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Guadagno’s Pension Maneuver in Sheriff’s Office Questioned

guadagno
Credit: Governor's Office/Tim Larsen
Lt. Governor Kim Guadagno.

At the same time as Gov. Chris Christie has been calling for pension reform, his Lt. Governor, Kim Guadagno,has been fighting allegations that she improperly manipulated job titles while serving as Monmouth County sheriff. Her alleged goal was to enable a top deputy to keep collecting an $85,000 pension along with his $87,500 salary. Critics also say that Christie’s Attorney General’s Office and Treasury Department failed to properly investigate the charges

Four years after New Jersey State Policemen’s Benevolent Association President Anthony F. Wieners Jr. filed the first formal complaint calling for an investigation, two state judges last month ordered the release of internal Christie administration documents that not only bolstered the allegations against Guadagno, but raised questions about whether law enforcement or Treasury officials ever interviewed Guadagno about the case.

“The documents show Guadagno made false and misleading statements to enable Michael Donovan to continue collecting pension checks that should have stopped, and that she helped him circumvent the rules by playing around with job titles,” said Mark Lagerkvist, investigative editor for New Jersey Watchdog, who sued for release of the documents. “Based on the information released, there is a real question whether the Division of Criminal Justice did the legitimate investigation that the PFRS (Police and Firemen’s Retirement System) Board asked it to do.”

The release of documents in the Guadagno-Donovan case brings renewed scrutiny to the abuse of the pension system by “double-dippers” who are able to collect both salaries and pensions by exploiting loopholes in New Jersey’s pension system, whose seemingly byzantine rules, labyrinth of job titles, and exemptions for non-career positions are grist for the politically connected. Christie’s ally, Essex County Executive Joseph DiVincenzo, became a poster boy for the system’s excesses when it was revealed that he was drawing a $158,831 salary while simultaneously collecting a $68,861 pension from the same job.

The new attention to the Guadagno case comes at a particularly inopportune time for Christie, who recently cut $2.4 billion in pension payments and is preparing a comprehensive plan to cut the state’s pension and retiree health benefit costs. For Guadagno, it is likely to revive scrutiny of a questionable pension maneuver that she has managed to avoid answering questions about for more than four years -- just as she has refused to answer questions from reporters about Hoboken Mayor Dawn Zimmer’s charge that she threatened to withhold Sandy aid if Zimmer did not back a development represented by a Christie ally, and about whether she intervened to quash an investigation into the Hunterdon County Sheriff’s Office in 2010.

Since February, press officers in the governor’s office, the Attorney General’s Office and the Treasury Department have failed to respond to repeated requests for an interview with Guadagno and for information on Guadagno’s actions while serving as sheriff, the subsequent Treasury Department inquiry, or the investigation by the Attorney General’s Office.

Guadagno’s lone public comment on the case was a November 1, 2013, Associated Press interview in which she said her 2008 hiring of Donovan, a retired investigator, to replace Chief Sheriff’s Officer John J. Cerrato “saved the taxpayers of Monmouth County $50,000 a year, put a uniformed officer on the street, put a well-qualified retired law enforcement officer in his place.”

However, Guadagno’s decision to classify Donovan as a “chief warrant officer,” rather than as “chief sheriff’s officer” -- a position that is required to be in the pension system -- actually cost the deficit-ridden state pension system $227,000 in payments that were paid to Donovan while he was serving in a capacity that should have required him to suspend his pension and reenroll in the pension plan. It also cost the pension system $18,000 in pension contributions that Donovan would have been required to pay had he indeed been named chief sheriff’s officer.

Documents obtained by the Treasury Department and ordered released by Administrative Law Judge Linda Kassekert, included an August 21, 2008, memo by Guadagno announcing that Donovan would replace Chief Sheriff’s Officer Cerrato as “the new Chief of our Law Enforcement Division,” where he would supervise 124 uniformed officers, 24 civilian employees, and an $11 million budget, according to the department website.

The week before the announcement, however, Guadagno was already researching ways for Donovan to get paid by the Sheriff’s Office and continue to receive his pension, the Treasury documents showed. In response to Guadagno’s August 13 request for research into whether other counties used the position of Chief Warrant Officer -- a title outside the pension system -- Sgt. David Finck reported back in an August 25 memo that eight of the other 20 counties had someone in that position.

Guadagno formally appointed Donovan the following month as Chief Warrant Officer -- even though supervising the warrants division was just a small part of the overall responsibilities he had taken over from Cerrato. As Chief Warrant Officer, which was classified as a temporary position, Donovan could continue collecting his $85,000 annual pension and did not have to resume making payments into the pension fund, which he would have had to do if he had been named Chief Sheriff’s Officer.

Guadagno’s downgrading of Cerrato from chief sheriff’s officer to captain and her unusual “hiring of another individual from outside as Chief Warrant Officer, assuming the proposed demoted person’s duties” aroused sufficient concerns among the Monmouth County Board of Freeholders that it was the subject of a September 11, 2008, executive session, whose minutes were included in the Treasury records.

When the freeholders called Guadagno in for questioning in the closed session, “she apologized for not following the proper personnel procedures in hiring the new warrant officer and for not handling the impending demotion of the current Captain in a proper manner,” the freeholder board minutes said. “She went into great detail as to why she needs to hire a new person with authority and why the current Captain cannot continue his current responsibilities.”

What she evidently did not detail to the freeholder board was why Donovan would be assuming Cerrato’s full range of duties -- but not his title as chief sheriff’s officer.

It didn’t take members of PBA Local 314 of the Monmouth County Sheriff’s Office long to figure it out, though. In an anonymous complaint to the Treasury Department in May 2010, one PBA member noted that Donovan, was “working out of title as the CHIEF SHERIFFS OFFICER,” but was listed as the chief warrant officer so he did not have to pay 8.5 percent of his salary toward pension payments, as other officers did.

“Donovan makes 85K and does not pay any of it to pensions. He should pay over 7K. What is more egregious he is still collecting his pension from the prosecutor’s office. With all the pension reform and corruption out there in New Jersey this former law enforcement officer is abusing the public: by collecting a pension, working in a job with a pension and not paying into the pension. THAT IS ILLEGAL!!!!!!!!”

Lagerkvist agreed. “What makes this case different from the usual double-dipping is that you have somebody in high office who made false statements to allow the pension system to be cheated,” he said. “We have a governor in Christie who has taken steps to make the pension system more solvent by eliminating cost-of-living increases and raising pension contributions, but all of that falls on the back of the average worker.” “Meanwhile, you have a privileged class of public officials and their cronies who are allowed to goose countless millions from a pension system facing a $51 billion shortfall. Chris Christie certainly didn’t invent double-dipping, but he did little to stop it. Look at the double-dippers working in the governor’s office -- and think about what his own lieutenant governor did,” Lagerkvist said.

Guadagno already had been elected as Christie’s lieutenant-governor when Wieners, as president of the 33,000-member state PBA, formally complained to the state Division of Pension and Benefits three times between February 2010 and January 2011 “that Mr. Donovan’s status is Chief Warrant Officer, but he clearly is working in the capacity of Chief of the Sheriff’s Department,” according to Division of Criminal Justice documents ordered released by Superior Court Judge Mary Jacobson.

Furthermore, Wieners, who was worried about the growing deficit in the PFRS pensions system, urged the Division of Pensions and Benefits to investigate what he saw as a growing trend of retired law enforcement officers being assigned to management job titles outside the pension system that enabled them -- like Donovan -- to collect both pensions and paychecks simultaneously.

Nowhere is that trend more pronounced that in the 21 county sheriff’s offices. In fact, 17 out of 21 county sheriffs are retired law enforcement officers who simultaneously collect their pensions and their sheriff’s salaries, and 29 of their undersheriffs are also double-dippers who collect both pensions and salaries, according to New Jersey Watchdog. (Donovan was promoted to undersheriff -- a higher exempt title -- in 2011 after Wieners and Lagerkvist began making inquiries.) Chief sheriff’s officers, however, are pensionable positions, which is why the PFRS Board in May 2011 voted to formally ask the Attorney General’s Office to launch a criminal investigation not only of the Donovan pension sleight-of-hand, but also of Essex County Sheriff Armando Fontoura’s altering of retiree John Dough’s title from chief sheriff’s officer to chief warrant officer. The PFRS Board also asked for a criminal inquiry into Union County Sheriff Ralph Froelich’s hiring of retiree Harold Gibson, his top deputy, as “clerk to constitutional officer.”

Despite potential conflicts of interest posed by Guadagno’s former status as deputy director of the Division of Criminal Justice from 1998 to 2001, where she had supervised some of those who presumably would now be investigating her, and the political difficulties inherent in asking high-ranking members of the Christie administration to investigate Christie’s lieutenant-governor, neither Christie nor then-Attorney General Paula Dow opted to appoint a special prosecutor or independent investigator. Instead the case was referred to the Division of Criminal Justice.

The handling of the Guadagno case contrasted sharply with Christie’s hiring of Randy Mastro and the Gibson Dunn Crutcher law firm to conduct an investigation of the governor’s office’s involvement in Bridgegate. According to an all-inclusive index of documents related to the Division of Criminal Justice investigation that Jacobson ordered released, the Division of Criminal Justice apparently did nothing but collect articles and documents during the first year in which it was supposed to be conducting a criminal investigation into the Donovan, Dough and Gibson cases.

Finally, on June 14, 2012, Deputy Attorney General Anthony Picione sent a confidential “memorandum regarding the status of DCJ’s investigation” to DCJ Director Stephen Taylor and to Christine Hoffman, chief of DCJ’s corruption bureau.

Jacobson did not order the release of that document -- which would show the extent of the investigation conducted by the division -- agreeing that the confidentiality of criminal investigation files outweighed the public’s right to know in this instance.

A week later, Hoffman wrote a letter to the PFRS Board of Trustees simply stating that the investigation had been closed, but she did not share the findings of the investigation with the police pension board.

It was not until this February -- 20 months later – that the board’s staff shared the letter with the PFRS board members, who were displeased that the letter did not disclose anything about the investigation’s findings.

“If this is closed, when are we going to find out the outcome?” PFRS trustee John Sierchio asked at the meeting. “I just want to know how they came to their conclusion.”

The PFRS Board subsequently voted to ask the Division of Criminal Justice for its case files.

Lagerkvist had already sought the release of all relevant Division of Criminal Justice and Treasury Department records through an Open Public Records Act (OPRA) request. When the state refused, he filed a pair of lawsuits that the Attorney General’s Office fought for months, just as it has fought to prevent disclosure of internal records related to its decision not to pursue the 2010 indictments of Hunterdon County Sheriff Deborah Trout and two of her aides, and the subsequent state takeover of the Hunterdon County Prosecutor’s Office.

Lagerkvist won a partial victory last month with the release of most of the DCJ and Treasury documents he had requested, but noted that the failure of the DCJ index to include any letters or emails requesting information in the case or any notes or transcripts of interviews most likely indicates that neither Guadagno nor other key witnesses were interviewed.

Guadagno and other Christie administration officials have not responded to requests for interviews or comment on the case.

To Lagerkvist, the bottom line on the Guadagno-Donovan case and its handling by the Christie administration is clear.

“What we’re witnessing is a pattern of behavior that appears dishonest, unethical, secretive, self-serving and quite possibly illegal,” Lagerkvist said. “From an administration that supposedly champions reforms, it is also an epitome of hypocrisy.”

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