Complicated
Yesterday, when the jury in the racketeering trial of Joe Ferriero emerged from 4 days of deliberations after an eight week trial with a mixed verdict, the jury foreman said it was difficult to follow the complicated case without a paper and pencil. I totally understand. A few years back, when Ferriero was at the height of his power, as a Bergen County Democratic Committee member I had to take to Visio to map out the complicated web of influence that drove the Pay to Play cycle (shown above) during the eight year reign of the man known as “Boss Joe”. I had a few years to observe it, the jury only had two months.
They did find him guilty of racketeering for hiding his obscenely large percentage (up to 1/3) of the profits for software he convinced elected officials to purchase, while taking unusual steps to hide his financial interests. Although Ferriero faces a maximum sentence of 45 years behind bars, the problem with obtaining a guilty verdict on the other two schemes allowed to be discussed (there were more that the prosecutor did not focus on) had to do with two things, the way the victims perceived their role and testified to it, and the way that corruption in NJ is morphing into the private sector, where private firms are squeezed by greedy politicians. I'll explain in a little bit.
Hypocrisy
Former and current elected officials called to the stand were in power when there were no laws against pay to play at the county level. They were perfectly fine with Boss Joe telling them which donor firms to hire as long as it was their campaigns that eventually received the campaign cash. But when they learned that Ferriero was pocketing some of it himself, they were outraged. When they were the apparent beneficiaries of the corrupt system, it was just swell.
Asking the Right Questions
It was telling that the elected officials on the stand testified that Ferriero did not tell them how to “vote”. That may be true, but I think the Prosecutors asked the wrong question. Ferriero didn’t care what you called your post office and what potholes you filled or where you put a new bus stop or what citizens you honored. He only cared about the care and feeding of BCDO donors – professionals who needed to be hired by towns anyway, engineer, bond counsel, attorney, contractor for a huge project, etc. Prosecutors should have asked elected officials if he told them precisely which firms to hire and exactly why and what phone calls to make.
When I ran for Council in Tenafly, I specifically avoided asking the BCDO for campaign money because I knew there were strings attached – in the form of the Chairman demanding you hire a particular attorney – usually land use Dennis Oury, who was also the attorney for the BCDO, or a particular engineering firm that was a big donor to the BCDO, or a bond counsel, or any of the outside professionals for a contract with that municipality regardless of the needs and financial state of the town.
Why an Informed Electorate Matters
As the system got bigger and more lucrative, and worse for the taxpayers, some of the engineering firms in Bergen County were getting tired of being milked as the greed of the BCDO became insatiable. Ordinary fundraisers typically became so expensive most residents and County Committee members could not afford the $1,000 a plate dinners, Hudson River Cruises, or golf outings, except the donor firms eventually passing the cost onto taxpayers. The engineering firm owners would complain, but they would still donate. And then jack up the fees to the town to cover the donations. One firm even went as far to skirt the Pay to Play laws limiting donations by forcing their employees to donate to just under the limit, and then reimbursing them. These companies felt it was the cost of doing business, because without donating to the BCDO, they would not get work in either the County, or any of the towns where Ferriero had influence over the officials there. Besides, the taxpayers who didn’t know how the folks were chosen on the ballot and had no idea what Joe Ferriero did as Party Chairman and had never heard of the County Committee because they never went to a primary except on Presidential years, and even in NJ, not even then, were none the wiser.
I was completely ignorant of the County Committee and what they did until Loretta Weinberg (currently on the Bridgegate Investigative Committee), explained it at an event in 2003. An Assemblywoman at the time, Weinberg said the only way to preserve democracy was to get as many citizens involved as possible and to make the process more transparent and open, and then citizens would truly be able to choose who got on the ballot. Because that is what the County Committees in NJ do. They choose who goes on the ballot. How much money and how many boots on the ground or phone calls they get for their campaigns is also determined by the County Committee, and most importantly, the Chairman. The County Committee members are elected at the Primary in each municipality every two years and each district has a man and a woman position for their respective party who decide who gets on the local ballot. You probably have never even noticed that slot on the ballot. But it’s there.
Representative Democracy
These duly elected party officials chosen at the Primaries by the general public, then elect a Chairman for the Committee in each County. So although Ferriero was not elected by the public at large, he was elected by the committee members who were. Ferriero’s attorney during the trial said that Ferriero was not required to disclose his business dealings because he was an unpaid volunteer (like a candy striper or something) and not a directly elected official. However the truth is he was the most powerful political Boss in NJ, who could make or break a politician by denying them a spot on the ballot or directing the County Committee attorney to legally challenge anyone they did not want on the Primary or General Election ballot. Believe me – that happens a lot more than you think. During the Trial testimony from a former Bergenfield Mayor who had the audacity to endorse a candidate not of Ferriero’s choosing was telling. The Mayor was forced to donate $50,000 to the BCDO to make up for angering the Chairman who was mad he had to fund a primary battle. Ferriero did not like giving Committee Members a choice of candidate or the public a real Primary. It was usually like the Soviet Union – one choice down your ballot. And he decided who wound up on that ballot.
Back to the trial. The charges in the Xanadu (now American Dream Meadowlands) scheme were particularly egregious because the amounts involved were so large. Ferriero’s law firm, which actually shared the very same building as the BCDO Headquarters, 50 Main Street in Hackensack, received over $35,000 a month, funneled through another law firm, in what prosecutors portrayed as basically protection money and a bribe so that Ferriero would influence elected officials to favor his client and also not work to actively derail the Xanadu project. I think the jury became confused when the law firm who funneled the cash, and who advised the company to pay Ferriero’s firm because they knew how much power Ferriero had and the damage he could do, and the company who was the victim here, testified that they did not see it as a bribe or extortion. When the victim doesn’t see themselves as a victim, because they either don’t want to admit they were shaken down or to be seen as bribers, the jury has a hard time declaring the defendant as guilty, even when, in the eyes of the law, they are.
NJ Corruption Morphs
The problem stems from the fact that now that public contracts are scrutinized so carefully, because that was where blatant pay to pay existed at the County level and Municipal level for years, corruption has morphed to the private sector through the local building Departments and Planning Boards. In NJ, where land is at a premium, residents have a gut reaction to developers. They are all assumed guilty and not to be trusted. However, the truth is, most folks going to a building department as an applicant just want to build something, not unleash evil on the world. The problem comes when applicants for a private project are told by employees in the building department who to hire for their engineer, land use attorney, subcontractors, etc. in order to get through the permit process or to get a variance that never would have been granted otherwise. There is no envelope with cash handed from the developer to the Mayor, but simply from a developer to what looks like a subcontractor. This is a form of extortion, but the applicant often feels they have no recourse.
The public will never see the developer as the victim, because they are assumed to be the ones offering a bribe first, not the ones being squeezed to hire donors to the Mayor’s campaign. In NJ the Mayor appoints every single one of the members of the Planning Board except one, which the Council appoints. And because it is a private project the public will see it as a private decision between the developer and his subcontractors, not a matter of public concern. Which is what happened at Xanadu. However, when a builder shows up at the Planning Board with a smiling attorney at his side, who supplied the cash to help elect the Mayor, the members know how to vote and which outrageous variances to pass without anyone even saying a word.
I was surprised to learn of this when a client of mine explained what happened when he went to a town building department (that shall remain nameless because those folks have been caught) after retaining all his professionals. He was asked who his professionals were and when he told them, the Building Dept employee shook his head, handed him a slip of paper with a phone number on it and told him to call “This Guy.” It occurred to me that projects in that town, including his were nearly impossible to get through the building department without months of reviews and review fees by a well known Bergen County Pay to Play firm, and hoops to jump through for the client if they did not hire the “right” folks.
What was at the core of the Xanadu case was the perception of a “threat“ to the developer if they did not hire Joe Ferriero’s firm.
Lobbyists
One of the items that I think slipped by the jury in this case and was mentioned in the Indictment was that Ferriero was not registered to act as a lobbyist, which was not needed at the county level, but was needed at the State Level. He had lobbied State Senators, and State agencies on the Xanadu project without being registered as a lobbyist. In the indictment it was mentioned that Ferriero had lobbied a State Senator to remove a bill from consideration that would have affected the project.
And so, Ferriero was not registered as a lobbyist but acted as one, concealing his financial interest in the Xanadu project and netting his firm 1.7 million dollars over four years. He also hid his firm’s stake by not having either his firm, or Concept Realization, the shell company, appear on the schedule listing the “Project Professionals” or “Government and Public Relations Professionals” on the Xanadu project.
At the County level, as BCDO Chairman the indictment charged that Ferriero directed BCDO staff to prepare talking points for the Xanadu project.
Statewide Influence
The reason that a County Chairman could have state level influence is the Pay to Play tactic known as “wheeling”. A Party Chairman could send money to a different County – basically extending his influence statewide. Bergen County is still one of the most affluent and populated in the state. The cash generating potential of Bergen County for campaigns is well known outside of NJ. Which is why Ferriero could send letters to Trenton basically saying he personally wanted the project approved.
The Bergenfield Grants Writing Scheme
The Bergenfield scheme mentioned in this trial where the Borough hired a firm where Ferriero and Dennis Oury hid their interest in a grants writing firm got Ferriero and Oury convicted the first time. Although both were found guilty, the “Money is Speech” position of the US Supreme Court prevented Ferriero from actually serving time. The jury in this trial said they would have liked to have heard from Oury. The relationship between the two appeared to matter to the jury to determine the racketeering charge there. The charges suggested that Ferriero corrupted Oury in that one case, but I always remembered Ferriero and Oury as a team. At least that is how Oury behaved while the attorney for the BCDO. I actually helped organize a protest when Oury planned, as BCDO attorney, to lobby Trenton to get rid of the new anti-Pay To Play laws. I am not sure why the jury did not find Ferriero guilty in the Bergenfield case, unless it was because Oury was the guy doing most of the work and was actually Borough Attorney while profiting from his stake in a firm he told the Borough to hire. Or the jury was not made aware of the extensive interaction between Ferriero and Oury before the Bergenfield case.
The Software Scheme
As for the last scheme allowed to be discussed. As stated before, Ferriero was always pressuring elected officials he had helped elect, who to hire. It was widely known to any elected officials in Bergen County. I suspect a lot of new officials may not understand how it all works yet and are a little too trusting. The classes given to new elected officials in NJ are often taught by attorneys who are part of the Pay to Play system and see nothing wrong with it. At least that was the opinion of my first Municipal Law teacher. (I switched classes after he let that little opinion slip out.) Some newbies appreciate the guidance, but have no idea that it is donor money, plain and simple, behind it.
I found it disturbing that Ferriero met with a Teaneck member of the Council to push for the software company he had a stake in. Teaneck is supposed to be a non-partisan town. But there have been disturbing stories and lawsuits over the years about elections were being conducted there. Ferriero’s influence was suspected because Ken Zisa, a Ferriero ally, since convicted on other charges was involved.
Ferriero also pressured State Senator Paul Sarlo, also Mayor of Woodridge to hire the software firm, but the Council stopped him. That caused Ferriero to shout at Sarlo during one of those expensive golf outings. That is how much power he had, that he could shout at a sitting state Senator, CEO of Sanzari, one of the largest construction firms in the state, about not doing what he was told.
It was telling that the oldest Mayor in Bergen County, recently passed away, Mayor Calabrese of Cliffside Park, who knew Ferriero too well, suspected Ferriero had a hand in the cookie jar. After he specifically asked if Ferriero was behind the software firm C3, paperwork was provided hiding Ferriero’s interest and declaring that the software developer was the sole owner.
With Defense Witnesses Like That, Who Needs a Prosecutor?
Witnesses for the Defense often came off like prosecution witnesses under cross examination, which is why Ferriero probably chose not to testify. Dennis McNerney, the Former County Executive and someone dubbed the $3 million dollar man because Ferriero would pay almost any amount to keep that seat in Democratic hands, because it had the power to dole out patronage jobs, (see my chart) seemed to just confuse the jury with a fevered persecution rant. I think he really was rattled by having to testify. However the testimony of Former Dumont Mayor McHale who had been a long time friend of Ferriero’s, reinforced the power Ferriero wielded by explaining that people thought he was one of “Ferriero’s puppets”. Ferriero often seemed to surround himself with uncurious elected officials who would take orders and not ask too many questions. Many Committee members believed Freeholders like Ganz, Padilla, Carroll, and even former County Executive McNerney to be just such characters. Although called as a defense witnesses several of them stated they felt “betrayed” when they found out that Ferriero lied about his stake in the software firm, the charge that ultimately stuck. The defense witnesses did not appear to help Ferriero’s case. If Ferriero didn’t tell them what to do, how could they feel betrayed in hiring that software firm? At the beginning of the trial, Ferriero’s attorney said that Ferriero would testify. After seeing his friends crumble on cross, I think he thought better of it. There was a lot the prosecutors could ask on cross examination.
What Wasn’t Said
The most disturbing of the schemes to come to light, the most chilling, and the one where the Federal Prosecutors were not allowed to discuss during the trial was that of the dermatologist accused of fondling at least a dozen female patients, who was given Pretrial Intervention by the Bergen County Prosecutor Molinelli. Dr. Ragi had paid Ferriero $500,000 to help him keep his license and he was magically given not one but two pretrial interventions, which are unheard of for the crimes alleged. However, like Dennis Oury, the current Bergen County Prosecutor had previously been the Attorney for the BCDO. The state actually forbids the doctor from treating female patients, but because he was given PTI by the Bergen County Prosecutor, he is allowed to continue to practice.
And so, Ferriero, although it appeared through his alleged influence with the Bergen County Prosecutor, may have gotten a sex offender off the hook, the Federal Prosecutors were keeping their powder dry for another crack at Ferriero, if he could not be convicted in this trial.
Can of Worms or Pandora’s Box?
The trial does open up what appears to be a Pandora’s box for other politicians and attorneys, such as Ferriero’s law partners, who are scrambling to make what Joe did seem like an honest day’s work by writing blogs on political websites to try to mitigate the damage. Menendez, who also appeared to help the developer of Xanadu, and also appeared to help another doctor in hot water, being mentioned in the case does not help his current troubles. NJ residents are so sick of corruption, they are calling for Menendez to resign. Like I warned two months ago, a big political rock was just overturned and now the public can see how ugly Pay To Play can be and the characters who carry it out for donors and their own enrichment, scurrying for cover.
Onward
Next week – Bridgegate. Now that US Attorney Fishman has successfully completed the Ferriero Trial, he can now focus on the possible Bridgegate indictments. Corruption at the interstate level with a hint of Presidential politics thrown in, may make the Ferriero trial pale in comparison. I do find it interesting that the man at the center of the Bridgegate web – David Samson, used to be Joe Ferriero’s boss. Yes, Joe Ferriero used to actually work at the firm formerly known as Wolff & Samson. My only question is did Ferriero learn the political ropes about land use and politics from Samson, or the other way round?
