| Saturday, April 23, 2005 |
The State Commission of Investigation has opened an inquiry into the role of political influence at New Jersey's top public universities.
The investigative agency sent letters this week to the University of Medicine and Dentistry of New Jersey, Rutgers University, the New Jersey Institute of Technology and Rowan University. The letters request a broad range of documents, from information about hiring to consultant and professional services contracts and spending, according to a source who has seen the letters.
The probe was prompted by weeks worth of revelations and questions about spending at the medical university. This week, UMDNJ began releasing information about no-bid contracts.
The document release came after repeated requests from the press and began with the year 2002. For that year alone, the university gave out $126 million in contracts without competitive bidding.
State Sen. Robert E. Littell, R-Franklin, on Friday requested that state Auditor Richard L. Fair examine the no-bid contracts. "I was appalled to learn that so many of the contracts issued by UMDNJ were no-bid,'' said Littell, pointing out that the university receives more than $200 million in state funding.
Administrators at UMDNJ have pledged to have an outside audit conducted.
The SCI started its probe after acting Governor Codey questioned a $75,000 no-bid contract given in 2002 to Philadelphia lawyer Ronald White, a top fund-raiser for former Gov. James E. McGreevey. The contract called for White to serve as a liaison to McGreevey and to discern the former governor's health-care "vision." University officials said they could find no evidence that White, who has since died, did anything for the money.
The probe widened this week as the agency, which conducts fact-finding investigations, also requested information from the other state-supported schools.
Of the public universities, it has been thought that UMDNJ - a sprawling and Byzantine public bureaucracy - has been most prone to patronage and questionable spending practices. But all of the institutions have massive payrolls and elaborate budgets that critics say have been vulnerable to political interference for years.
Since the McGreevey administration, Democrats have stepped up political influence on the state college boards, appointing more party loyalists than previous administrations had named.
McGreevey also backed John J. Petillo for the presidency of UMDNJ, which he assumed last year. Petillo will be formally inaugurated on Tuesday.
Reformers saw his selection widening political influence at the state schools. Petillo, of West Orange, was chosen after trustees spent $350,000 for a nationwide search. He is a longtime player in the state, former head of the UMDNJ Board of Trustees and the first non-physician to run the institution.
A bipartisan arm of the Legislature, the SCI conducts fact-finding investigations. It has subpoena power and the authority to recommend changes in government operations and refer matters to the Attorney General's Office for criminal prosecution.
Former Sussex County Democrat Party Chairman and Others Charged with Embezzling from Union and Bankrupt Health Fund
NEWARK - A federal grand jury today returned a five-count indictment against a former Sussex County political party chairman and two other individuals for their roles in embezzlement schemes that victimized Local 16 of the United Service Workers of America in Newton and its now-bankrupt health fund.
Charles W. Cart, Charles H. Wiener and Marvin Raphael are charged with conspiring to embezzle a total of approximately $284,000 in health fund and union funds as a result of a multi-faceted fraud scheme existing between May 2000 and November, 2001. Susan Donato, 47, of St. Cloud, Fla., formerly the President of Local 16 and the administrator of the Local 16 Health Fund was previously charged in a separate one-count Information.
Donato pleaded guilty in January to conspiracy to embezzle from the Health Fund and is presently cooperating in the government's investigation.
Cart, 56, of Newton, is a former Sussex County political party chairman as well as the founder and former President of Local 16. He is also the CEO of Health Choice, Inc, a third-party health benefits administrator, also located in Newton. Wiener, 68, of New Port Richey, Fla., is Cart's stepfather. Raphael, 63, Boca Raton, Fla., is the owner of Marvin & Tedi, Inc., also of Boca Raton.
The Indictment portrays Cart as the union founder who left to create Health Choice. Subsequently, Cart and his co-conspirators' schemes contributed to the demise of the union with the alleged embezzlement of the health fund that the union workers paid into, said Christie.
"On the one hand, this defendant led people to believe he was on their side as a labor organizer," said Christie. "Yet, as we allege, he then turned them into victims by embezzling from them, their union and their health fund."
The main source for the embezzled funds was an alleged scheme to generate cash from the Local 16 Health Fund by fraudulently increasing the "per member" administration fee paid to Health Choice, the third-party administrator that processed Local 16 medical claims. These increased payments were then diverted to Wiener and another Cart family member who is not identified in the Indictment.
For example, between May 2000 and November 2001, Cart caused approximately $144,000 in checks to be sent from his company, Health Choice, to another company, identified as Company-1 in the indictment, under the guise of paying fees incurred by Company-1 on behalf of Local 16, according to the Indictment. In truth, Company-1 had performed no services for Local 16 and was being used solely as a conduit by Cart to get the money to his stepfather Charles Wiener.
Cart is also charged with conspiring with Raphael and Donato to defraud Local 16 of $84,000 by creating a consulting position at Local 16 for defendant Raphael, for which no legitimate services were expected or provided. Between approximately August, 2000 and July, 2001, Raphael received monthly payments of $7,000 pursuant to the consulting agreement. Thereafter, Raphael re-directed approximately $56,000 to Cart directly or through his horse farm, Horsearound Stables, according to the Indictment.
Cart and Wiener are also charged in Counts Three and Four of the Indictment with a mail fraud conspiracy for trying to deprive the union members of the honest and faithful services of co-defendant Sue Donato in her representation of Local 16 and the Local 16 Health Fund. Count Five charges both Cart and Wiener with money laundering.
Conviction on Count One, the conspiracy to embezzle from the Local 16 Health Fund, carries a maximum sentence of five years in prison, a $250,000 fine and restitution to the fund. Count Two, the conspiracy to embezzle from the Local 16 Union, carries a maximum sentence of five years in prison, a $250,000 fine and restitution to the union. Counts Three and four carry a maximum sentence of 20 years each in prison and a $250,000 fine. Count Five, the money laundering count, carries a maximum sentence of 20 years in prison and a $500,000 fine.
In determining an actual sentence, the judge to whom the case is assigned would, upon a conviction, consult the U.S. Sentencing Guidelines, which provide appropriate sentencing ranges that take into account the severity and characteristics of the offense, the defendant's criminal history, if any, and other factors. The judge, however, is not bound by those guidelines in determining a sentence.
Parole has been abolished in the federal system. Defendants who are given custodial terms must serve nearly all that time.
Despite indictment, all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Christie credits Special Agents from the Department of Labor, OIG, under the direction of James Vandenberg, Assistant Regional Inspector General. Christie also credited Special Agents from the Labor Department's Employee Benefit Security Administration, Acting Regional Director Jonathan Kay, with assisting in the investigation.
The case is being prosecuted by Assistant U.S. Attorney V. Grady O'Malley, Senior Litigation Counsel, and Assistant U.S. Attorney Matthew Boxer, both of the U.S. Attorney's Office in Newark.
http://www.usdoj.gov/usao/nj/publicaffairs/NJ_Press/files/cart0223_r.htm