Originally appeared in the Star Ledger on 04/18/01
BY JOHN HASSELL AND RON MARSICO
STAR-LEDGER STAFF

Buffeted by fresh charges of ethical misconduct, acting Gov. Donald T. DiFrancesco declared yesterday he will pursue his campaign for a full term in November, despite growing concern among fellow Republicans and the potential defection of some key allies.

"I'm determined to move forward," DiFrancesco said, responding to a report criticizing his actions as the Scotch Plains township attorney in the 1990s. In the report, disclosed yesterday, two lawyers for the township said DiFrancesco kept his stake in a parcel of land secret while acting to benefit himself, his family and a major developer.

"Everything you've read is not true," he said.

Even as DiFrancesco mounted a vigorous defense and released a busy campaign schedule for today, he came under intense pressure from some county chairmen and party leaders to leave the race. They have become increasingly worried that revelations about DiFrancesco's private business dealings could produce a Democratic rout in November's gubernatorial and legislative contests.

William Dowd, the party chairman in Monmouth County, an important GOP bastion, said he is so concerned that he might take away an advantageous position on the county ballot for the acting governor in DiFrancesco's primary-election battle against Jersey City Mayor Bret Schundler. "The party is at its wits' end," Dowd said.

"I put a great price on loyalty. This is very uncomfortable for me," Dowd said. "But the party is at stake here. There comes a point where we have to say, 'What are we doing here?'"

Dowd complained that the continued spate of stories about DiFrancesco's past business dealings has been harmful, and that DiFrancesco "doesn't seem to be able to get past these allegations."

Another county chairman, who requested anonymity, said party officials are frantically discussing their options. "The party elders are talking to one another," the chairman said. "The only question is whether we have the courage to tell Donnie directly. He's got to get out. I'll tell you, it's fever pitch."

Fueling the GOP angst is a legislative redistricting plan, approved last week, that all but ensures some Democratic gains in the Senate and Assembly, both now controlled by the Republicans. Additionally, campaign finance reports released yesterday showed Democrats with nearly a 4-to-1 fund-raising advantage at this stage of the race.

The DiFrancesco campaign was in full damage-control mode yesterday, beginning with a morning meeting originally scheduled to plan DiFrancesco's official campaign kickoff on Sunday. Aides said it quickly broke up into a series of closed-door sessions focused on whether the acting governor should stay in the race.

The sense of urgency was driven in part by the deadline set by an election law that would allow three officials, already hand-picked by DiFrancesco, to grant his ballot spot to another candidate. The deadline is no later than 48 days before the June 5 primary -- which would be today, unless legislators decided in a special session next week to push the primary back.

In more than two dozen interviews with campaign officials, county chairmen, financial backers and elected office-holders, Republicans conceded that there have been candid discussions about drafting former Rep. Bob Franks to replace DiFrancesco. And one close Franks associate said yesterday that the former congressman is "reluctant but ready" to run if needed.

Other Republicans signaled they, too, would be willing to step forward if DiFrancesco decided to withdraw. Chuck Lietgeb, a spokesman for Assembly Speaker Jack Collins (R-Salem), said the speaker "would listen" if Republican leaders sought to draft him. Yesterday Collins announced he will not seek re-election this year.

Schundler, who hopes that Republicans disaffected with DiFrancesco will rally around his campaign, called on the acting governor to leave the race in light of a story in the New York Times yesterday, which cited a confidential report prepared for Scotch Plains municipal leaders that listed repeated ethical violations by DiFrancesco as township attorney.

The withering seven-page report by two lawyers hired by the township, which was obtained yesterday by The Star-Ledger, cited a pattern of actions that those lawyers said were "clearly improper and replete with conflicts that cannot be ignored or waived."

Asked whether DiFrancesco should withdraw, Schundler said, "I think he should. Frankly, he's not going to appreciate my advice, I presume. But I don't believe Don can possibly win the general election. So where we are is the point where the party has to make a decision."

The GOP, he said, cannot afford to field a candidate whom Democrat Jim McGreevey "can blow to pieces."

At an impromptu news conference yesterday at the Hackensack University Medical Center, where he was surrounded by network television cameras and dozens of reporters, DiFrancesco rejected the calls for him to withdraw. The Times story, he said, was leaked by the McGreevey campaign -- a charge McGreevey denied.

DiFrancesco specifically rejected the findings in the Scotch Plains report that he lobbied local officials to help his brother and cousin reclaim a tract of land the township had foreclosed on after they failed to pay back taxes. The acting governor insisted he recused himself years ago from all issues regarding the property in question, at 2435 Plainfield Ave. He also denied he ever lobbied for a zoning change.

"It's absolutely a lie," said DiFrancesco, who was accompanied by his wife, Diane. "It's not true, so I'm not concerned about it. We've heard it before. We're hearing it now, and we'll hear it again."

DiFrancesco said many people have called him, urging him to stay in the race, and he is fighting harder than ever.

Joseph Kyrillos, the state senator selected by DiFrancesco last week to take over the Republican State Committee in June, predicted that any anxiety among Republicans will dissipate quickly.

"All of this is spurred by Web site rumors and gossip," Kyrillos said. "But support for the governor is solid, and that is not going to change."

The allegations of ethical violations are the latest in a series of reports that have left DiFrancesco with heavy political baggage. Since the state Senate president also became the state's chief executive in January, his campaign has been rocked by disclosures of troubled business dealings and suggestions of conflicts of interest.

Among the issues was a report that the state's largest home builder paid off a $225,000 debt owed by DiFrancesco. The payment was part of a deal that called for K. Hovnanian Companies to make a $100,000 down payment on a $1.54 million parcel of land in Scotch Plains. The land dealings were a focus of the critical report by the township's special counsel.

In an unrelated 1994 real estate transaction that also came to light, four friends lent DiFrancesco $575,000 to help stave off a $1.2 million bank foreclosure. Among those lending him money was Anthony Sartor, a member of the Port Authority of New York and New Jersey and an engineer whose firm has done millions of dollars in state work.

DiFrancesco also came under scrutiny when he released personal financial records showing he earned more than $135,000 in the last two years by investing in more than two dozen lucrative initial public offerings not available to most investors.

And earlier this month, DiFrancesco's nominee for state treasurer, Isabel Miranda, was forced to withdraw following a report that she had been fired from Citibank in 1996 after being accused of misusing her expense account. Critics also attacked DiFrancesco for an arrangement that would have allowed Miranda to serve as treasurer while on leave from her job at U.S. Trust Co. of New Jersey -- despite the potential conflicts.

The drumbeat of bad news for the DiFrancesco campaign has been accompanied by equally discouraging reports from Republican fund-raisers. Yesterday, the Democrats announced they had $9.2 million combined in their various soft- money accounts, while Republicans reported only $2.6 million in the bank.

The upshot, analysts said, is an antsy Republican Party. "There's a growing sense in Trenton -- in the Republican Party -- that as skillful as DiFrancesco has been as Senate president, the job of governor may not fit him as well," said David Rebovich, a political scientist at Rider University. "People are nervous."

Staff writers Ted Sherman, Joe Donohue, Anthony Twyman and Jeff Whelan contributed to this report.

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