Originally appeared in the Star Ledger on 04/19/01
BY DUNSTAN McNICHOL
STAR-LEDGER STAFF

Acting Gov. Donald DiFrancesco's top aide collected regular payments totaling more than $100,000 last year from the owner of a Trenton lobbying firm that was pressing lawmakers on several issues before the Legislature, including the construction of a sports arena in Newark.

The money was part of an agreement to buy the assets of the aide's lobbying business, which he owned for just two months before he went to work for DiFrancesco in the fall of 1999 as deputy executive director of the New Jersey Senate.

The aide, Jeff Michaels, followed DiFrancesco to the governor's office this year, where he serves as his chief of staff. The payments by former lobbyist Charles "Chip" Stapleton, now a management consultant, came to light earlier this month when Michaels filed disclosure forms required of all top officials who work in the governor's office.

Both Michaels and Stapleton insisted yesterday that the transaction posed no conflict of interest and had been cleared in advance by ethics officers for the Legislature and governor's office.

"Every single contractual review was done so we would be in conformity with every single rule and regulation," Stapleton said.

Tom Wilson, a DiFrancesco spokesman, said there was nothing improper about the arrangement.

Michaels, 36, sold the clients and "business assets" of his firm to Stapleton in October 1999 to clear the way for his return to a top job on DiFrancesco's Senate staff, a position he had left two years earlier to become a lobbyist. The disclosure, which requires the listing of only a range of values, showed that Stapleton paid him between $100,000 and $250,000 during 2000.

Michaels declined to be more specific about the size of the payment, but said he took a substantial loss by accelerating the repayment schedule by at least one year so he could complete the deal before he moved with DiFrancesco from the Senate to the governor's office in March.

"That's what I felt was the best way to give the public the highest level of confidence," he said. "I'm proud of how I handled it. I handled it in the best way."

While Stapleton was making the payments to Michaels, his lobbying firm, Public Affairs Management Group, was lobbying lawmakers on behalf of seven clients that sought or won hundreds of millions of dollars in benefits from the state. The firm was paid $200,000 for that work, according to state records.

Among the clients was Newark Sports and Entertainment LLC, the developers seeking to build the Newark arena. The company paid Stapleton's firm $30,000 last year for the purpose of "convincing the Senate to support the arena project."

Last month, DiFrancesco announced his support for locating an arena in Newark.

Michaels said yesterday he never spoke with Stapleton or his lobbyist about the arena proposal.

"I had no discussions with C.E. Stapleton Associates, Chip Stapleton, on any issue before the Legislature or any issue before the governor's office. Not one," said Michaels.

Peter Eisner, managing director of the Center For Public Integrity, a Washington, D.C., watchdog group, said Michaels' deal with Stapleton posed at least the appearance of a conflict with his role as the top aide to the Senate president and acting governor.

"The appearance is there's an arrangement that creates a special relationship that makes the business of state government have more to do with friendship than it has to do with what may be in the public interest," he said.

Among Stapleton's other clients was Cooper's Ferry Development Corp., which has collected more than $9 million in land and financing from various state entities since 1999 to help build a minor league baseball stadium on the Camden waterfront. Another, Bridgewater Resources Inc., sought changes in state regulations controlling trash handling. And a third, Rent-A-Center, paid the lobbying firm $25,000 to push legislation regulating the rental industry.

"It was completely unsuccessful," Rent-A-Center's senior vice president and chief counsel, Bradley Denison, said of the lobbying effort.

State ethics rules would have required Michaels to disclose his "continuing business relationship" with the lobbying firm and to formally recuse himself from any matters involving the firm's clients once he became an employee of the governor's office, as he did in March.

But as a Senate aide, Michaels was under no obligation to disclose the business relationship with Stapleton, said Albert Porroni, the Legislature's chief ethics officer. The reason, Porroni said, is that the Legislature's disclosure rules apply only to members of the Senate and Assembly.

Rita Strmensky, executive director of the Executive Commission on Ethical Standards, said Michaels avoided any potential conflict when he joined the governor's staff in February because he reported receiving his final payment from Stapleton before he left the Legislature.

Harry Poszycki, chairman of Common Cause of New Jersey, said Michaels' roles as a lobbyist and legislative aide point out the problems that arise when individuals take the "revolving door" between public and private positions.

"It's not going to comfort the public a bit to disclose the revolving door; you need to close the revolving door," said Poszycki.

Denison, the senior vice president for Rent-A-Center, said his company neither sought nor gained any advantage from Michaels' switch from company lobbyist to Senate aide in 1999.

"As far as I know or was concerned, his move into government didn't have any impact on our lobbying effort, nor was it designed to," he said.

Before Michaels and Stapleton became business partners, they had worked for several years together in the top echelons of the state Senate.

From 1992 through 1994, while DiFrancesco was Senate president, Stapleton served as the Senate's executive director and Michaels was his top deputy.

After Stapleton left to form his own lobbying firm in 1994, Michaels stayed on at the Senate through mid-1997. He then left to join Issues Management as a lobbyist.

Two years later, in August 1999, Michaels incorporated his own lobbying firm, Public Affairs Management Group, listing his Hillsborough home as the firm's headquarters, according to state records.

But on Oct. 1, before he had even registered with the state as a lobbyist for his own firm, Michaels returned to the Senate as DiFrancesco's top aide.

At the time, Public Affairs had four clients who paid a total of $64,020 in lobbying fees during 1999, state records show. Those firms were Valero Energy of Texas, Xerox Corp. of Princeton, Rent-A-Center and Newark Sports and Entertainment LLC, the arena developers. Last year, those same clients and three others paid Public Affairs $137,570 in lobbying fees, according to state reports.

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