Former Hoboken City Officials Rebut Charges of Overbilling by Lawyers

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Former Hoboken City Officials Rebut Charges of Overbilling by Lawyers

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Posted by When Hoboken was a prairie. . . on February 10, 2004 at 19:00:23:

Former Hoboken City Officials Rebut Charges of Overbilling by Lawyers

Jim Edwards
New Jersey Law Journal
02-09-2004

The former clients of lawyers for the city of Hoboken have produced a detailed, check-by-check rebuttal of accusations that they signed off on dubious, overbilled contracts.

According to their 61-page analysis -- which drills down to individual payments complete with check numbers derived from city records -- it may be that the lawyers actually saved Hoboken money.

The competing sets of claims followed former Mayor Anthony Russo's indictment last year for allegedly taking a bribe from a lawyer in return for a contract. The billing review was spurred by an unrelated accounting audit that raised questions about the city's contractors.

The billing flap started in December, when Hoboken Corporation Counsel Joseph Sherman invited county and federal prosecutors to examine $1.3 million in bills by three sets of lawyers who made campaign donations to Russo.

The lawyers appeared to have billed beyond their contracts, or received double contracts to do the same work running at the same time, or to have been paid without contracts, city officials alleged.

"Every judge in the state has seen this thing. I can't go into a courtroom without getting asked about it," says Arthur E. Balsamo, one of the accused lawyers, regarding the allegations. The Cliffside Park solo practitioner denies he worked without a contract, and he hails the detailed rebuttal.

The two former Hoboken officials responsible for the analysis say the allegations are simply political mudslinging designed to make Hoboken's new mayor look good in comparison with the old one.

Former city chief financial officer George De Stefano and former business administrator George Crimmins say they spent three straight days in the city clerk's office pulling out billing and contract records. They provided the Law Journal with copies of what they found.

All the payments made to the accused lawyers appear to be legitimate, they say. There are no missing contracts, and much of the "overbilling" is reimbursable expenses that should not have been counted against their contract fees, they say. Once those are factored out, the pair claims, two of the attorneys actually billed less than their contracts called for.

Robert Murray of Murray, Murray & Corrigan in Little Silver, received a $325,000 contract to act as Hoboken's general counsel, and an $85,000 contract to act as labor counsel -- both contracts for calendar year 1999. However, halfway through 1999, Murray received a second set of identical contracts for the same amounts of money, doubling the value of his business to $820,000, according to De Stefano and Crimmins. The second contract was for calendar year 2000, they note.

By June 2001, Murray had billed the city for $859,168, the pair's analysis shows. An overbilling? Not at all, they say. Of that sum, about $21,000 was for reimbursable expenses and $18,395 was a payment from a prior contract in 1998. Once those are taken away from the total, Murray brought his bill under the line by $146.25.

Murray's bills have been a particular focus because he occupied the positions of corporation counsel, labor counsel and counsel to the school board simultaneously. During the same period, Russo is accused of taking a $1,500 bribe from former Kearny Mayor Leo Vartan, a solo practitioner who handled a school board lobbying project in Trenton.

The allegations, and the Law Journal's coverage of them, "has damaged and tarnished the reputation of creditable law firms as well as the professionals of the prior administration," De Stefano wrote in a cover letter to the analysis.

Murray did not return a call for comment; nor did his lawyer.

It is a similar story with Carbone & Faasse of Ridgewood. The firm was retained for two positions, representing the planning board and as counsel on waterfront development. Like Murray's firm, Carbone & Faasse's $175,000 contract for 1999 was renewed for the same amounts six months into the agreement. The firm continued to receive checks until July 2001, the records show.

Although the doubled-up deal called for total payments of $350,000 over the two years, the firm eventually billed $395,463, according to the De Stefano and Crimmins analysis. But again, once reimbursables and prior-year payments are removed, Carbone & Faasse underbilled by $26,202, the documents show.

John Carbone did not return a call for comment.

Cliffside Park's Balsamo was the object of the least serious allegations. Although the City Council approved a resolution paying him to serve as Alcoholic Beverage Control Board prosecutor, the city could not find a contract authorizing $18,250 in payments to him. Balsamo himself also managed to lose a copy of the document, he told the Law Journal in January.

The city should have looked harder, De Stefano and Crimmins say, as their digging in the clerk's office revealed signed copies of that contract. "I don't think they looked. I think the clerk they asked did a cursory look and said they didn't find it," Crimmins says.

"Hallelujah!" Balsamo said, in reaction to news that his contract did, in fact, exist, and that the analysis appeared to exonerate him. "It would be nice for something to come out to say I actually didn't swindle anybody."

The only remaining mystery is the timing of the contracts. De Stefano and Crimmins' research offers no explanation for the early renewals, although the payment lists indicate that all three sets of lawyers were paid during both calendar years.

Sherman, the city's corporation council, declines to comment. He has previously said that even if the contracts were awarded as part of a patronage scheme the money is not recoverable as legal work was actually done.

The current city business administrator, Robert Drasheff, did not return a call. Hudson County Prosecutor Edward DeFazio referred the matter to the U.S. Attorney's Office in January, citing the ongoing federal investigation of Hoboken. The U.S. Attorney's office declined to comment last week.

Municipal billing in Hudson County -- and whether it is done honestly -- has a slippery history. In 2003, for instance, Jersey City Mayor Glenn Cunningham accused Lyndhurst's Scarinci & Hollenbeck of overbilling the city's redevelopment agency. A Law Journal examination of the bills, however, indicated that the biggest biller was Teaneck's DeCotiis, FitzPatrick, Cole & Wisler. The former firm is allied with Cunningham's political enemies, the latter is one of his fundraisers.

A similar scenario is playing out in Hoboken. The accused lawyers supported former Mayor Russo -- and De Stefano is Russo's brother-in-law. Their accusers are loyal to the current mayor, David Roberts, who took over in 2001.

And it is not only the Russo faction's lawyers who have been taking flak. At the same meeting in which the billings probe was first aired, Russo's son, Councilman Michael Russo, persuaded the city to ax Clifton firm Pojanowski & Trawinski from the payroll. Its $90,000 contract was for ad hoc litigation. The firm was conflicted in representing the council, Michael Russo claimed, because it represented his election opponents in a balloting challenge.

"This is the Russo machine's way of getting back at the administration," Joseph Pojanowski III said last week. "The Roberts administration felt the probes were just and the Russo people are trying to intimidate and bully their way to stop the investigation of their favorites."

Michael Russo, unsurprisingly, believes the opposite is true. "It's kind of sad that the administration would go to those lengths to charge three different firms, three different attorneys, they're very respected in their communities, in their professions. For a political headline, they're going to defame those people."

Russo claims he's on a mission to rid Hoboken of patronage and graft. When asked if -- given that his father is nearing trial in Newark U.S. District Court on bribery charges -- that might be something of a mountain for him to climb, Russo replied, "Yes and no. I was elected as my own man. ... It's just something I need to be consistent with."

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: Former Hoboken City Officials Rebut Charges of Overbilling by Lawyers

: Jim Edwards
: New Jersey Law Journal
: 02-09-2004

: The former clients of lawyers for the city of Hoboken have produced a detailed, check-by-check rebuttal of accusations that they signed off on dubious, overbilled contracts.

: According to their 61-page analysis -- which drills down to individual payments complete with check numbers derived from city records -- it may be that the lawyers actually saved Hoboken money.

: The competing sets of claims followed former Mayor Anthony Russo's indictment last year for allegedly taking a bribe from a lawyer in return for a contract. The billing review was spurred by an unrelated accounting audit that raised questions about the city's contractors.

: The billing flap started in December, when Hoboken Corporation Counsel Joseph Sherman invited county and federal prosecutors to examine $1.3 million in bills by three sets of lawyers who made campaign donations to Russo.

: The lawyers appeared to have billed beyond their contracts, or received double contracts to do the same work running at the same time, or to have been paid without contracts, city officials alleged.

: "Every judge in the state has seen this thing. I can't go into a courtroom without getting asked about it," says Arthur E. Balsamo, one of the accused lawyers, regarding the allegations. The Cliffside Park solo practitioner denies he worked without a contract, and he hails the detailed rebuttal.

: The two former Hoboken officials responsible for the analysis say the allegations are simply political mudslinging designed to make Hoboken's new mayor look good in comparison with the old one.

: Former city chief financial officer George De Stefano and former business administrator George Crimmins say they spent three straight days in the city clerk's office pulling out billing and contract records. They provided the Law Journal with copies of what they found.

: All the payments made to the accused lawyers appear to be legitimate, they say. There are no missing contracts, and much of the "overbilling" is reimbursable expenses that should not have been counted against their contract fees, they say. Once those are factored out, the pair claims, two of the attorneys actually billed less than their contracts called for.

: Robert Murray of Murray, Murray & Corrigan in Little Silver, received a $325,000 contract to act as Hoboken's general counsel, and an $85,000 contract to act as labor counsel -- both contracts for calendar year 1999. However, halfway through 1999, Murray received a second set of identical contracts for the same amounts of money, doubling the value of his business to $820,000, according to De Stefano and Crimmins. The second contract was for calendar year 2000, they note.

: By June 2001, Murray had billed the city for $859,168, the pair's analysis shows. An overbilling? Not at all, they say. Of that sum, about $21,000 was for reimbursable expenses and $18,395 was a payment from a prior contract in 1998. Once those are taken away from the total, Murray brought his bill under the line by $146.25.

: Murray's bills have been a particular focus because he occupied the positions of corporation counsel, labor counsel and counsel to the school board simultaneously. During the same period, Russo is accused of taking a $1,500 bribe from former Kearny Mayor Leo Vartan, a solo practitioner who handled a school board lobbying project in Trenton.

: The allegations, and the Law Journal's coverage of them, "has damaged and tarnished the reputation of creditable law firms as well as the professionals of the prior administration," De Stefano wrote in a cover letter to the analysis.

: Murray did not return a call for comment; nor did his lawyer.

: It is a similar story with Carbone & Faasse of Ridgewood. The firm was retained for two positions, representing the planning board and as counsel on waterfront development. Like Murray's firm, Carbone & Faasse's $175,000 contract for 1999 was renewed for the same amounts six months into the agreement. The firm continued to receive checks until July 2001, the records show.

: Although the doubled-up deal called for total payments of $350,000 over the two years, the firm eventually billed $395,463, according to the De Stefano and Crimmins analysis. But again, once reimbursables and prior-year payments are removed, Carbone & Faasse underbilled by $26,202, the documents show.

: John Carbone did not return a call for comment.

: Cliffside Park's Balsamo was the object of the least serious allegations. Although the City Council approved a resolution paying him to serve as Alcoholic Beverage Control Board prosecutor, the city could not find a contract authorizing $18,250 in payments to him. Balsamo himself also managed to lose a copy of the document, he told the Law Journal in January.

: The city should have looked harder, De Stefano and Crimmins say, as their digging in the clerk's office revealed signed copies of that contract. "I don't think they looked. I think the clerk they asked did a cursory look and said they didn't find it," Crimmins says.

: "Hallelujah!" Balsamo said, in reaction to news that his contract did, in fact, exist, and that the analysis appeared to exonerate him. "It would be nice for something to come out to say I actually didn't swindle anybody."

: The only remaining mystery is the timing of the contracts. De Stefano and Crimmins' research offers no explanation for the early renewals, although the payment lists indicate that all three sets of lawyers were paid during both calendar years.

: Sherman, the city's corporation council, declines to comment. He has previously said that even if the contracts were awarded as part of a patronage scheme the money is not recoverable as legal work was actually done.

: The current city business administrator, Robert Drasheff, did not return a call. Hudson County Prosecutor Edward DeFazio referred the matter to the U.S. Attorney's Office in January, citing the ongoing federal investigation of Hoboken. The U.S. Attorney's office declined to comment last week.

: Municipal billing in Hudson County -- and whether it is done honestly -- has a slippery history. In 2003, for instance, Jersey City Mayor Glenn Cunningham accused Lyndhurst's Scarinci & Hollenbeck of overbilling the city's redevelopment agency. A Law Journal examination of the bills, however, indicated that the biggest biller was Teaneck's DeCotiis, FitzPatrick, Cole & Wisler. The former firm is allied with Cunningham's political enemies, the latter is one of his fundraisers.

: A similar scenario is playing out in Hoboken. The accused lawyers supported former Mayor Russo -- and De Stefano is Russo's brother-in-law. Their accusers are loyal to the current mayor, David Roberts, who took over in 2001.

: And it is not only the Russo faction's lawyers who have been taking flak. At the same meeting in which the billings probe was first aired, Russo's son, Councilman Michael Russo, persuaded the city to ax Clifton firm Pojanowski & Trawinski from the payroll. Its $90,000 contract was for ad hoc litigation. The firm was conflicted in representing the council, Michael Russo claimed, because it represented his election opponents in a balloting challenge.

: "This is the Russo machine's way of getting back at the administration," Joseph Pojanowski III said last week. "The Roberts administration felt the probes were just and the Russo people are trying to intimidate and bully their way to stop the investigation of their favorites."

: Michael Russo, unsurprisingly, believes the opposite is true. "It's kind of sad that the administration would go to those lengths to charge three different firms, three different attorneys, they're very respected in their communities, in their professions. For a political headline, they're going to defame those people."

: Russo claims he's on a mission to rid Hoboken of patronage and graft. When asked if -- given that his father is nearing trial in Newark U.S. District Court on bribery charges -- that might be something of a mountain for him to climb, Russo replied, "Yes and no. I was elected as my own man. ... It's just something I need to be consistent with."

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