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This Dog Barked. How Come No One Listened?

As of this afternoon, we in Trenton know no more than we did about the City’s stolen payroll than we did at the end of last week, when the Trenton Times published two stunning articles by reporter Cristina Rojas online Friday. The first, released Friday afternoon, detailed how the City experienced problems with its tax payments to the State of New Jersey throughout most of 2015, and had received multiple frequent written notices from the State about delinquencies totaling hundreds of thousands of dollars.

And then, while readers were still absorbing that news, The Times dropped another story bombshell at 6PM which explained that there is a balance of $3.4 Million Dollars owed by Trenton to the federal Internal Revenue Service. All of those funds, plus those owed to the State, were stolen by the owners of Innovative Payroll Services (IPS), the pay service whose responsibility it was to make those tax payments on behalf of Trenton. The City has filed a civil lawsuit in Federal District Court to seek restitution from IPS. We are told that IPS is insured or bonded for only $1 Million Dollars, far less than the City owes, and for which it is responsible to make good to the State and the IRS.

This case will take a while to fully unravel and resolve. Apart from the court case itself, the fallout within the City of Trenton and the Eric Jackson Administration will no doubt be severe. I don’t have a lot to add from my previous piece on the subject, posted on Saturday. I do, however, want to muse a bit  on one aspect of this matter that – I hope – could be further advanced in our understanding much sooner rather than later. And to do that, I will consult the case files of the smartest forensic detective around. Of course, I refer to Mr. Sherlock Holmes.

In the short story “The Adventure of Silver Blaze,” Holmes and Dr. John Watson investigate the theft of a valuable race horse, named Silver Blaze, from his stable, and the murder of the horse’s trainer. Without describing the whole plot, I will just recount that the case is solved when Holmes correctly interprets a key clue. As he tells Scotland Yard’s Inspector Gregory,

Gregory: “Is there any other point to which you would wish to draw my attention?”
Holmes: “To the curious incident of the dog in the night-time.”
Gregory: “The dog did nothing in the night-time.”
Holmes: “That was the curious incident.”

The dog in question lived in the stable, as a watchdog. He would have barked if he saw a stranger, or any action out of the ordinary. But he didn’t bark. He knew the person the person who committed the crime. It was an inside job.

The lesson here? If the dog doesn’t bark, look to the folks at hand for your suspects. But if the dog barks? For the love of God, LISTEN TO IT!!

John LaVelle heard the dog, and listened. LaVelle is the CEO of Logistics Resources International. According to a Trentonian article last Friday by David Foster, Mr. LaVelle had been  a customer of Innovative Payroll Services from 2008, when he started receiving state tax delinquency notices from Pennsylvania, the home state of his company, as well as Indiana, Minnesota and North Carolina, some of the other states in which Logistic Resources does work. According to LaVelle, IPS made several excuses for the late tax payments, mostly blaming the states themselves. David Foster tells us “the notices scared LaVelle enough to stop doing business with IPS in 2014.”

In LaVelle’s own words, “We had to run away from [IPS] as fast as we could. Even after two years we’re still in the throws (sic) of trying to figure out what was paid and was not.” [Emphasis mine - KM]

When John LaVelle started getting those delinquency notices from the states, he knew something was wrong. He heard the dog barking, and knew “We had to run away from [IPS] as fast as we could.”

Trenton heard the dog barking, too. He (in the form of the New Jersey Treasury Department) barked four times in the first half of 2015, with serious delinquency notes each time for hundreds of thousands of dollars.

The dog barked on April 12.

And three times more in early June. On June 5, June 9, and June 12.

That’s a lot of barking.

But no one – No One – in the City of Trenton seemed to listen. Because, on June 18 – the ink was barely dry from those three new notices from the State that month -  the City of Trenton extended IPS’s contract. And during the following six months, IPS stole another $3,400,000 from Trenton, that should have been paid to the Internal Revenue Service.

In fiction, it took a Sherlock Holmes to figure out why a watchdog didn’t bark. It shouldn’t take a genius detective to figure out what’s going on when he does start yapping. It’s a sign that something’s not right. If the dog barks, you listen. You respond. You take action.

John LaVelle responded. He took action. He’s still counting his losses, but he got out from IPS as soon as he suspected something wasn’t right.

Trenton didn’t. The Eric Jackson Administration heard the warnings and failed to recognize them for what they were. In fact, not only did the City fail to respond to these screaming warnings. Not only did it fail to run away as fast as it could. It doubled-down and extended the contract of what by June 18 should certainly have been strongly considered as a serial embezzler. And now we are screwed.

Why did the City ignore these multiple warnings?

How come no one paid attention to the dog?

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