 2005 and spring of 2007. On the Angelini fraud the report says that SJTA had its own rule for payroll purposes requiring a minimum of one day a  week work to be on payroll and get state employee pension benefits.

OIG discovered false records of weekly attendance by Angelini at SJTA and says these were created "for the system to automatically process a payroll check and, thus, enable him to be enrolled in PERS (pension system.)"  (p68) The report doesn't identify who it was that was faking the Angelini attendance records.

The report found that outside law firms including Angelini's were paid "exorbitant fees for minimal work."

Overcharges including double billing were not detected "because no one at SJTA was examining law firm invoices."

They were simply processed for payment unchecked.

A great deal of lax management is reported throughout the toll authority but apart from Angelini few of the perps are identified by name.

An example is the lack of enforcement of the state "ethics" ban on civil servants serving as election campaign officers. The head Ethics Officer of the SJTA - unnamed - whose job it was to enforce ethics rules herself was a party campaign treasurer for some years before the OIG inquiry!

A sample of 90 of the 350 employees of SJTA found 28 had outside employment requiring notification and approval by the toll authority. Only 3 of these 28 were in compliance by having obtained approval from SJTA. Four were working in gambling casinos in Atlantic City, although that was explicitly  prohibited by SJTA employment rules.

SJTA went through the motions of applying 'ethics' rules on conflict of interest even to the extent of employing an ethics officer, but actual implementation and enforcement was virtually non-existent, OIG found.

The indulgence of "lawyers" was described as among the worst examples of mismanagement at SJTA but the report was scathing about lack of management across the board writing that "almost everywhere OIG looked, it found either an absence of policies and procedures designed to protect public assets or a lack of compliance with those policies and procedures, and often a disregard for the safety of those assets as well. Instead of the authority being run as a public entity in the executive branch, it appeared to be a poorly managed satellite office.

"For example, well paid top managers were permitted personal use of Authority assigned vehicles – including SUVs. Those managers openly disregarded executive orders, ethics statutes, and even SJTA’s own policies.

"The absence of an inventory system led to the misuse and potential disappearance of assets; and the lack of a procedure for the use of petty cash and the abuse of an Authority issued credit card could cover up missing assets." (We've cleaned up a promiscuous use of initial capitalizations - editor)

Other areas of waste and abuse included:

- uncontrolled issue of mobile ('cell') phones to staff without any policy on their issue or use for non-SJTA purposes

- issue of vehicles (21) to director level and above with unlimited personal use

- employees without vehicles could claim commute mile costs

- taxable fringe benefits not reported

- issue of Sunoco gasoline charge cars

- new positions being created without review or board authority even during a supposed 'hiring freeze'

- inconsistent performance evaluation practice

- major promotions and salary increases occurred without any documentation of the rationale

- haphazard attendance time report keeping with many of the reports entered without checks by a supervisor

- a marketing campaign launched that was outside the approved budget and without board approval

- issue of procurement debit cards called P-cards allowing procurement at higher cost of items already in SJTA inventory and lack of supervisor sign-off on monthly statements

- reimbursements for expenses occurring without receipts or other evidence of the expenditure being incurred

- toll collection auditors are union members like the toll collectors they are auditing

- audits often long after collection

- toll collectors doing their own money counts and reports unsupervised where there should be "job segregation"

- professional services procured without formal written contracts, others so vague as to be useless

- vendor invoices accepted for payment without documentation of job done

- payments made that exceeded board authorized amount

- contracts routinely extended for many years without review or competition

- change orders used to alter and extend contracts circumventing competitive bidding

- payments made to local organizations, associations and charities without there being any guidelines or record of authorization

- discrepancies between pay checks and recorded salary scale

Almost history now?

A lot of the report is almost ancient history now. The investigation ran from late 2005 to mid 2007. Executive director during that period of was James R Ianonne, who had succeeded James Crawford when Crawford moved to run the Inter Agency Group (IAG) for E-ZPass in mid 2005.

Crawford tells us for the record that he was never interviewed by anyone from OIG

The mess they were describing was during the Ianonne executive-directorship.

Ianonne resisted the OIG inquiry, even to the extent initially of moving for a legal opinion that it had no standing to conduct the inquiry.

Ianonne left SJTA in late 2006, apparently because of the OIG investigation, and was succeeded by the present executive director, Bart Mueller.

Also two new deputy executive directors and a new chief of staff have been appointed since the regime brutally criticized in the OIG reports.

Sharon Gordon spokesman for SJTA says internal reforms and tighter controls were needed and have been implemented.

She says the problems were addressed "when the were brought to our attention."

Reports completed in fall of 2008

We're told that both OIG reports were essentially complete 18 months ago - around the fall of 2008.

It apparently took a change of administration - the defeat of Democrat Governor Jon Corzine by Republican Chris Christie - for the OIG reports to see the light of day.

Cooper report on would-be state pensioner Angelini:

TOLLROADSnews 2010-03-11