Political contributions illegal and ignored

Former CEO of Birdsall Services Group was sentenced to state prison for his role in a criminal scheme in which more than $1 million in corporate political contributions were illegally made through employees of the firm to evade New Jersey’s pay-to-play law but no legal action has been announced concerning the secret $1 million donation to Jersey City Steve Fulop’s superPAC that was apparently laundered through a corporation formed in Delaware the day before being moved to the politicians’s secret slush fund.

A spokeperson for state Attorney General Robert Lougy dodged commenting on the scandalous Fulop cash transfer, which looks exactly like a bribe without a clear understanding of the benefits returned in exchange. Federal prosecutors also appear to be asleep at the switch, since FBI agents and members of US Attorney Paul Fishman’s office were notified about the felonious Fulop funds as soon as news accounts made tham widely known.

Howard Birdsall, 72, of Brielle, who formerly was CEO and the largest shareholder of Birdsall Services Group, was sentenced to four years in state prison by Superior Court Judge James Den Uyl in Ocean County.  Birdsall pleaded guilty on Feb. 18 to a charge of second-degree misconduct by a corporate official.  At the time of his plea, he paid $49,808 to the state, representing forfeiture of the political contributions that he made on behalf Birdsall Services Group that were reimbursed by the firm.

“As the company’s CEO and largest shareholder, Howard Birdsall cashed in when Birdsall Services Group secured millions of dollars in public contracts that should have been off limits because of the firm’s illegal contributions,” said Lougy.  “Now he must pay the price for their crooked scheme.”

Three campaign finance watchdogs have asked federal officials to investigate the $1 million donation to a super PAC that sources say is aligned with Jersey City Mayor Steve Fulop.

Campaign Legal Center, Democracy 21, and Citizens for Responsibility and Ethics in Washington have all asked the Federal Election Commission to find out whether the donation, from Delaware company DE First Holdings to Coalition for Progress, illegally evaded campaign finance laws that ban an individual from making a donation in someone else’s name.

Making matters appear worse in the Fulop example, Jersey City lawyers were apparently consulted in the matter and approved the deal in advance, reflecting a conspiratorial mindset behind the hidden fund source.

“New Jersey’s pay-to-play law is designed to ensure that public contracts are awarded through a transparent process, rather than being doled out to the biggest political contributors,” said Director Elie Honig of the Division of Criminal Justice.  “This prison sentence sends a message that we will aggressively prosecute anyone who engages in criminal conduct to skirt that important law.”

Birdsall Services Group (BSG) – an engineering firm formerly based in Monmouth County that now is out of business – pleaded guilty on June 13, 2013 to charges of first-degree money laundering and second-degree making false representations for government contracts.

As a result of its plea, BSG paid two major criminal penalties: a $500,000 public corruption profiteering penalty and a $500,000 anti-money laundering profiteering penalty.  In each instance, the penalty was the maximum amount authorized by law.  BSG also paid the state $2.6 million to settle a civil forfeiture action filed by the Attorney General’s Office in connection with the criminal case.

The charges against Howard Birdsall and BSG were contained in a March 26, 2013 indictment, which also charged six other executives and shareholders.  The charges stemmed from an investigation by the Division of Criminal Justice Corruption Bureau, which found that the defendants allegedly conspired to avoid the restrictions of New Jersey’s Pay-to-Play Act by disguising illegal corporate political contributions as personal contributions of firm employees.

Thomas Rospos, 64, of Belmar, N.J., formerly the executive vice president of BSG and its second largest shareholder, pleaded guilty on Feb. 25 to a charge of third-degree tampering with public records or information. The state will recommend that he be sentenced to three years in state prison, and he must forfeit $150,000 in political contributions that he made, which the firm reimbursed.

Rospos is scheduled to be sentenced on May 23 by Judge Den Uyl.  Another indicted defendant, Scott MacFadden, 61, of Brick, N.J., the former chief administrative officer of BSG, pleaded guilty onJan. 6 to a charge of third-degree misconduct by a corporate official.

The state will recommend that he be sentenced to up to 364 days in jail as a condition of a term of probation.  He must forfeit $30,000 in political contributions that were reimbursed by the firm.  MacFadden is scheduled to be sentenced by Judge Den Uyl on June 3.  The charges against the other individual defendants in the indictment are pending.

Two former employees of the marketing department of BSG, Philip Angarone, 43, of Hamilton (Mercer County), N.J., the former marketing director, and Eileen Kufahl, 51, of Bradley Beach, N.J., pleaded guilty to participating in the scheme before the indictment was returned and are awaiting sentencing.

All of the remaining defendants who are charged in the indictment face first-degree counts of conspiracy and money laundering, as well as other charges.  The first-degree charges carry a sentence of 10 to 20 years in state prison, and the money laundering counts also carry fines and penalties of up to $1 million.  The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.

Under the alleged scheme, instead of Birdsall Services Group making corporate political contributions to campaigns and political organizations that would disqualify it from public contracts awarded by certain government agencies, shareholders and employees of the firm made personal political contributions of $300 or less, which are deemed unreportable.  Multiple personal checks were bundled together at Birdsall Services Group and sent to the appropriate campaign or political organization.

The shareholders and employees were then illegally reimbursed by Birdsall Services Group, directly or indirectly, through added bonus payments, and the firm falsely omitted the illegally reimbursed contributions in documents filed with the Election Law Enforcement Commission (ELEC) and with government agencies that awarded the firm engineering services contracts.  The scheme continued for more than six years and involved more than $1 million in contributions.

Whether criminality applies to bribes and secret money transfers depends on interpretation, which has been made more difficult by conservative Supreme Court rulings in recent years.  A case pending against US Senator Robert Menendez is the first to allege that money given to a campaign fund is a bribe, but the FBI has compiled a lot of evidence linking those funds to direct actions by the politician.

Judging from the Birdsall jail sentence and inaction on the Fulop slush fund, virtually anything can happen when dirty money connects with politics but it is more likely that nothing will force officials to come clean unless significant changes are made in existing law.

An earlier version of this report said it has been speculated that Fulop’s $1 million came from hedge fund manager David Einhorn, but his spokesperson, Jonathan Gasthalter, flatly denied that any connection exists.


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