Huge loss for political boss in fight with Murphy over EDA investigation

Updated Jul 31, 2019

Efforts by South Jersey powerbroker George E. Norcross to shut down a governor’s task force investigating the state’s troubled Economic Development Authority were dealt a major blow in court Wednesday after a judge refuted arguments that the inquiry was little more than a political hit job.

Superior Court Judge Mary C. Jacobson dismissed a lawsuit brought by attorneys for Norcross and several business entities with ties to him, who charged that the task force appointed by Gov. Phil Murphy represented an illegal exercise of the governor’s power.

“To prevent the governor from investigating the EDA just didn’t make sense to me,” she said.

The judge rejected assertions by lawyers for Norcross that the work of the task force looking into the state’s tax incentive program “was not a bona fide investigation.” She was especially scathing in her criticism of their arguments in court urging her to ignore the findings of the state auditor who sparked the creation of the task force, while at the same time citing the posts of the political news website New Jersey Globe regarding the case.

“That was very telling to me. You didn’t want me to look at something that was important, but you did want me to look at a blog post,” she said. “The court does find the governor has the authority to initiate an investigation.”

There was no immediate indication that the decision would be appealed.

“The plaintiffs will review the judge’s written decision in order to make a determination about whether and how to move forward to protect their rights and the good names they’ve built over decades in business," said a spokesman for Norcross. "The plaintiffs are proud they are to have brought new jobs to Camden, invested more than $300 million in the city’s future, and become an integral part of its ongoing renaissance and neither today’s ruling, nor the task force’s actions, will diminish this success.”

Murphy created the EDA task force in January to look into how those incentives, intended to lure business to the state, had been awarded, taking action after the New Jersey Comptroller questioned whether some of those grants had been “miscalculated, overstated and overpaid.”

But it soon became apparent that much of the focus of the task force had turned early to the city of Camden, and to Norcross-connected companies that had benefitted from the state incentives.

That led Norcross to head to court in June, seeking a restraining order against Murphy and his administration in a bid to bring an end to the EDA investigation. In the civil complaint filed by Norcross and the other entities, they claimed they had been “falsely and publicly accused of misconduct regarding the tax incentives” and were denied a fair opportunity to refute those accusations.

“Moreover, those accusations have been made through an entity that is unauthorized by law,” said the lawsuit.

Attorneys for the task force and the governor in an all-day hearing before Jacobson on Wednesday in Trenton sought the dismissal of the complaint.

“The argument they make doesn’t have any legs,” declared attorney Theodore Wells Jr.

Wells maintained in court filings that the Norcross complaint did not support the extraordinary relief being sought — a declaration, he said, that “an investigation initiated by the governor into a state entity granting billions of dollars of state tax incentives to companies, and involving matters of great public importance, is unlawful.”

“The lawsuit was filed to stop the task force from doing its work,” Wells told Jacobson. “They thought by filing the lawsuit, Gov. Murphy would give up. It didn’t happen and it’s not going to happen.”

The legal proceedings have played out amid a growing political battlebetween the governor and Norcross, who are bitter political rivals, and the legislative leadership, centering on the EDA and the several lucrative tax incentive programs that have been widely supported in the Legislature. Those programs are strongly opposed by the governor, who has called for major changes in the incentives that critics call a multi-billion-dollar corporate giveaway.

Two legislative committees in the Statehouse have launched their own hearings into the EDA and the state’s tax incentives, the Grow NJ and the Economic Redevelopment and Growth Grant programs. Both programs expired last month, and the Assembly and Senate have separately voted to extend them for a year. The governor has said he will veto the measure.

The task force, in the report it issued last month, concluded that the EDA did not have adequate procedures in place to vet applications, including a failure to pick up on misstatements that would have led to the rejection of some applications or a significant reduction in the size of certain awards. It also claimed that the legislation that created the incentive program was largely shaped by special interests, including those with close ties to Norcross.

The lawsuit against the governor and the EDA was brought on behalf of Norcross; his insurance company, Conner Strong & Buckelew, LLC; NFI, L.P.; The Michaels Organization, LLC; Cooper University Health Care, where Norcross serves as chairman; and Parker McKay, a law firm headed by the brother of Norcross.

At the heart of the complaint were claims that the companies were singled out from more than 900 applicants for EDA tax incentives, falsely accused of serious misconduct, and denied the opportunity to refute the accusations.

Attorneys for the powerful South Jersey Democrat argued that the state launched “a wholly unlawful public probe” designed to reach a preordained conclusion that they have somehow broken the law in connection with two EDA-administered tax incentive programs. They also argued that the task force report had been “laser-focused” on Norcross and “laden with the sort of false and erroneous conclusions a one-sided presentation might be expected to produce.”

Jacobson last month had denied a request for a restraining order to prevent the task force from releasing a report of its findings, and to prohibit any further public hearings. However, the case remained before the court pending trial.

“The governor cannot convene a tribunal to investigate private citizens, said Herbert Stern, who represents Cooper University Health Care. “This investigation was set up to investigate us. The law does not allow them to do that.”

Wells, however, rejected assertions by attorneys for Norcross that the work of the governor’s task force was essentially a political “hit job” targeting the South Jersey Democrat, calling the assertion “a red herring.”

He said there was nothing in the task force's subpoenas, hearing transcripts, or its report demonstrating that the task force exceeded its authority to investigate the management and affairs of the EDA.

“In fact, these materials confirm that the task force is properly conducting an examination and investigation of the management and affairs of the EDA consistent with the governor’s statutory and constitutional authority,” he said.

In a statement following the ruling, the spokesman for Norcross said they were disappointed.

"The judge’s decision sets a dangerous precedent that this administration — or any administration — can hold investigatory hearings without allowing their targets basic due process rights,” he said.

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