In a move signaling a potential lawsuit, the attorneys for over a dozen activist groups are telling the state’s embattled Economic Development Authority to preserve any records related to how it awarded and monitored compliance of its controversial tax break program during Gov. Chris Christie’s time in office, between 2010 and 2018.
The activist groups – which have been critical of the programs, and skeptical of claims of economic revitalization under them – are seeking any such records, including emails, text messages, communications and other documents stretching all the way back to January 2010.
The agency has fallen under intense scrutiny in recent months following an audit from the state comptroller’s office which found the EDA had little oversight of billions of dollars awarded under the Grow New Jersey tax credit program, and that the agency overpaid and over-awarded tax breaks to companies that were not compliant with the program or should have never received the awards in the first place.
As a result, corruption, fraud and abuse of the program ran rampant, critics note.
“We are tired of the EDA board continuing to ignore the concerns of activist groups. Litigation is always a last resort, but the EDA board has left the people of New Jersey with no choice,” Saily Avelenda, executive director of member-group NJ 11th for Change, said in a statement.
“There’s a long list of taxpayers holding negligent or corrupt public officials accountable through the courts,” added Rob Duffey, interim director of New Jersey Working Families, in the same statement. “If the NJ EDA Board won’t do the right thing and resign over this $11 billion corporate gravy train, taxpayers may have to take matters into their own hands.”
The letter, written by Flavio Komuves of the Somerset-based law firm Weissman & Mintz, cites the comptroller’s report and Murphy’s ongoing EDA task force, which have unearthed allegations that financial services firm Jackson-Hewitt cheated the EDA out of over $2 million in tax breaks it never should have received.
“New Jersey courts allow members of the public to seek redress for fraudulent and wasteful practices, including breaches of fiduciary duty by public officials. Remedies may include money damages from those who breach their fiduciary duty and those who benefit from such breaches,” Komuves wrote.
Gov. Phil Murphy – a vocal critic of the tax breaks – wants to let the program expire in July and replace it with a heavily capped set of incentives. His office declined to comment, and the EDA could not be immediately reached for comment.
Murphy’s depiction of the tax breaks and the EDA has drawn harsh rebuke from Christie and other notable lawmakers under the Republican governor’s term, such as former Sen. Ray Lesniak and Senate President Stephen Sweeney, D-3rd District.
“Gov. Murphy is intentionally misleading the public on tax incentives and using inquisition-like tactics to intimidate businesses and witnesses,” Christie said on Twitter. “He should be ashamed and is hurting New Jersey.”
Lesniak, on Monday, issued a two-page letter to Sweeney; Murphy; Assembly Speaker Craig Coughlin, D-19th District; and the chairs of the Senate and Assembly economic growth committees, also condemning Murphy’s rhetoric around tax credits.
“In a press statement in reaction to an audit of the state’s tax incentive program you said, ‘[a]s much as $11 billion was squandered…’ away and Treasurer Elizabeth Muoio in a letter to the members of the Senate Economic Growth and Assembly Commerce and Economic Development Committees stated that tax incentives will cost the state treasury billions, without giving any evidence to support those statements,” Lesniak said.
Sweeney, Christie and Lesniak have all pointed to the economic revitalization that cities such as Camden, Jersey City and Newark have enjoyed thanks to Grow NJ.
Following board Chair Lawrence Downe’s resignation, the only member to acquiesce with the request, Murphy announced last week that former Goldman Sachs executive Kevin Quinn would succeed him in the role. The governor said last week that he would “respect the decisions” of the other four board members to not step down.
Murphy’s EDA task force is scheduled to meet in Newark Thursday morning at a currently unknown location.