From ProPublica authors Nancy Solomon and Jeff Pillets:
A law firm linked to New Jersey political boss George E. Norcross III enjoyed extraordinary influence over the state’s tax break program, crafting new rules and regulations in hundreds of calls, meetings and messages with top officials in Trenton, newly released emails reveal.
The emails, obtained by WNYC and ProPublica through a public information request, provide a rare look at how the Norcross family machine leveraged its access to top state officials to advance the interests of clients and friends allied with the political leader. The lawyers pushed officials at the New Jersey Economic Development Authority for client concessions, pressed staffers for expedited reviews and went over their heads to appeal objections.
Kevin Sheehan, an attorney with Parker McCay, where Norcross’ brother Philip is managing partner, focused on getting bigger tax breaks for the Philadelphia 76ers, Cooper Health System and nuclear services giant Holtec International, which won some of the most lucrative tax awards in state history. The companies were promising to move to downtrodden Camden as part of a renaissance pushed by George Norcross, a Democrat whose insurance brokerage was among the tax break recipients.
Sheehan phoned or emailed EDA chief Tim Lizura nearly every day. He arranged dozens of meetings and conference calls with Lizura’s lieutenants and lower-level staffers, who spent hours consulting with the lawyer and working out financial projections and various development scenarios for his clients.
Sheehan also communicated with top officials at former Gov. Chris Christie’s Department of the Treasury and the Attorney General’s Office, which advised him on questions raised by Parker McCay clients. At Sheehan’s request, Lizura advised Sheehan on how tax break winners could sell their credits to raise capital, passing along the names of financial contacts.
When necessary, Sheehan brought in Philip Norcross for leverage, and he also contacted the office of Christie, a Republican aligned with George Norcross in bolstering the tax incentive program to encourage job creation and retention.
Sheehan made a growing list of changes he wanted to make to a brand new law that offered tax breaks to companies willing to invest in new jobs, the emails suggest. “Thanks Kevin,” Christie administration senior counsel Colin Newman wrote to Sheehan in June 2014 after reviewing language the lawyer suggested in a tax credit “cleanup” bill.
“A copy of the bill incorporating all the changes we previously discussed would be very helpful,” Newman wrote. The bill passed in October 2014 and included extra bonus credits for specific companies, a lessening of the hiring requirements and changes to what kinds of businesses are eligible for the tax break.
The newly released documents comprise 12,000 pages in all and cover 18 months between September 2013 and February 2015.
But Kevin Marino, an attorney for Sheehan and Parker McCay, said the volume may leave a misleading impression of the extent of Sheehan’s communications with the agency. The documents include many emails on which Sheehan was merely copied and others that contain long attachments, Marino said.
“I am absolutely confident that Parker McCay and Kevin Sheehan have behaved lawfully and ethically with all their interactions with the EDA,” said Marino, who also represents George Norcross.
However, the emails illuminate possible irregularities in how the program was administered by the state, a charge that has prompted investigations and at least one criminal referral from a special task force appointed this year by Gov. Phil Murphy, who is also a Democrat. It has not been disclosed who is the subject of the criminal referral.
On Tuesday, George Norcross, Parker McCay and other entities affiliated with the Norcross family sued Murphy, arguing the governor “unlawfully empowered the task force with powers he did not possess and authorized the retention and payment of New York lawyers who proceeded to commence and conduct an investigation in violation of multiple provisions of New Jersey law.”
The task force has said that EDA regulators at times did not rigorously verify financial information submitted by applicants and accepted claims that other states were trying to convince them to relocate. Verifying such claims is crucial because the law says companies may only receive breaks after documenting competitive offers from other states.
One EDA staffer, responding to a question from Sheehan about potential tax breaks, suggested that his client produce documentation comparing alternative locations. “Perhaps he can produce a cost benefit analysis comparing the Philly site [to Camden] but it wouldn’t have to be too in depth,” the staffer wrote.
The new details about Sheehan’s role in steering state policy go beyond recent allegations made in task force hearings about the generous tax breaks, which Murphy has panned as an “$11 billion black hole.”
Spurred by a state audit that found major flaws in the program, Murphy appointed the task force to investigate possible program fraud. In its first months, the task force has heard from company whistleblowers and focused attention on awards made to South Jersey companies affiliated with George Norcross.
The party leader and his many allies have responded with a barrage of criticism aimed at the governor and have defended the Camden developments. They argue that the program is more generous to projects in Camden because, as the poorest city in the state, it needs the most help. But state records show Norcross has been a main beneficiary of the tax breaks.
WNYC and ProPublica reported this month that more than $1.1 billion of the $1.6 billion committed to tax breaks in Camden so far went to companies owned by or affiliated with George Norcross or tied to Philip Norcross, who is also a lobbyist representing firms that have collected tax awards.
“This is the first thing that was needed to happen, to move people to the city of Camden in order to help create jobs and create an influx of activity in the city which would hopefully draw some private capital investment,” George Norcross said.
In a December 2013 email inquiring about possible tax credits for a Camden charter school founded by George Norcross, Sheehan reminds Lizura about new regulations that could benefit Cooper Hospital, which is chaired by Norcross. At that time, companies providing retail jobs were not eligible for tax breaks. Cooper Hospital had no immediate comment.
“My suggestion would be to add a sentence at the end of the definition to say: a university research hospital shall not be considered final point of sale retail,” Sheehan wrote.
The New York Times reported this month that Sheehan helped draft sections of the 2013 Economic Opportunity Act that specifically benefited his clients.
Lizura declined to be interviewed for this story. In a statement sent by his lawyer, he said, “During my tenure at the EDA, we routinely worked with companies and their representatives to provide them with feedback regarding the requirements of the program, and to assist them with their applications, consistent with the EDA’s purpose of encouraging job growth and economic development in New Jersey.”
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