It's too bad that Freeholder George Graham -- the boss who runs the County government -- isn't going to allow county residents to question New York City attorney Matthew Boxer, the guy they are paying $500,000 to tell them what went wrong with the solar project. Kudos to Freeholder Jonathan Rose for standing up to Graham. Maybe Rose will be able to form a "transparency" coalition with Freeholders Phil Crabb and Sylvia Petillo?
A recent letter to current State Comptroller Philip Degnan raises a number of questions that should be raised face-to-face with Mr. Boxer and the people who engineered Boxer's appointment: Freeholder Graham and SCMUA Commissioner Dan Perez (a New York City lawyer, appointed by Graham, who is now a candidate for Freeholder). The letter states:
As you are aware, your office was formerly the domain of Mr. Matthew Boxer, 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.
My OPRA request concerned documents related to a scandal in northwest New Jersey 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 just one of the counties involved, Sussex County, is estimated at upwards of $40 million.
Three counties were involved in this particular project: Somerset, Morris, and Sussex Counties. 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. Based on this review, 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 -- 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 me 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."
While noting that all this was before your time, may I ask you a question? Do you believe that, perhaps, the Office of the State Comptroller let down the taxpayers of Sussex County just a bit?
So Matthew Boxer moves on to his law partnership and the Office of the State Comptroller keeps 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.
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. Two members of the Sussex County Freeholder Board -- Gail Phoebus and George Graham -- pushed for Mr. Boxer to be brought in for this purpose. Below is a memo from attorney Dan Perez (now himself a candidate for Sussex County Freeholder) to then Freeholder Gail Phoebus:
Begin forwarded message:
Date: April 12, 2015 at 7:47:23 AM EDT
To: Gail Phoebus <email@example.com>
You pick the time and let me know; I am clear all day. How about this for a discussion list (please feel free to change):
1. Catch-up on recent freeholder meeting and other developments
2. Archer & Greiner conflict/possible ethics complaints against Cantalupo (undisclosed representation of Birdsall) and Weinstein (led settlement negotiations without being appointed)
3. OPRA requests and responses, post to a website?
4. McConnell malpractice issues/possible local gov't ethics complaint
5. New law firm to review settlement -- Lowenstein (Boxer), NYC??
6. Wendy Molnar
7. Dan to meet with Phil?
9. Response to Crabb column
10. Next steps
Daniel M. Perez, Esq. Law Offices of
Daniel M. Perez 93 Spring Street, Suite 505 Newton, NJ
07860 (973) 300-5135 (office) (973) 300-5199 (fax) (201) 303-6209 (cell)
In April 2015, the Office of the State Comptroller turned down both Sussex and Morris Counties' requests to review the solar project. According to those Freeholders who I have spoken with, 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 only man 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 only man to review the solar project -- handed Matthew Boxer a contract for $500,000 to conduct said review.
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 Freeholder wrote to Mr. Boxer's firm inquiring how he came by it. 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.
None of these individuals, except Freeholder George Graham, admitted to having any knowledge of these negotiations, conversations, meetings or agreements with your law firm before 5:00 PM on New Years’ Eve 2015.
...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 Freeholder -- 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? And note that, at the time, this Freeholder -- as a member of the Board -- was Mr. Boxer's client.
So the Freeholder wrote to the State Ethics Commission and noted the following:
At the January 27th, 2016 regular Freeholder meeting, now, Freeholder Director George Graham admitted that he, solely, negotiated this agreement.
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:
"Mr. Boxer contacted this office to seek advice regarding whether the post-employment restrictions prohibit him from being involved in a review of the (solar) Program. Mr. Boxer advised 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. Mr. Boxer also advised that he contacted the Office of the State Comptroller, which performed a search of its records and emails and found no emails, correspondence or other documents indicating that he had any involvement in that office's review of the procurement for the Program. Based on these facts, the State Ethics Commission concluded that Mr. Boxer was not substantially or directly involved in the Program during his State employment and that the post-employment restrictions therefore do not prohibit him (or derivatively Lowenstein Sandler) from being involved in the present review of the Program on behalf of Sussex County."
I note that the word "facts" is used when "representations" might be more appropriate. As the State Ethics Commission did not conduct its own review of the Office of the State Comptroller's "records and emails... correspondence... other documents", it is clear that they are simply accepting Mr. Boxer at his word.
It is a bit odd to claim that the person in charge of an office was so lax as to have no knowledge of what was a three-county project involving -- to start -- $100 million. And that 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?
In its reply, the State Ethics Commission expressly invited further inquiry:
"If you have information indicating that Mr. Boxer was substantially and directly involved in the Office of the State Comptroller's review of the procurements related to the Program, please do not hesitate to provide that information to this office for further consideration."
In search of the truth, I sent in an OPRA request that asked for the same documents that the Office of the State Comptroller willingly turned over to Mr. Boxer (as a citizen, after he no longer worked there), according to the statement of the State Ethics Commission. Mr. Robert Shane, of your office, denied my request -- arguing that it was "over-broad" and that my request "appears to relate to OSC’s statutory obligation to review procurements pursuant to N.J.S.A. 52:15C-10. Please be advised that any such records are exempt from disclosure as advisory, consultative and deliberative material. This exemption is specifically included in OSC’s enabling legislation at N.J.S.A. 52:15C-10b(5)."
If so, then we have a situation in which we must be content to take the word of Mr. Boxer. As he is the only person who appears to have benefitted from this fiasco -- to the tune of a half-million dollars -- that is, indeed, most unfortunate.
It is time for the Freeholders to establish a citizen's commission to investigate this corrupt mess and call those who have benefited to account. Make someone like Harvey Roseff the chairman and you won't need to spend a half million dollars of taxpayers' money (property tax money!) to get the job done.