STATE OF NEW JERSEY COMMISSION OF INVESTIGATION 2000

STATE OF NEW JERSEY


COMMISSION OF INVESTIGATION





32nd ANNUAL REPORT

2000

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Members of the Commission








Attorney, Bedminster; sole


practitioner, Pluckemin. Appointed to


Commission January 1995 by Senate


President Donald T. DiFrancesco.


Designated chair by Governor
Certified civil trial attorney, Warren;
Christine Whitman. Assistant
principal, Norris, McLaughlin and
Prosecutor, Essex County, 1984-1985;
Marcus, Somerville. Appointed to
Commissioner, New Jersey Police
Commission October 1995 by
Training Commission, 1986-1995;
Governor Christine Whitman.
Committeewoman, Township
Member, Supreme Court Advisory
Committee, Bedminster Township,
Committee on Judicial Conduct;
1993-1995. Graduated 1975,
former member, Supreme Court Civil

Montclair State College; 1980, New
Practice Committee; former member,

York Law School.
Board on Trail Attorney Certification;
Leslie Z. Celentano
and former chair, District XIII Ethics

Committee; president, Somerset


County Bar Association, 1992-1993;


Graduated 1974, Monmouth College;

M. Karen Thompson
1978, Rutgers University Law School.




Attorney, Oakland; managing partner,


Edwards & Caldwell, Hawthorne/


Trenton. Appointed to Commission


March 1997 by Governor Christine


Whitman. New Jersey Attorney
Attorney, West Deptford; principal,
General, 1986-1989; Chief Counsel to
Audriann Kernan, P.C., Woodbury.
Governor Thomas H. Kean, 1982-
Appointed to Commission January
1986; member, New Jersey General
1999 by Assembly Speaker Jack
Assembly, 1977-1982; member,
Collins. Solicitor, Gloucester County
Oakland Borough Council, 1975-
Planning Board, 1997-1999;
1979. Faculty member, Rutgers
Prosecutor of Environmental
Eagleton Institute of Government,
Violations, Gloucester County Health

Politics & Public Policy, 1990-1991.
Dept., 1996-1999; Prosecutor,

Graduated 1967, Seton Hall
Westville Borough and Harrison
W. Cary Edwards
University; 1970, Seton Hall
Township, 1998-1999; Public

University Law School.
Defender, West Deptford, 1996-1999;


Public Defender, Woodbury Heights,
Audriann Kernan
1998-1999. Graduated 1988,

Stockton State College; 1991, Widener

University Law School.

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TABLE OF CONTENTS



INTRODUCTION………………………………………………………………. 1

HISTORY…………………………………………………………………………. 6

OPERATIONS…………………………………………………………………… 9

INVESTIGATIONS AND REPORTS – 2000…………………………… 13

REGULATORY, ETHICS AND LAW ENFORCEMENT OVERSIGHT
Computer Crime………………………………………………………….... 13

WASTE, FRAUD AND ABUSE
Public School Roofing Projects…………………………………………... 20

PRIOR INVESTIGATIONS…………………………………………………. 34

COMMISSION MEMBERS, 1969-2001……………………………….. 56

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INTRODUCTION


Why the SCI

The State Commission of Investigation was created by law in 1968 to fulfill a unique mission of
vital importance to the citizens of New Jersey: to attack organized crime and political corruption; to root
out waste, fraud and abuse of taxpayers’ dollars; to shed light on matters that subvert public justice and
public safety; and to recommend appropriate reforms and improvements in laws and in the operations of
government. The Commission was given an extraordinary mandate to pursue this all within a framework
untainted by political intrusion or favoritism.


Thirty-three years later, this investigatory and fact-finding mission, as well as the need for an
independent entity to carry it out, remains no less vital.

Singular Achievements

During 2000, the Commission bolstered its record of exemplary public service with wide-
ranging investigations that shed light on crime and corruption, waste of taxpayers’ money and other
abuses of the public trust. In each instance, the citizens of New Jersey were alerted to a range of
systemic problems and the need for comprehensive reforms:

· COMPUTER CRIME

In an unprecedented project conducted jointly with the Office of the Attorney General,
the Commission examined the threat posed by computer-related crimes in New Jersey. The
two agencies mobilized combined resources in recognition of the fact that the “dark side” of high

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technology, ranging from computer hacking and fraud to identity theft, child pornography and
bias crime, has grown to such an extent that a unified approach by law enforcement is required
to meet the challenge. A report of this investigation, which included three days of public
hearings in February 1999, was issued in June 2000.

Recommendations contained within this comprehensive joint report formed the basis for
proposed legislation that would strengthen New Jersey’s computer and technology crime laws.
Additionally, the report provided parents, teachers, law enforcement authorities and government
officials alike with an easily accessible compendium of ways to detect and curb computer crime
and related abuses.

· WASTE AND ABUSE IN PUBLIC SCHOOL ROOFING
PROJECTS

A statewide investigation of public school roof construction projects revealed
widespread waste and abuse, including conflicts of interest, subversion of public contracting,
improper labor practices and inadequate oversight that place the safety of school children in
jeopardy and cost New Jersey taxpayers needless millions of dollars each year. The
Commission aired its preliminary findings during a two-day public hearing in December 1999.
A final report, incorporating sworn testimony and other investigative materials, was issued in
September 2000.

The findings of this investigation, which coincided with the enactment of a $12 billion
statewide school construction and renovation program, provided a framework for investigative
follow-up by the new Office of the Inspector General and served as a valuable “road map” for





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taxpayers and local boards of education on how to recognize and avoid future abuses.

A Broader Mission

The true measure of the Commission’s performance far exceeds the findings and results of
investigations completed during the past year. Beyond the public activities detailed in this annual report,
the Commission and its staff currently are engaged at various stages in a range of significant
investigations related to all elements of the Commission’s statutory purview, including organized crime,
official corruption, and waste and abuse of government funds. In that regard, approximately 150
Commission subpoenas were served during 2000 seeking access to scores of individuals, thousands of
documents and a range of other exhibits relevant to those active investigations. Also, as in years past,
barely a week went by that the Commission did not receive requests for investigative action, assistance
or advice from citizens of New Jersey. Commission records include more than 100 such citizen
contacts via mail and telephone requiring evaluation and response.


Also during the past year, the Commission provided staff advice and assistance to federal, state
and local law enforcement agencies. One notable example involved the findings of the Commission’s
school roofing investigation, which were furnished to a range of state and federal agencies, including the
Office of the United States Attorney, the Federal Bureau of Investigation, the United States Internal
Revenue Service, the New Jersey Division of Criminal Justice, the New Jersey Office of the Inspector
General and the New Jersey Department of Labor. In this regard, the Commission also provided
information and assistance to the New Jersey Departments of Education and Community Affairs.
Additionally, Commission staff participated in a series of seminars to help local school board members





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and business administrators deal with the types of abuses detected during the investigation and to
provide them with insight into ways of enhancing competition in the award of construction contracts.
Beyond New Jersey, the roofing investigation triggered numerous inquiries and requests for assistance
from oversight entities in other states, including the Delaware State Auditor of Accounts and the Office
of the Inspector General – New York City School Construction Authority.


On the legislative front, in addition to a series of measures stemming from the computer crime
investigation, legislation was introduced in the Assembly last year to combat abuses uncovered by the
Commission in its 1997 investigation of contract labor practices. The probe found that millions of
dollars are siphoned from state and federal tax revenues each year by unscrupulous entities that employ
undocumented aliens and fail to fulfill a variety of payroll tax obligations.




In sum, 2000 was a productive year for the Commission in its service to the citizens of New
Jersey. Above all, given the fact that savings generated by efficiencies, reforms and improvements
resulting from the Commission’s work far outweigh its overall operating costs, this agency once again
has proven itself to be an effective public investment.

The Commission’s public documents, including the full text of reports of investigations, are
available electronically via computer at http://www.state.nj.us/sci/





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HISTORY


The Commission was established in 1968 after extensive research and public hearings by the
Joint Legislative Committee to Study Crime and the System of Criminal Justice in New Jersey (the
“Forsythe Committee”). That panel was directed by the Legislature to find ways to correct a serious
and intensifying problem involving organized crime and political corruption. The committee’s final
report, which confirmed a crime-control crisis in those areas, attributed the expanding activities of
organized crime to “failure . . . in the system itself, official corruption, or both.” As a result, sweeping
recommendations for improving various areas of the criminal justice system were proposed.


Two of the most significant recommendations were for the creation of a new criminal justice unit
within the Executive Branch, and the establishment of an independent Commission of Investigation. The
Forsythe Committee envisioned the proposed criminal justice unit and the Commission of Investigation
as complementary agencies in the fight against crime and corruption. The criminal justice unit was to be
a large organization with extensive personnel, empowered to coordinate, conduct and supervise criminal
investigations and prosecutions throughout the state. The Commission of Investigation was to be a
relatively small but expert body that would conduct fact-finding investigations, bring the facts to the
public’s attention, refer its findings to appropriate law enforcement agencies for possible prosecution
and make recommendations to the Governor and the Legislature for improvements in laws and in the
operations of government.


As the Forsythe Committee stated in the final report of its comprehensive study, this would not





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be “a ‘crime commission’ alone. There are many occasions,” the panel concluded, “when hard-hitting,
expert fact-finding is needed without involving the criminal process or implying criminal violations are
under investigation. . . .This Commission will provide a significant, independent ‘watchdog’ for the entire
system. . . .”


As a result of the Forsythe Committee’s recommendations, the Division of Criminal Justice in
the Department of Law and Public Safety and the State Commission of Investigation, structured as an
independent agency of the Legislature, were created. New laws were designed — effectively so, as
history has shown — to prevent conflict and duplication between the Commission’s operations and
those of prosecutorial authorities.


The Commission was given the responsibility to maintain a constant vigil against the intrusion of
organized crime into society, to expose systemic wrongdoing or governmental laxity via fact-finding
investigations, and to recommend new laws and other remedies to protect the integrity of the
governmental process. The Division of Criminal Justice and other prosecutorial agencies were given the
responsibility to seek indictments or file other charges of violations of law and to bring the violators to
justice, where appropriate.


Legislation creating the SCI in 1968 established an initial term beginning January 1, 1969, and
ending December 31, 1974. The Legislature extended the term of the SCI for five-year periods on four
subsequent occasions: in 1973 for a term expiring December 31, 1979; in 1979 for a term expiring
December 31, 1984; in 1984 for a term expiring December 31, 1989; and in 1989 for a term expiring





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