The Jersey Sting

Two months ago, a book was published called The Jersey Sting, by two Star-Ledger reporters, Ted Sherman and Josh Margolin. It provides the history of an enormous federal sting operation which led to the arrest of dozens of government officials, most of them from local governments, on July 23, 2009 (see my blog post of that date). It's a real page-turner that shows how things work and how easy it can be for anyone with money to make deals with elected officials, at least in New Jersey.

The actual sting operation is not really a local government ethics story, but rather a tale of an ethics environment that is so poor, criminal conduct is just waiting for the money to start it going.

If nothing else, this book should make it very clear to local government officials all over the country how valuable a good, independent ethics program is. The books shows very clearly what can happen when there is nothing to prevent an ethics environment from getting this bad.

Here's the story in a nutshell, or at least how it appears. In the midst of a serious investigation into corruption, the New Jersey U.S. Attorney decides to run for governor. His associates turn the heat up and institute a sting operation, whereby a "developer" offers bribes to numerous government officials in return for help in speeding up the approval process. Nearly all the government officials are with the party against which the former U.S. Attorney is running. The "developer" is wired, and officials' phones are tapped. One day, early in the morning, right in the middle of the gubernatorial campaign, they are all arrested at the same time. The governor from their party loses to the former U.S. Attorney.

This isn't what happens in the world of government ethics, if it is done right. Ethics commission members are not politically involved, so they have no incentive to help their party or their former colleagues, nor are they perceived to have any incentive. There are no stings, and no one is tempted to act unethically. No one is wired, and no phones are tapped. No one is arrested. No one goes to prison. Enforcement is not undermined by the belief that it was done for partisan purposes or to further the career of the enforcers.

Instead, ethics training and advice are offered (criminal authorities don't offer much that is positive), and EC members keep a low profile and have no ethics or political career objectives.

Why would any sane official prefer politicized criminal enforcement to an independent ethics program? And yet there are very few good, independent ethics programs in the United States. Go figure.

The Pressures of Fundraising
More than anything, it seems, the cause for all the bribe-taking is the enormous pressure placed on getting campaign funds. Local elections don't attract the money of people who feel strongly about issues. These people give to congressional and presidential candidates. Local elections attract the money of people who can benefit from local government decisions, who work for local government, or who are involved with political parties.

Therefore, local elections practically require that elected officials owe something to a lot of people who do or want to do business with them. And tough races can sand away the ethics of many individuals. In the midst of fundraising, an offer of a few thousand dollars can seem like millions. When people say they wouldn't sell themselves for $5,000, like most of the Jersey officials did, they probably have not run in a tight local race.

Professionals tend to give more than anyone, because in most places professional contracts do not have to be bid out. This is also true of those who do emergency repairs, those who enter into at-call contracts for electrical, plumbing, and other work, and sometimes insurance brokers.

Reading this book, my feeling grew much stronger that public campaign financing is most important at the local level, where it scarcely exists (I administer one of the few local programs). It would improve the ethics environment of any city or county to have the pressure of fundraising taken off of candidates' backs.

Schemes and Observations
For the rest of this blog post, I want to share with you some of the schemes Sherman and Margolin uncover in their book, and some of the observations they make.

The authors portray the state's League of Municipalities annual convention as three days of developing relationships between officials and vendors. In fact, one county official, set up by the FBI, takes a payoff in an Atlantic City hotel room. Caught, he does a deal to bring in more officials. Another year, a sewer contractor who wrapped $100 bills around his business cards hired scantily clad women to attract attention to his booth. After getting a series of no-bid contracts, and getting caught, he too helped the feds.

The most surprising catch in the Jersey Sting was an attorney specializing in, of all things, election law. Despite knowing the election laws inside out, this first-time mayoral candidate allegedly had a campaign contributor pay his campaign manager's salary, and he did things illegally that he could have done legally by setting up PACs. He also put the worst sort of lawyerly arrogance on display for the informant's tape recorder:

We're breaking down the world into three categories. There's the people who were with us, and that's you guys. There's the people who climbed on board in the runoff. They can get in line. And then there are the people who were against us the whole way. They get ground into powder.

He was arrested three weeks after he took his place in city hall.

Arrogance and incompetence are what most differentiate those who accept bribes and those who don't. Many officials think a developer who seems to be a neophyte is someone ripe for the picking, so they don't stop to think, or investigate, what the "developer" is actually talking about. If they stopped to think, or actually asked a question or two, they would realize that something was up. Some officials did, and they are still in office, not necessarily because they're more ethical, but because they're more astute and not so quick to take advantage of what appears to be a stooge.

Patronage
Jersey is full of valuable patronage positions, not just for friends, but also for low-paid elected officials and for retired officials. An example is a county undersheriff. Another is the position of Jersey City deputy mayor, a part-time job with great exposure that pays well and, since the deputy mayor never votes, but has lots of influence, can do many things other officials can't.

One guy got on a regional sewerage commission, and gave a job to his brother and his wife. The commission is characterized by the authors as "a patronage pit."

Fixers
A lot of unethical conduct is facilitated by bagmen, fixers, go-betweens, whatever you want to call them (they often themselves "consultants" or even fancier names). These people explain to the uninitiated how things work, they open doors, they navigate procedures, and they bring people together, so that deals can be made. They are hired by developers, contractors, and grantees, as well as by law firms and investment firms. They advise officials, party committees, and campaigns.  Some are ward bosses or party officials. They are also made great use of by the FBI.

But since they usually hold no office, they are completely ignored by government ethics. Imagine an ethics training session tailored to bagmen. Or even better, one run by bagmen!

One big-time fixer told the FBI informant, "You don't need to know how I do something. All you need to know is whether it got done." A classic ends vs. means statement.

Campaign Finance Schemes
Straw donors seem to be used a lot in New Jersey. It works this way. Someone doing business with the local government wants to give a campaign contribution over the limit, so he gives money to an intermediary, who gives it to friends who, in turn, make "legal" campaign contributions. This is illegal to do, but it is almost impossible to catch, even harder than bribes.

Another way to help a candidate without directly giving him money is to give contributions to his allies. In return, his allies will have their contributors do the same. It's a great way to get around contribution limits and hide both pay to play and influence peddling.

And then there is the legal defense fund, which one of the officials in the sting used. The fund's purpose was to sue anyone the official felt was responsible for political attacks on him. This official was smart enough not to deposit the check that would have got him arrested.

A past Jersey City boss, Frank Hague, had a partner's desk custom built with a two-way lap drawer "that could be pushed outward like a bank drive-thru window, ostensibly to allow visitors to deposit cash-stuffed envelopes." The desk was passed on to the city clerk and then the corporation counsel as a nice relic, at least until the Jersey Sting gave it new meaning.

Billboards placed where they are prohibited are worth more than others, so there is a lot of incentive to get around local rules and restrictions, and opposition from locals. Political operators have what it takes to get around rules and restrictions, so it is in their interest to get into the business of selling space to the big outdoor advertising firms. And the same connections can bring in advertising on those billboards, from those doing business with local governments. One firm that handled political fundraising did their ad pitches right after doing their fundraising. It would be hard to say no, for the very same reason it's hard for many to say no to political fundraising appeals. Talk about piggybacking!

Of course, developers involved in numerous businesses can make numerous contributions anyway.

Using and Spreading Influence
An unusual form of favoritism: a mayor has a favorite restaurant, and someone wants to open a place across the street. Not wanting his favorite restaurant to have such direct competition, he makes sure the city inspector doesn't okay the plans.

A good way for an appointee to spread his influence is to force subordinates to purchase tickets to political events and make donations to,  and work on campaigns of, candidates he wants something from. One parking authority director even made his employees pay for a billboard advertising his civic association.

Parting Thoughts
When New Jersey instituted nonpartisan elections in an attempt to undermine the power of the parties, the parties got the first election moved to May, when no one else was running and, therefore, few people would turn out other than those involved in the parties or directly affected by government decisions. And with the increased uncertainty of nonpartisan elections, raising funds became that much more important.

One of the first responses to the sting was a bill to amend the constitution to require indicted officials to be replaced. This is hardly a solution. But it sounds good. Meanwhile the arrested officials were insisting they were innocent or entrapped, and many other officials were probably thinking there wouldn't be a sting for a few more years at least, and that they'd know how to handle it when it came.

Robert Wechsler
Director of Research-Retired, City Ethics

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