Should Cory Booker be liable for watershed's financial losses?

By Tim Darragh | NJ Advance Media for NJ.com
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on March 04, 2016

Lawyers in a lawsuit involving U.S. Sen. Cory Booker argued Friday whether he should be held partly responsible for losses at the Newark Watershed Conservation and Development Corp.

 

NEWARK — For lawyers arguing in federal court over whether U.S. Sen. Cory Booker should remain in a lawsuit alleging that he failed to properly oversee the city's bankrupt watershed corporation, the question could come down to this: How far does a board member have to go to say he's done his duty?

Legal teams representing the former Newark mayor and the provisional trustees who took over at the Newark Watershed Conservation and Development Corp. debated the point Friday before U.S. Bankruptcy Judge Vincent F. Papalia. 

The judge said he would rule soon on whether Booker and former board Vice Chairman Vaughn McKoy should remain as defendants or dismissed from the case.

The provisional trustees filed the suit last year against 28 individuals or businesses, saying some, such as former Executive Director Linda Watkins-Brashear, should be held financially responsible for looting the agency. Others, such as Booker and McKoy, also share financial responsibility because even if they were caught off guard by the corporation's spectacular crash, their inattention to matters allowed it to happen, the lawsuit says.

Attorney James Scarpone, representing the watershed, said it's not enough to argue that Booker and McKoy did not know about the watershed's financial peril — even if auditors did not bring it up.

"They made no effort to find the facts," Scarpone said.

The watershed's public tax returns from 2007-2012, he said, clearly showed Watkins-Brashear was making hundreds of thousands more than her contract allowed. Financial and legal professionals also hired by her saw their compensation increase as well, he said. No one checked on how — or if — the agency bid for contracts. 

Even if Booker and McKoy relied on those professionals in good faith, Scarpone said, good faith does not solely "consist of a lack of intent to do harm."

Average citizens, he noted, were able to investigate and expose the corporation's misdeeds, which they would reveal in a report entitled "Hog Wild," which was sent to the New Jersey Office of the State Comptroller.

Booker's attorney, Marc Elias, said the corporation's bylaws specifically put oversight responsibility in the hands of its secretary and treasurer. It also was reasonable for Booker to rely on professionals' reports on the corporation's financial state, he said.

Mayors hear lots of complaints, Elias added, and if the mayor of Newark had to respond to every allegation of wrongdoing or face litigation, "we're going to have a whole lot of lawsuits."

As for McKoy, attorney Jaimee Katz Sussner said it was reasonable for him to rely on the professionals hired by the watershed. "There was tons of oversight here," she said. McKoy's "only sin was volunteering at the request of the mayor," she said.

Sussner and Elias also argued that McKoy and Booker have legal immunity from financial responsibility, since they were acting on the public's behalf and had no role in the corruption there. 

Laws protect honest board members from financial responsibility so that good, honest people will serve on them, Elias said.

Watkins-Brashear last year pleaded guilty to accepting bribes and filing a false tax return in connection with her role at the watershed. Special Projects Manager Donald Bernard Sr. and two contractors also pleaded guilty to corruption charges.

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