We are close to two full weeks after the first press reports that up to $8 Million Dollars of Trenton municipal funds paid to Innovative Payroll Services for the purpose of tax payments has gone missing. Two weeks and no one in officialdom is saying a word. The Mercer County Prosecutor’s Office is conducting a criminal investigation and is clamming up, understandably. The NJ Treasury Department stated that due to confidentiality laws between taxpayers (such as the City) and the State, they can’t say anything. A spokesman for the state wrote to the Trentonian nearly two weeks ago, “I would refer you to the city’s communications office.” And the City isn’t saying anything.
For the life of me, I don’t know why. It’s not as if it’s any longer a secret that there are funds missing. At this point, why pretend nothing’s happened? After all, whoever took the money knows what happened! It’s no secret to them! Of course, there are things you don’t say during an investigation. You don’t make statements accusing anyone in particular. You don’t disclose any forensic information that could be used as evidence in any future criminal trials. That’s common sense.
But a white collar crime of the scale that is being publicly discussed in the media cries out for disclosure. A responsible Administration, at the outset of this problem, should have (and there is still time, guys!) publicly answered the following questions:
- How much is missing? To whom were the payments due? The State? The USA? Both?
- Over how long a period have payments not been made? When was this problem first suspected? What’s the timeframe of how the discovery was made?
- Was the payroll service bonded for any of this loss? If not, how will the money be replaced? Taxpayers are responsible for missing and/or late payments. In the absence of a payroll surety bond, how will the missing money be repaid?
- What assurances are there for City employees, on whose individual behalf these payments were made, about their personal responsibility for missing tax payments? How will their 2015 tax returns be affected?
- To what extent, if any, has the recent transition to a new Information Technology vendor affected this problem? The old vendor, ADPC, had specifically identified significant problems in the payroll processing systems in a June 2015 review they had prepared for the City (h/t to Jim Carlucci for that tip). The timing is certainly suspicious: June 2015 – ADPC spotlights payroll system problems. November 2015 – ADPC is replaced by a new IT vendor. February 2016 – Missing tax monies come to light, a problem that could stretch back several months.
- What steps are being taken to ensure this won’t happen again? What changes will be implemented? Who takes responsibility? Who is accountable?
However, we are not hearing anything about any of this. The City’s News and Announcement page is full of press releases and announcements concerning either ceremonial fluff, or matters that the City doesn’t really have any control over in any case. But any useful information about embezzlement of $8 Million Dollars? Crickets.
No one has even had the decency to get up in front of a microphone and say something like, “Due to the ongoing nature of this investigation, we cannot make any statement at this time.” Neither the Mayor, nor the Business Administrator, nor Police Director, nor City Attorney, nor Council President, nor anyone else has said anything to the employees or citizens of Trenton. The only thing we’ve gotten is a “decline to comment” statement from the city’s press officer Michael Walker.
And that is just wrong.
So, just what have the people in City Hall been doing these past two weeks? With the Prosecutors Office and other law enforcement on the case, what can they all have been doing?
Covering their collective asses, no doubt. Lawyering up, maybe? Or perhaps boning up on the particulars of White Collar Crime, and preparing for the inevitable fallout, once the dam breaks and the real story comes out.
As it no doubt will. Sooner. Or later. The truth will out.
Even though no one in Trenton may bear any criminal responsibility for what’s happened – although, given the total news blackout imposed on this matter, that cannot be ruled out – there may be civil liability here, and accountability may yet be imposed on individuals currently in the employ of the City of Trenton. So there’s a lot to learn! Thankfully for those on East State Street, there is a lot of information out there about this non-violent financial crimes.
Here’s a link to a handy primer on the subject. found at random after a quick Google search of the terms “covering up white collar crimes.” It’s the very first result that came up, with the handy title, “5 Rules for Protecting Yourself in a White-Collar Criminal Investigation.”
A quick summary:
1. When you hear the corporate Miranda warning, it’s time to get your own lawyer.
Most executives assume their communications with corporate counsel about a legal problem are privileged, and that they are free to talk about problems at the company. They would be only half right… But the reality is that you likely need to obtain your own lawyer who will look out solely for your interests. Company counsel will never say upfront that you need your own lawyer because his or her goal is to elicit information.
2. Everything you say over email can and will be used against you.
Another rule in day-to-day behavior that will help you steer clear of white-collar prosecutions is to be careful about what you say over email. Know this fact: Virtually every email you send is preserved somewhere and will remain available to the government for years to come… Delicate subjects should be handled face-to-face or via telephone; avoid locker room talk over email; and assume every email you send will be read later in the worst possible light. [Hmmm, is that why no one in City Hall returns my emails? Mayor Jackson has never replied to anything I’ve written him. Just wondering.]
3. Be wary of discretionary accounting.
Don’t assume that just because you are not responsible for accounting, you can’t be charged with accounting fraud. If accounting decisions are important to the success of your business, make sure you get clear guidance from the experts on what information needs to be disclosed to the accountants and auditors.
4. If something doesn’t feel right, it probably isn’t.
Many white-collar criminal defendants can pinpoint a definitive moment in the past where they thought something was amiss in their business dealings, and they wanted to speak up, but for one reason or another, decided to stay quiet. Inaction can lead to trouble just as easily as enthusiastic misconduct. Prosecutors do not limit their ire to the architect of a crime; rather, they look to ensnare everyone who was complicit… If something feels shady or seems too good to be true, it almost certainly is. Trust your instincts and affirmatively remove yourself from the situation.
5. The attempted cover-up is usually worse than the crime.
Think of Martha Stewart or Barry Bonds, who were convicted not for the crimes that initially led investigators to their doorsteps, but for their attempts to cover up their actions.
A failed cover-up attempt often becomes the focus of the prosecution because it is easier to prove than the crime, and because the government can use the cover-up as a proxy for criminal intent.
This may all be hyperbole. There may likely be no criminal liability within Trenton’s city limits. But at this point in time, there really is no reason for the continuing, and frankly contemptible, silence on the part of the City of Trenton.
What started as rumors in print about a serious matter of missing public funds is beginning to smell like a cover-up.
This refusal by any of the city’s public officials to speak to the matter makes me think that rather than seeking to inform the public and reassure them that any problem is being addressed, the Eric Jackson Administration is embarking on a cram course on Responsibility Avoidance.
It’s time to level with the public. Now.