Why did Rose & Lazzaro hand a solar scam enabler a $518,000 no-bid contract?

Matthew Boxer was the State Comptroller from January 2008 until December 2013.  Before taking this position, Mr. Boxer was an associate with the New York City law firm of Lowenstein Sandler.  After leaving office, he returned to that firm as a partner.

Most residents of Sussex County are aware of the scandal that involved a public-private partnership to install solar panels on local government buildings, using federal subsidies.  As it turned out, the private entity responsible for the work was under-capitalized, failed to pay the contractor doing the work, was sued by the contractor, and the project stopped.  The cost to taxpayers in Sussex County is estimated at upwards of $40 million. 

Sussex was one of three counties involved in this project -- Somerset and Morris were the others. Lacking its own agency, Sussex County worked through the Morris County Improvement Authority (MCIA), although each county made its own individual contracts with the entity, called Sunlight General, a new creation with a board of directors drawn largely from a French bank.  

In February 2011, the Board of Chosen Freeholders of Sussex County authorized a shared services agreement with the MCIA to implement the solar project.  In July 2011, the project was sent to the Office of the State Comptroller for review.  After reviewing all the project documents, the following month (August 2011), the project was given the okay by the Office of the State Comptroller -- headed up by Mr. Matthew Boxer.  Based the affirmative review given by Mr. Boxer's office, the Sussex County Freeholders went forward with the project. 

Apparently, the project was so fashioned that by October 2011, Sussex County had received just one bid -- from Sunlight General.  And so, in that month, the Sussex County Freeholders awarded the contract to Sunlight General.

The Freeholder Boards of Morris, Somerset, and Sussex Counties all signed agreements -- reviewed by the Office of the State Comptroller (Mr. Boxer's office) -- that used taxpayer-secured debt to back up SunLight General's operations. Unfortunately, the contracts were poorly written, the expected flow of capital was fanciful, the projects poorly planned and executed.  Allow us to quote from the documents supplied by the federal court: 

- SunLight General Capital and its subsidiaries were formed "with virtually no assets, such that they were undercapitalized at the time of formation." 

- The SunLight Entities "have drawn on the Public Bond Funds and diverted such funds for non-trust purposes in violation of the New Jersey Trust Fund Statute." 

- The SunLight Entities have admitted that "millions of dollars of Public Bond Funds" have been used to "make lease payments" and to "fund the SunLight Entities' required contributions under the Program Documents, and to pay the 'soft' costs (including attorneys' fees) of the Authorities and the SunLight Entities." 

- "The SunLight Entities owe Power Partners millions of dollars as a direct beneficiary under the New Jersey Trust Fund Statute and there are no longer sufficient funds in the Public Bond Funds to pay Power Partners and to complete the projects." 

- The SunLight Entities "participated in an additional scheme to draw down over $6.3 million in Public Bond Funds and misdirected more than $2.7 million of such funds for non-trust purposes." 

- Those who controlled the SunLight Entities treated corporate assets as "their personal piggy banks, repeatedly transferring assets from one entity to the next for the purpose of ensuring that there would be insufficient assets in each entity to satisfy its obligations to Power Partners." 

- "The corporate form of the SunLight Entities was used to commit conversion, make fraudulent transfers, and other improper acts." 

Yes, the Office of the State Comptroller -- Mr. Matthew Boxer's office -- let down the taxpayers of Sussex County.  Matthew Boxer got to move on to his law partnership and the Office of the State Comptroller just keeps on reviewing what it reviews and the residents of Sussex County are left to deal with the $40 million loss in their (higher) property tax bills.  In March 2015, the Freeholder Boards of both Sussex and Morris Counties reached out to the Office of the State Comptroller and formally requested that the State Comptroller review the project -- for a second opinion. 

About this time, the name Matthew Boxer resurfaced again, only now it was as part of a proposal to bring in "outside counsel" to review the solar project and what went wrong.  Sussex County Freeholder Boss George Graham – the guy Freeholders Rose and Lazzaro follow -- pushed for Mr. Boxer to be brought in for this purpose. 

In April 2015, the Office of the State Comptroller turned down both Sussex and Morris Counties' requests to review the solar project.  No official reason was ever provided.  However, there is an "unofficial" explanation provided in a May 26, 2015, memo from the MCIA to the Morris County Freeholders.  It goes as follows: 

"The County is still awaiting a written letter from the Office of the State Comptroller, as a follow up to the phone conference with Morris County on April 27, 2015.  In the absence of the written response, and as a reminder, the State representatives (OSC) advised the County that it undertook an internal review of the Solar II Program and conducted its own analysis and evaluation of the Solar II Program.  Following this review process, the Comptroller's Office concluded that, based upon the information that Morris County had forwarded to them, it was not going to pursue a further review of the Solar II Program." 

So it appears that the Office of the State Comptroller had conducted a review of the solar project it had signed-off on, but was unwilling to share said review.  The memo continued: 

"The Comptroller's Office noted several factors in its post-review decision not to review the matter further: 

a. Noting that the Solar Programs and original agreements were a local policy decision, approved by the County Freeholders, and; 

b. That in the view of the Comptroller's Office, both the change in the SREC Market, as well as the legal dispute between the developer and the contractor (SunLight/MasTec) contributed to the Solar II Program not proceeding as originally expected." 

The "post-review decision not to review the matter..."  Wow.  

The Office of the State Comptroller's recalcitrance to share the review that they had already conducted or to take that review further was a loss to the taxpayers of Sussex County, but a boon to former State Comptroller Matthew Boxer, who was now being touted as the onlyman to do a review that was to be paid for by fresh taxpayer's money.

And so, it came to pass that in January 2016 a new Freeholder Board in Sussex County -- now controlled by the very same individuals who had been for months advocating for the selection of Matthew Boxer as the onlyman to review the solar project -- handed Matthew Boxer a contract for $500,000 to conduct said review. 

The guilty parties in handing out that ridiculous contract – Freeholders Graham, Rose, and Lazzaro. 

The manner in which this contract was provided to Mr. Boxer was curious, and remains unexplained to this day. In a letter, dated January 19, 2016, a Sussex County official wrote to Mr. Boxer's firm inquiring how he came by the contract.  Here is what he wrote: 

Dear Mr. Boxer,

On New Years’ Eve, Dec 31, 2015, I received a phone call, about 5:00 PM, informing me that a resolution had been submitted to the Sussex County Clerk of the Board regarding an agreement with Lowenstein Sandler, LLC to provide professional services to conduct a review of the facts and circumstances involved in the Sussex County Renewable Energy Program. 

This was the first time I had any knowledge of this negotiation and agreement. 

I spoke to our Freeholder Director, the other sitting Freeholders, our County Administrator, our County Council, our Clerk of the Board, our County Treasurer, our Director of the Department of Central and Shared Services, our Purchasing Agent, and our assistant purchasing agent. 

...I believe that the governing body has had no part in negotiating an agreement with your firm. 

I would like to know, and now ask, who represented Sussex County in these negotiations, especially the negotiation of the “blended” hourly rate and the understanding that the Board of Chosen Freeholders has provided that fees are not to exceed $500,000.00? 

To this day, this official -- a respected member of the community in Sussex County and a veteran of the Korean War -- has never received the courtesy of a reply.  Why not?   

So the official wrote to the State Ethics Commission and noted the following: 

He stated that this agreement was negotiated with two phone calls with a Matthew Boxer, Esq. 

In 2011 Matthew Boxer was the New Jersey State Comptroller.  

Matthew Boxer led a staff responsible for overseeing audits and performance reviews at all levels of New Jersey government. The office audited government finances, examined the efficiency of government programs and scrutinized government contracts.  

On August 23, 2011 the State Comptroller's office, after a review, signed off on the procurement of a Photovoltaic Systems Developer with respect to certain local government facilities in the County of Sussex and the RFP as approved for advertisement. 

I have been asked by many Sussex County residents if Matthew Boxer has a conflict of interest representing Sussex County as Special Counsel in order to review its participation in the Sussex County Renewable Energy Program. 

To which the State Ethics Commission replied that Mr. Boxer claimed that he “did not have any personal involvement in the Office of the State Comptroller's review or approval of Sussex County's procurement related to the Program.”   

It seems strange that the person in charge of the office directly charged with reviewing the contract -- the failsafe in the approval process – would claim no personal involvement.  That is a curious statement.  How about professional involvement?   

Was Mr. Boxer so lax as to have no knowledge of what was a three-county project involving -- to start -- $100 million? His office reviewed nearly a dozen similar contracts involving many more millions in public money.  Okay. let's accept that Mr. Boxer was a "delegator" without direct, day-to-day knowledge about the office he was responsible for.  How did he come to be recommended as the sole recipient of a $500,000 contract to review what his office failed in reviewing at the start?   

The answer to that is simple: Freeholders Graham, Rose, and Lazzaro.  

And now, Rose and Lazzaro are asking us to give them a second chance to make breathtakingly stupid decisions like this one. Decisions that have to do with spending our money.

Really?