Next year will mark the 50th anniversary of New Jersey’s State Commission of Investigation, which was created during the Gov. Richard Hughes administration in response to growing concerns about organized crime and political corruption. More broadly, the SCI’s mission is to investigate waste, fraud and abuse of government tax dollars. That mission has kept the SCI and its staff of about 40 busy ever since. It has issued 120 investigative reports, on everything from influence peddling in the used car industry to flaws in the home construction industry to public employee benefit abuses. Lee Seglem, acting executive director, provides some insights into the agency’s inner workings and current focus in a Q&A with Gannett New Jersey.
Can you briefly describe the role of the State Commission of Investigation (SCI)?
The State Commission of Investigation is an independent fact-finding agency that investigates taxpayer waste, fraud, mismanagement, organized crime, corruption and other abuses of the public trust. The SCI is not controlled or administered by any other single agency or entity of government and is empowered at its own discretion to issue findings and recommendations via public reports and hearings. Since its inception nearly 50 years ago, the commission’s work (including 128 separate reports and hearings) has demonstrably saved taxpayers millions of dollars and has been the catalyst for numerous statutory, regulatory and administrative reforms bolstering the integrity of New Jersey government at all levels.
Also, given the commission’s unique status as the only non-prosecutorial watchdog agency authorized by law to conduct investigations involving matters that affect the criminal justice system, it serves as a valuable partner to law enforcement. Over the years, the SCI has provided extensive assistance to various law enforcement agencies, including referrals, investigative expertise and intelligence-sharing, that have proved instrumental in the successful outcome of numerous organized crime and other criminal cases. Citizens are invited to contact SCI investigators confidentially at 609-292-6767 or online at [email protected].
SCI Reports: 2010-2017
Dirty dirty: The Corrupt Recycling of Contaminated Soil and Debris; Armed and Dangerous – Ten Years Later;Questionable Contracting: No Bids, Lax Oversight and a Monopoly in Online Tax Sales; Gaming the System: Abuse and Influence Peddling in New Jersey’s Used-Car Industry; Inside Out: Questionable and Abusive Practices in New Jersey’s Bail-Bond Industry; Scenes From an Epidemic: Pills to Heroin; New Jersey’s Flourishing Narcotics Trade; Union Leave Costs Taxpayers Millions; Criminal Intrusion in Solid Waste, Recycling; SCI Finds Waste, Lack of Internal Controls at NJSIAA.
You have been involved with the commission in some way for more than 20 years. What two or three investigations do you think have had the most enduring impact?
Seven years ago, the SCI was among the first institutions in government or elsewhere to sound an official alarm about the emerging opioid crisis. This investigation, culminating in a 2013 final report, “Scenes from an Epidemic,” took the public on a harrowing tour of exploding drug-trafficking, addiction and death, from prescription painkillers to heroin. Over the years, the SCI also has been at the forefront of revealing widespread and costly abuses of state and local public employee pension and benefit systems, and its findings and recommendations have led to significant oversight and control in those areas.
Also, throughout its history, the commission has repeatedly examined organized criminal intrusion in the solid waste industry, laying the groundwork for landmark legislation enacted in the mid-1980s designed to keep the industry free of corruption. In response to the SCI’s most recent findings in this realm (2016-17), legislation is pending that would extend state oversight and licensing to elements of the recycling industry as well.
What is the process for determining which investigations to conduct? How many possible topics do you have to choose from each year? Who has the final say on which investigations to pursue?
Investigations conducted by the SCI originate from a variety of sources: tips and complaints from average citizens, information gathered and developed by our own staff, suggestions from public officials and, sometimes, based upon a formal request from the Legislature. Every contact received by the commission is examined on its merits. If the subject matter falls beyond the SCI’s statutory jurisdiction, or a determination is made that another agency or office of government could more appropriately handle it, a referral is made.
Final decisions on what we investigate rest with our four-member commission governing board. Matters brought to our attention over the years that have evolved to form the basis for actual investigations comprise a wide spectrum. A combination of citizen complaints and federal referrals, for example, led to a series of SCI findings of waste, abuse and corruption in new-home construction and inspections. In another matter, routine staff inquiries resulted in a major investigation of corruption and abuse in New Jersey’s bail-bond industry. Further, material facts provided by members of the Legislature led to an investigation of waste and mismanagement in the state’s leading high school interscholastic sports association.
SCI reports: 2000-2009:
Waste and Abuse in Local Government Employee Compensation and Benefits; Gangland Behind Bars: How and Why O.C. Street Gangs Thrive in NJ’s Prisons and What Can Be Done About It; Alarming Contracts in the Purchase of Fire Trucks in New Jersey; Weaknesses in the procurement of Electronic Voting Machines; Higher Education: Vulnerable to Abuse; Charity Care: An Ailing System; Armed and Dangerous: Guns, Gangs and Easy Access to Firearms Ammunition in New Jersey; Taxpayers Beware: What You Don’t Know Can Cost You; The Gifting of New Jersey Tax Officials; County Clerks’ and Registers’ Offices in New Jersey; The Good, the Bad and the Ugly: New-Home Construction; EZ Pass: The Making of a Procurement Disaster; The Changing Face of Organized Crime in New Jersey; Associated Humane Socties; N.J. Enhanced Motor Vehicle Inspection Contract; Societies for the Prevention of Cruelty to Animals; Public School Roofing Projects.
The SCI initially was created in response to concerns about organized crime. How pervasive is organized crime in New Jersey today, and in what ways has it evolved?
Organized crime is alive in New Jersey, if not altogether well. Prosecutions and self-inflicted wounds in recent years, including the jailing of mob leaders, the undermining of entire crime organizations by turncoats and the crippling effect of factional strife, have clearly diminished the scope and influence of traditional organized crime, i.e., as portrayed by Hollywood and shows like “The Sopranos.” That said, the demand for illicit goods and services provided by these criminal enterprises has not diminished, and there is still a lot of money to be made. Thus, you see remnants of La Cosa Nostra still involved in lucrative illegal sports gambling, labor racketeering, loansharking, solid waste and related old-school activities, along with various forms of health-care fraud, opioid pill-mill operations and financial and computer frauds.
Meanwhile, the vacuum left by the old mob’s decline opened the door for “non-traditional” crime groups from eastern Europe and the Balkans, the former Soviet empire, Africa and Asia, not to mention the transnational drug cartels that feed off the ever-growing demand for illicit narcotics. One of law enforcement’s biggest concerns is the nexus between these criminal groups and international terrorist organizations operating in the post-9/11 environment. And at ground level here, the whole criminal gang picture is in flux with the rise of a multitude of fractured “hybrid” neighborhood youth gangs fomenting chaos on urban streets. So, broadly defined, “organized crime” has changed, but it has not gone away, and the SCI is actively engaged in gathering intelligence and tracking key trends.
SCI reports: 1990-1999
Computer Crime; City of Orange Township; Pension and Benefit Abuses; Borough of Seaside Heights; Contract Labor — The Making of an Underground Economy; New Jersey Detective Agency; New Jersey School Busing Industry; Insurance Interests and Licensure of Insurance Commissioner Andrew J. Karpinski; Russian-Emigre Crime in the Tri-State Region; Casino Control Commission; County Clerks’ Trust Funds; Garfield School District; N.J. Marine Sciences Grant and Sham Retirement of E. Brunswick Teacher; Organized Crime in Bars Part II; Borough of Jamesburg; Marlboro State Psychiatric Hospital; Nursing Home Certificates of Need; Point Pleasant School District; River Vale Recreation Department; Medical Provider Contracts; oney Laundering;Belleville Township; Criminal Street Gangs; assaic High School Print Shop; uality Education Money to Lyndhurst; Fiscal Year’ 89 Budget Over-Expenditures Division of Development Disabilities; Local Government Corruption Overview; Solid Waste Management; New Jersey Transit’s Bus Subsidy Program; Organized Crime in Bars; Motor Fuel Tax Evasion; Video Gambling; Afro-Lineal Organized Crime; Garment Industry; Overview of Organized Crime; AIDS Prevention Program — State Department of Health.
The SCI has four commissioners – two appointed by the governor, one by the Senate President and one by the Assembly Minority Leader. What is the role of the commission members? Do they have a say in which investigations to pursue, and are they privy to the findings of the ongoing investigations?
The SCI’s four commissioners serve as the agency’s governing board. By law, no more than two can be of the same political affiliation, and they serve staggered four-year terms, which means they cannot all be appointed and/or replaced at once. This bipartisan construct, coupled with the fact that the appointments derive from three separate appointing authorities in two branches of government, is a linchpin of the commission’s unique place in the spectrum of government oversight. (For budgetary purposes, the SCI is “in but not of” the Legislature.) As to their powers and operational authority, the commissioners meet bimonthly and give full direction pursuant to the SCI’s statutory mission. With input from senior staff, they determine by resolution what to investigate and are actively involved in every case from start to finish. For example, they preside (usually individually) over private executive session hearings at which subpoenaed witness testify under oath. They also initiate and participate in the agency’s ongoing internal discussion of matters that might warrant further inquiry. In our investigations, we do not “target” individuals but rather seek to examine systemic problems that may be exemplified by individual actions. Upon completion of an investigation, the commissioners thoroughly review the draft report and vote to authorize its public release.
What is your annual budget and how many staff members do you have? How has that changed over time?
Relative to the entirety of state government, the SCI is a comparatively small agency that currently employs 42 people on an annual budget of $4.6 million. The bulk of the employee roster consists of investigative personnel, including special agents, investigative accountants and intelligence/investigative analysts. We are actually doing more with less, both in real economic terms and accounting for inflation. Ten years ago, the SCI had a slightly larger annual budget of $4.9 million with 41 investigative personnel.
SCI reports: 1980-1989
New Jersey School Boards Association; Cocaine; Nursing Home Property Cost Reimbursement System; Solid Waste Regulation; Check Cashing Industry; Union Lake; Impaired and Incompetent Physicians; Organized Crime-Affiliated Sub-Contractors on Casino and Publicly-Funded Construction Projects; State Racing Commission’s Regulatory Deficiencies; Probes of N.J. Division of Motor Vehicles; Organized Crime in Boxing; Excessive Spending and Near-Insolvency of the Newark Board of Education; Misconduct and Inappropriate Controls in the Newark School Security System; Abuse and Misuse of Credit Controls at Gambling Casinos; Improprieties in Leasing of State Lands at Great Gorge in Sussex County to a Ski Resort; Inadequacy of Laws and Regulations Governing the Boxing Industry; Inappropriate Activities of the Lakewood Municipal Industrial Commission; Misconduct in the Operation of Certain County and Local Sewerage and Utility Authorities; Mismanagement of the New Jersey Housing Finance Agency; Organized Crime Labor Relations Profiteering at Mass Housing Construction Sites; Organized Crime Infiltration of Dental Care Plans; Truck Unloading Practices; Questionable Public Insurance Procedures <EL,5>
There have been repeated attempts, dating back to Govs. Brendan Byrne and Christie Whitman, to slash the SCI’s budget or restrict its role. In 2010 and again in 2016, Gov. Christie sought to merge the SCI with other agencies under the umbrella of the Comptroller’s Office, effectively dismantling it. In your view, why would it be a mistake to disband the SCI? What can the SCI do that other agencies can’t?
The SCI’s unique governance structure and autonomous statutory authority is what undergirds its credibility as an effective tool of government. To lose that tool would be a very serious blow to the body politic, the taxpaying citizenry — especially in an era of diminished oversight by other institutional sectors, such as the news media. Aside from that, the SCI is the only government watchdog agency expressly authorized by statute to keep an eye on the criminal justice system. We have demonstrated the value and importance of this part of our mission repeatedly with investigations that have kept the public and its elected representatives apprised of everything from trends involving organized crime to corruption in the bail-bond industry to the intrusion of criminal street gangs into the state prison system. And speaking of value, we’re in the business of saving taxpayer dollars. In other words, we pay our own way. We can easily demonstrate that the amount of taxpayer savings attributable to the findings of our investigations over the years far exceeds what is spent to support our annual budget – a bargain, especially when you consider that the per capita cost of the SCI’s yearly budget is about 50 cents a year, less than a penny a week per New Jerseyean.
You have been acting SCI executive director for 18 months. Would you like to have the “acting” eliminated from your title? What is the process for naming a permanent director, and what has slowed that process?
Decisions on hiring and designating senior management staff, including the position of executive director, rest solely with the members of the commission.
In the early years of the SCI, it wasn’t uncommon for it to release three or four reports a year. Over the past decade or so, the SCI has only averaged about one a year. Why? Do the SCI’s activities extend beyond the reports it issues?
It’s important for the SCI, as well as all taxpayer-funded agencies, to address this question: “What have you done for me lately?” In 2016, the commission tripled its public productivity over the previous year, including an extensive public hearing into corruption and organized crime in the recycling of dirt and demolition debris, and two investigative reports on other matters. We plan to at least replicate that record for 2017 and beyond. Over the past two years, we have also launched an initiative to follow up on prior investigations. What happens when the SCI’s findings and recommendations generate action? What are the consequences when they do not? What else should be done based on changed circumstances? If a matter warrants investigation in the first place, it certainly merits re-evaluation with the passage of time. And given the complex investigative effort invested upfront, it makes little sense to leave the product of that work on a shelf under a cover of dust. Accountability in government demands more than that, and we are trying to do our part in that regard. Furthermore, people should know that the SCI’s extensive behind-the-scenes investigative work and ongoing law enforcement partnerships point up the fact that the true measure of its overall performance far exceeds the findings and results of broader investigations, hearings and reports completed in any given calendar year.
SCI reports: 1969-1979
Inadequate Sudden Death Investigations; Injury Leave Practices; Boarding Home Abuses; Misuse of Public Funds in the Operation of Non-Public Schools for Handicapped Children; Organized Crime in Atlantic City; Casino Gambling; Prison Furlough Abuses; Land Acquisition Deals in Middlesex County; Investigation of Medicaid Abuses; Lindenwold Municipal Corruption; Conflicts of Interest at Delaware River Port Authority; Pseudo-Charitable Firms Misusing Handicapped Fundraising; Narcotics Traffic and Drug Law Enforcement; Passaic County vocational-Technical School: Misuse of Funds and U.S. Surplus Property; Improper Municipal Planning, Zoning Procedures; Workers Compensation Frauds; Bank Fraud in Middlesex County; Office of the Attorney General of New Jersey; Organized Crime in Ocean County; Stockton College Land Acquisition Deals; Point Breeze Development Frauds, Jersey City; Misappropriation of Public Funds, Atlantic County; Building Service Industry Abuses; Corrupt State Purchasing Practices; Hudson County Mosquito Commission Embezzlements; rganized Crime Control of Long Branch; County Prosecutor System; Monmouth County Prosecutor’s Office-Misuse of Funds; Garbage
The most recent report, “Dirty Dirt: The Corrupt Recycling of Contaminated Soil and Debris,” was released in March. It was a follow-up to a 2011 report. Last August, you testified before a Senate committee on a bill that incorporated some of the recommendations contained in that report. To date, the bill hasn’t even received a hearing in either the Senate or Assembly. Is that frustrating?
As an investigative fact-finding agency that routinely suggests ways to fix the systemic problems its identifies, the SCI does not have the authority to carry those recommendations to fruition. That power rests elsewhere, and in the matter of our “dirty dirt” investigation, we were gratified with the introduction of legislation (S-2306) that would address all of our key recommendations in that matter. Primarily, the bill would take the major step of subjecting dirt brokers and others involved in the business of handling and recycling soil and demolition debris to the same licensing and oversight requirements under the law as it applies to solid waste. We are confident that the stark facts we gathered and put on display in this case — contaminated debris, some of it tainted with cancer-causing agents, covertly dumped at inappropriate and unregulated venues near waterways and residential areas — will be sufficient to bring momentum to this legislation. Without at least this change in the statutory framework, criminal elements will continue to profit from polluting New Jersey at will.
Which reports over the past four or five years have yielded concrete action?
Every SCI report over the past five years generated some form of action by legislators, regulators and/or law enforcement authorities. The 2013 “Scenes From An Epidemic” investigation of prescription pill and heroin abuse was, among other things, widely used as an educational tool and gave impetus to New Jersey’s war on addiction, including improvements in the state’s Prescription Monitoring Program (PMP). The 2014 report “Inside Out: Questionable and Abusive Practices in the Bail Bond Industry” resulted in legislation to crack down on unscrupulous elements of that industry. The 2015 report “Gaming the System: Abuse and Influence Peddling in N.J.’s Used Car Industry” resulted in a number of federal criminal referrals. The 2016 report “Questionable Contracting: No Bids, Lax Oversight and a Monopoly in Online Tax Sales” resulted in legislation to establish standards for electronic tax lien sales. The 2016 follow-up report “Armed and Dangerous — Ten Years Later” resulted in legislation aimed at enhancing law enforcement’s ability to track handgun ammunition sales. As referenced above, the “Dirty Dirt” investigation (2016-17) resulted in a comprehensive bill to require licensure and oversight of elements of the recycling industry.
LEE SEGLEM was appointed acting executive director of the State Commission of Investigation in October 2015. He has been on commission staff since 1994. In his previous position with the commission, he was assistant director for operations, where he supervised investigative teams, administered the production and completion of investigative reports and handled internal and external agency communications. Prior to joining the commission, Seglem was managing editor of New Jersey Reporter magazine. He is a former Statehouse bureau chief for Gannett News Service.
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