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NJ businesses linked to Norcross on path to tax breaks following investigation

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When Phil Murphy hired a team of high-profile attorneys to investigate how the state distributed tax breaks, the move was viewed as a declaration of war on South Jersey’s powerful political machine, led by George E. Norcross III and his longtime friend, the Senate President became Stephen Sweeney.

The hearings of the lawyers, conducted publicly with the feeling of a legal proceeding, uncovered allegations of political favoritism and perhaps even criminal conduct. Her first report focused on Camden businesses linked to Norcross, which has wielded enormous political influence for decades but faces the prospect of diminished power if Murphy’s lawyers expose wrongdoing.

But three years and nearly $14 million later, no criminal charges against any of the five Norcross-affiliated companies have been released.

Three of them have been certified by the state for their tax breaks, although they have not received the required certification for payouts totaling nearly $250 million. A fourth receives his loans. And a Supreme Court judge ruled last month that the fifth company — nuclear firm Holtec International — should receive its award. The country is appealing the decision.

South Jersey power broker George E. Norcross III testifies before the New Jersey Senate Special Committee on Economic Growth Strategies set up in Trenton on November 18, 2019 to review the state's tax incentive programs.

Prior to the lawsuit, Holtec was awarded the state’s largest tax break, $260 million over 10 years.

For Norcross allies, who argued in an unsuccessful lawsuit that the Murphy government was targeting the Camden companies, the results confirm that the companies applying for tax breaks committed no wrongdoing. A South Jersey insider who is familiar with the matter described the investigative panel’s work as “a great public relations campaign they ran that was funded mainly by the taxpayers.”

The Murphy administration has consistently denied any political rationale for establishing the EDA tax incentives task force, saying its work has led to much-needed reforms at the Economic Development Agency, the agency responsible for reviewing and granting tax breaks.

The agency has tightened its controls and recovered $350 million from companies, which “represents a very real savings for taxpayers,” Chief Executive Officer Tim Sullivan said in an interview. “And that number will grow.” An auditor’s audit earlier this month found that the “EDA has made significant progress since its 2019 report that prompted Murphy to set up the task force”.

“While we are disappointed with the Holtec decision, the serious issues uncovered and investigated by the EDA Incentives Task Force went well beyond that entity,” said Michael Zhadanovsky, a spokesman for Murphy. “The task force’s work has brought to light a number of very worrying flaws in the previous administration’s stimulus program.”

Focus on South Jersey

The focus on Norcross related businesses in Camden has always preceded the work of the task force.

Murphy hired the team of attorneys — led by former New York federal prosecutors Jim Walden and Pablo Quinones, and former dean of Rutgers Law School Ronald Chen — in January 2019 after the State Audit Office’s audit found lax oversight and management of had shown tax incentives .

Task Force Special Counsel Jim Walden poses questions to Fred Cole (foreground), NJ EDA Senior Vice President of Operation, testifies during a public hearing on tax incentives in the Baker Trial Courtroom at Rutgers Law School in Newark May 2.  19. Gov. Phil Murphy's task force is investigating tax incentives it encounters while tracking down fraud and abuse.

Murphy had taken office a year earlier critical of the tax break programs, and he’d gotten off to a rocky start with Sweeney and Norcross. Murphy’s legal team, armed with subpoena powers, appeared to offer critics of Norcross the best opportunity for a political newcomer to weaken the South Jersey machinery.

A wealthy insurance broker with a stable of loyal Democrats in Trenton, Norcross has for many years been considered the most powerful unelected official in New Jersey politics — regardless of who the governor was.

He and his childhood friend, Sweeney, were known to do business with Republican Gov. Chris Christie in a way they say helped revitalize the Camden area.

But the design and delivery of tax incentives under Christie seemed to progressives a prime example of doing business in Trenton for the benefit of those politically connected.

Related:NJ Tax Relief Board: ‘Special Interests’ Exercised Influence Then Profited

New Jersey:Savings from a flawed tax break program could save NJ nearly $600 million, research finds

Lawyers at Parker McCay, Run Norcross’s brother Phil Norcross’s South Jersey law firm, had “extraordinary influence,” according to a ProPublica and WNYC series, which also showed Norcross-affiliated companies receiving $1.1 billion “ on the legislation creating the incentive programs tax breaks.

These companies are: Conner Strong & Buckelew, George Norcross’s insurance company; Cooper University Health Care; Holtec International; the Michaels organization; and the shipping company NFI.

In July 2020, the task force recommended that the EDA freeze awards for these and seven other organizations totaling US$578 million. It also made unspecified criminal notices.

At public hearings, some of the Camden companies appeared to have benefited from programs administered by an agency with what the task force put it as “a culture of getting yes.”

Cooper and Holtec have been subjected to a thorough scrutiny. In a six-hour hearing, the task force focused heavily on whether Cooper, a Camden mainstay, was seriously considering moving across the Delaware River to Philadelphia, which would put hundreds of jobs at risk from leaving New Jersey. Norcross is the Chairman of Cooper’s Board of Trustees.

In the same hearing, the task force also addressed apparent issues with the stimulus requests from Conner Strong & Buckelev, the Michaels Organization and NFI. All three companies submitted letters of intent to relocate to Philadelphia. NFI and the Michaels Organization had been approved for $160 million in tax incentives in an agreement with Norcross’s insurance company to share office space in Camden.

Bonuses are likely to be paid

Conner Strong, the Michaels Organization, and NFI were later certified by the EDA for their tax premiums, but not for annual disbursement certification. Last year, the agency approved Cooper’s tax credits, saying in a letter obtained by the Philadelphia Inquirer that it was doing so “given the elapsed time and lack of further development” regarding the allegations against them. Cooper declined to comment.

A spokesman for the three other companies said they and their owners have invested hundreds of millions of dollars in Camden’s future, including nearly $300 million in their joint headquarters, brought hundreds of jobs to the city and hired Camden residents.

“We are pleased that the state has agreed that we have fulfilled our commitments and we look forward to being a part of Camden’s continued renaissance,” spokesman Dan Fee said in a statement.

The task force spent time examining Holtec at another hearing. The company was banned from doing any federal business for 60 days in 2010 following a money channeling program, but its CEO, Kris Singh, confirmed at his request that it had not been barred from state or federal contracts.

Holtec sued the EDA after suspending their tax credits. Last month, a Superior Court judge dismissed EDA’s arguments that it could revoke Holtec’s incentives and ordered the agency to pay the $26 million annual premium. The state’s request for inducements was “ambiguous,” Judge Robert Lougy said, and Holtec made no disqualifying misrepresentations.

Holtec delayed its statement after the court ruling and said it was happy with the decision and looked forward to working with the state and Camden. The EDA is appealing the decision.

Barring a successful appeal, despite the task force’s investigation, four of the five remaining Camden companies are on track to receive the awards, as Cooper has already been approved on his loans. That doesn’t negate the panel’s work, said Sue Altman, director of the New Jersey Working Families Advocacy Group and one of the most vocal critics of Norcross and the tax break.

She said she disagreed with the new tax incentives signed by Murphy last year but was happy with the oversight measures put in place by the EDA.

“Do I wish the outcome were different? Of course,” Altman said, referring to the Camden businesses. “But I’m pleased that it has sparked a conversation and given a voice to people who were previously unheard.”

Dustin Racioppi is a reporter at the New Jersey Statehouse. For unlimited access to his work on the New Jersey governor and political power structure, subscribe or activate your digital account today.

Email: [email protected]

Twitter: @dracioppi

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