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I Forgot to Ask Them to Be Honest

I never learn.

I’d spent almost two weeks of bitching about the total news blackout of information coming from Trenton City Hall about the scandal connected with the theft of Millions of Dollars of money intended for tax payments to the State and Federal Governments by the City’s former payroll vendor Innovative Payroll Services (IPS). I complained in print that not one word had been spoken by any Trenton official, while the local press was full of stories reporting rumor and speculation. At last Thursday’s City Council session, I spoke in person ab0ut the complete lack of openness about the scandal, taking Council members to task for failing to live up to their grand promises of transparency.

I even read to the Members a quote from the July 1 2014 Inaugural speech of current Council President Alpha Phi Alpha Brother Zachary Chester, when he promised Trentonians “We will do things transparently. We will do things in the open. We will let Trentonians know what their government is doing. This is my pledge to you.” I challenged the Council that night, “This evening is a test of that pledge. Frankly over the last two weeks the City has done a pretty poor job of giving us the transparency that you and the Mayor promised us. You have a chance – no, more than that, you have an Obligation – to start to make that better tonight. Before you and your colleagues vote on Resolution 16-60, you must end the coverup of the last two weeks. You must explain to us how we got here.”

That was OK, as far as it went. However, all that time I asked the Mayor and Council to talk to us, and explain to us, I forgot One Little Thing.

I forgot to ask them to be honest.

Silly me, I know! Who’d have thought that needed to be specifically requested? I guess I know better now.

Since Thursday, the Wall of Silence around City Hall has been breached, twice. Once on Thursday by Trenton Mayor Eric ZT Jackson, in remarks made to Trenton Times reporter Cristal Rojas. And the second time by Council President Brother Chester, in on-camera comments featured in a story filed by WPVI-TV reporter Nora Muchanic on Friday night. In both of these stories, both Mr. Jackson and Mr. Chester made statements that are flat out wrong and misleading. For the damage done to their credibility and truthfulness, they – and the public – would have been better served had they just continued their silent stonewalling.

In his statement to the Times, Mayor Jackson explained that the City’s own workers discovered that there was a problem with missing money. “Staff internally reconciling, looking at recordkeeping documents said something looked awry and began to look further and said to their director, ‘Something doesn’t look right here. We’re finding some inconsistencies’ and they kept elevating [the problem to upper levels of management],” he said.

We know this to be wrong. On several occasions throughout 2015, at least as early as April 24, the State of New Jersey notified the City – in writing – that tax payments normally made on the City’s behalf by IPS to the State were missing.The State notified the City of a problem. Not the other way around.

When asked if both State and Federal taxes were involved, the Mayor said, “We believe it’s just the one agency,” meaning the State, which up to that last week had been the only subject of speculation in the press.

The Mayor on Thursday stated that he believed that “just the one agency” – NJ – was involved, even though the very next day the City filed a lawsuit in United States District Court alleging that IP stole $3.4 Million Dollars in city funds intended as tax deposits to be paid to the US Internal Revenue Service. The Mayor had known for at least close to two months that more than one government agency had been defrauded by IPS. By the time the Mayor spoke to Ms. Rojas of the Times, the City had received a letter from IPS’ lawyer admitting that the company and its owner had stolen the City’s money for their own purposes.

Mr. Jackson also described a sequence of events from the internal discovery of a problem up to reporting it to law enforcement that now seems very unlikely. On Thursday, Jackson told the Times “When it was brought to his attention, his administration double-checked to make sure there weren’t any omissions or mistakes made by employees before meeting with representatives from IPS. The city then alerted the authorities. ‘We took immediate action to make sure that we knew what we knew and what we thought what was going wrong, so at that point, we went to law enforcement and we put it in their hands,’ Jackson said.” [Emphasis mine - KM]

We now know that the City learned about the matter of the missing IRS money – putting aside its knowledge of missing State money – in “late December,” according to the Times’ account of the City’s lawsuit. Yet the City did not contact the Mercer County Prosecutors Office until early February. A lapse of four to six weeks can’t be considered “immediate action” by any charitable interpretation of the phrase.

So to recap, Mayor Jackson gave an incorrect account of the discovery of the problem. His stance on how extensive the problem is was wrong. And his characterization of how quickly the City involved law enforcement authorities begs further explanation about what his Administration did when it sat on the problem for at least a month. All in all, not a real good showing for the guy who told us as a candidate that “the next mayor has to lead by example. Municipal government is only as strong, ethical and transparent as its leader.”

But I wrote all about the Mayor’s comments on Friday and Saturday. Why go over them again? In order to illustrate that Mr. Jackson IS leading by example. Just not exactly in the way he promised us two years ago. Mr. Chester is nicely following the example set by the Mayor in making misleading and dissembling public on-the-record statements to the press.

In a news report that aired on 6ABC Friday evening, and which I only saw and read about yesterday, Chester gives the impression that he doesn’t know many of the details of the story that he had been closely involved in for several weeks, if not longer. He told Nora Muchanic, “Not knowing what the amount is, whether it’s a million (dollars), $800,000, that’s a million or $800,000 that we don’t have in our budget.”

That is an extremely misleading statement. Once again, Friday was the day the City filed its lawsuit. The City – and Mr. Chester – damn well knew that IPS stole money intended for the Feds, and money intended for the State. He’d chaired several Executive closed Council sessions in which the Administration discussed the matter before the full Council, and he knew well before his colleagues about the problem, according to one of those colleagues, Phyllis Holly-Ward. He knew the details of the lawsuit. By the time he spoke to Muchanic, he DID know “what the amount is,” and that is was far in excess of “a million or $800,000.”

Since to date Mr. Jackson and Mr. Chester are the only two officials to have made any public comments on this whole mess, and since those comments are all flawed, misleading and wrong, what do we make of this?

Last week we were led to believe that the silence coming from City Hall was necessary to keep the details of an ongoing law enforcement investigation secure and confidential. Sure, there are still investigations ongoing on the state and federal level, but there is no mystery or air of confidentiality left. As of Friday, we know that the guilty parties owned up to stealing the City’s money.

On February 3rd – before the first news story had appeared in print, and weeks before the City made its first comments – IPS’ lawyer wrote,

IPS further acknowledges that it is obligated to the City of Trenton in the amount of the remitted taxes, as well as any interest and penalties which taxing authorities may assess against the City as a result.

BOOM! Case closed, in other words! That public revelation on Friday transformed this case from a “Whodunit?” into a “Howdowegetitback?” The crime has been solved, now the process of asset retrieval will see how much of the City’s millions can be recovered to settle our debt with the State and the IRS. And no doubt some of those funds are gone forever, and there will be remaining balances that we’ll owe to the Feds and NJ. That will probably come from the pockets of the city’s taxpayers.

Since this crime was basically solved before it became public, there are a few conclusions to be drawn.

The weeks of stonewalling and cover-up came from City Hall not to serve the needs of a criminal investigation, but to prevent political embarrassment. When those weeks of silence ended, the first words we heard from our Mayor and Council President have been incomplete, misleading, lies.The City of Trenton put a lid on this problem as long as it could because making it public would mean exposing major failures by employees of the City and members of this Administration.

The primary guilt for this theft, of course, falls on John Scholtz, the owner of IPS, and his daughters, by their own admission.

But they were able to steal SO much for SO long from the City of Trenton due to major long-term failures of policy, procedures, judgment, and oversight. The details of these we do not yet know, but we must find out what happened. We know that multiple warning signals were received, in the form of written notices from the State that were ignored. The reasons for this must come to light. There must be accountability. Scholz and his daughters are the thieves here, but they were aided and abetted by the City of Trenton.

Seen in the same light as other recent lapses in policy, procedure and judgment, such as the hiring of an unqualified IT vendor whose contract will cost millions of dollars more than perfectly good alternatives would have; and the Federal designation of the City as a “high-risk grantee of federal funds” after numerous problems administering US Department of Justice grant funds were found in audits; this latest problem indicates that there are serious and systemic problems in the administration that are not being addressed.

The complete – and totally unnecessary – lack of transparency, candor and honesty shown by the City over this last month shows that the folks running this City are in deep denial about how badly they are fucking up. What will be next to go wrong?

2 comments to I Forgot to Ask Them to Be Honest

  • ed.w

    If you get a chance see the Madoff movie http://www.imdb.com/title/tt4035574/

    My favorite scene is when they are auditing his fund and the investigator ask for his DTC account number (Depository Transfer Check)which he supplies knowing that if they check would expose the Ponzi scam.

    of course, as in real life, no one bothered to check, the rest is history.

    btw, the 186,000 was charged to last years budget, sigh

  • Kevin

    I will watch for it.

    These guys are definitely cut-rate, low-rent Madoffs. That one of their prized acquisitions was a Bentley that may have been owned by Paris Hilton says volumes.