Expanding probe hits office of governor
Budget records sought from 3 administrations

March 01, 2007 Star-Ledger

The federal investigation of the state's secretive budget process reached into the governor's office yesterday, as prosecutors subpoenaed three years of records involving nearly $1 billion in special interest grants.

The subpoenas, covering the administrations of three governors, sought budget records, computer files, reports and letters to determine what the state's top elected officials knew about the so-called "Christmas tree" awards.

The expanding inquiry, which had been focused on one influential senator who headed the powerful appropriations committee, is now looking at other lawmakers as well, including Hudson County Assemblyman Brian Stack (D-Hudson) whose estranged wife received a $100,000 state grant for a day care center she operates, according to two sources with knowledge of the investigation.

Yesterday's action comes less than two weeks after U.S. Attorney Christopher Christie dropped subpoenas on leaders of the Senate and the Assembly seeking information on how the funds were handed out.

Other subpoenas obtained yesterday by The Star-Ledger show that investigators are seeking additional records from the Department of Community Affairs and the state Office of Management and Budget -- which helped administer the controversial grants doled out by the Legislature.

Those with knowledge of the probe have said that prosecutors are exploring whether any lawmakers sought to steer money to organizations that would have directly benefited them or their families.

Christie spokesman Michael Drewniak declined comment yesterday.

A spokesman for Gov. Jon Corzine said FBI agents delivered two subpoenas early yesterday afternoon seeking records dating back to 2004 from the past three administrations -- beginning with former Gov. James E. McGreevey; the brief tenure of Richard Codey, who became governor in November 2004 after McGreevey resigned; and Corzine.

A Corzine aide said the governor would cooperate fully and has asked Attorney General Stuart Rabner to oversee compliance.

"The administration has previously provided full disclosure and cooperation in response to similar requests for this type of information from the media and the U.S. attorney, and we will certainly continue to do so," said spokesman Anthony Coley.

Codey, the Senate president whose leadership office was among those subpoenaed earlier, said his office is cooperating "in every way, shape or form."

McGreevey said he did not have time to comment.

The probe marks only the second time in recent memory that the state's governor has been subpoenaed in a federal criminal investigation, the other being 2004 when prosecutors investigating a political fundraiser dropped one on McGreevey's office.

At issue now are hundreds of millions in secretive, last-minute budget additions that the Legislature approves each year.

The grants -- typically earmarked for projects in legislators' home districts -- have long been known in Trenton as "Christmas tree items," and have been dispensed by lawmakers from both parties for things like road construction, ballfields, school or nonprofit programs. The money has usually been disproportionately distributed in the districts of whatever party controls the Statehouse, records have shown.

There is nothing inherently illegal about the political grant-making, unless a public official pressing for grant money conspired to get something of value in return -- such as a job, a payment, or the trading of a grant in return for campaign contributions.

The Statehouse investigation grew out of an ongoing inquiry into Sen. Wayne Bryant (D-Camden), who was accused last April by a federal monitor of using his position to steer funding to the state's medical university after he received a "no-work" job there.

Bryant was forced to step down from the powerful appropriations committee in the wake of the outcry over the allegations.

The Office of Legislative Services is continuing to fight an earlier subpoena for documents in connection with the case in federal court -- a battle that first brought the widening probe to light.

At least one other legislator has already become another focus of interest in the probe.

A $100,000 state grant that went to a Union City day care center operated by the estranged wife of Assemblyman Brian Stack (D-Hudson) has now come under scrutiny, according to two individuals with knowledge of the investigation who requested anonymity.

Stack, who is also the city's mayor, said yesterday he was unaware that the 2005 grant had raised questions.

"It's pretty cut and dried," said Stack, who has announced plans to run for the Senate this year. "It was mostly for capital improvements. It's among the many grants we were able to seek."

Stack said he and his wife are divorcing, so money that goes to her facility does not help him.

"We haven't lived together for four years," he said.

His wife, Katia Stack, said yesterday she has not received a subpoena, but was not surprised the grants to the day care center piqued prosecutors' interest.

"If they read something in the paper, they're going to look into it," she said.

A story in the Sunday Star-Ledger found other examples of Christmas tree grants by legislators that went to organizations or municipalities that employed them.

Codey this week proposed new rules to reform the budget grab bag.

Under the proposals, a senator must submit requests for budget additions to the appropriations committee at least 21 days before the Legislature on the budget.

Members also will be required to disclose whether they or family members have any business relationship with the grant recipient.

"Adoption of the annual appropriations act is the Legislature's single most important responsibility. It is essential that the public have confidence in our decision-making. Subjecting budget revisions to more public disclosure will move us in that direction," said Codey.

Republicans yesterday continued to sharply criticize the Democratic leadership over the grants. While both parties have used Christmas tree grants while in power, Republicans pointed out that the spending more than doubled under Democratic control, and they sought to highlight Corzine's role in the process.

Senate Minority Leader Leonard Lance (R-Hunterdon) said Corzine bore direct responsibility for last year's Christmas tree process in which $378 million was inserted into the budget by Democrats in the middle of the night.

Corzine removed $33 million of that special interest money with his line-item veto, but preserved the rest, helping break a budget stalemate and end a government shutdown.

Lance said Corzine should have eliminated more of the special interest money.

"The Legislature passes the budget and the governor signs it," Lance said. "And in New Jersey, the governor has the power to line-item out all of these additions if he so desires. That is a power even the president of the United States does not have."