Murphy’s EDA task force investigations could last years, former Christie AG says

The state’s former top cop under Gov. Chris Christie said the current administration’s investigations into companies that may have lied to fraudulently obtain tax breaks could drag on for years, and long after the Legislature and Gov. Phil Murphy agree on a new set of economic incentives.

The inquiry, which held its first meeting Thursday, has already found one company that allegedly lied on its multi-million tax break application.

“Until there is a determination to stop investigating, the task force is going to continue investigating,” former Attorney General Chris Porrino, who served from 2016 to 2018 under Christie, told NJBIZ.

”I can tell you from having defended investigations and having conducted them — with 100 some odd companies that they’re talking about, this investigation could go onto five years,” added Porrino, now a partner and chair of the litigation department at Lowenstein Sandler.

You might not like it very much, but this investigation is well underway, and if you wait for the task force and the attorney general’s office to have to drag the information out of you, I can tell you that law enforcement doesn’t appreciate that.

Murphy convened the task force in January to root out any companies that may have lied, or gamed and cheated the existing Grow New Jersey tax breaks, which were vastly expanded in 2013 under Christie.

The state comptroller’s office released an audit in January which found severe deficiencies in the ability of the Economic Development Authority, tasked with overseeing the incentives, to verify whether companies were being truthful in their tax break applications and creating the promised jobs and activity.

A whistleblower, former Jackson-Hewitt executive Gulsen Kama, testified Thursday that the company lied about plans to move out of the state in order to cheat the EDA out of $2.7 million in tax breaks when it had no such ideations. Instead, its plans to move to Jersey City were already a “done deal” by the time the company submitted its tax break application, Kama said.

Even more, the financial services company moved enough of its jobs to Florida that it no longer qualified for the tax credits, Kama said.

A spokesperson for Jackson-Hewitt denied the allegations but said the company will fully comply with any state and law enforcement investigations.

In addition to the 100 companies the task force ordered to hold onto any documents related to the tax breaks they already received, task force head and Rutgers Law School Dean Ronald Chen issued similar orders to 20 such companies that consulted many of those tax break recipients.

“There was a presentation [Thursday] about a company that I think, according to the task force at least, defrauded the state… That’s the presentation that was put out, that we’re going to take a good, hard, long look to make sure that no other companies engaged in similar conduct,” Porrino said. “They are a very resourced task force.”

In the meantime, Porrino said, any business that received tax breaks must make sure to have all its “square corners turned” and paperwork in order.

“You might not like it very much, but this investigation is well underway, and if you wait for the task force and the attorney general’s office to have to drag the information out of you, I can tell you that law enforcement doesn’t appreciate that,” Porrino said.

“Any company that receives incentives here needs to make sure that they have gone back and checked that everything was done in accordance with established procedure,” he added.

Murphy is looking to end Grow NJ once it expires in July and replace it with a set of incentives capped at $400 million a year. But the Democrat-controlled Legislature is hoping to keep many aspects of Grow NJ in place and have cast skepticism on whether the state should cap the amount of tax breaks it awards every year.