UNION COUNTY, NJ — Just months after the state comptroller raked the Union County Alliance over the coals for taking $1.5 million in taxpayers dollars and having little to show for it but a newsletter twice a year, the county secretly cut off funding and any connection to the non-profit that began in 1993.
The county made the move without issuing any explanation why they would no longer be pumping $230,000 a year in taxpayer dollars into the controversial UCA, which has 501-C non-profit status and a sullied past since 2008. The UCA also quietly closed their office on Westfield Avenue in Rahway, which cost taxpayers $12,600 a year in rent even though the space was largely unused and left unmanned.
Last week Union County Public Information Director Sebastian D’Elia said in an interview with LocalSource that the freeholder board had decided that many of the functions handled by the UCA could be done by the county department of economic development, which was created in 2013. He also said that as far as he knew the UCA was no longer operating as a non-profit.
Formed in 1993 by founders Ann Baran, then county manager, Democrat Sen. Ray Lesniak and Republican former acting governor Donald DiFrancesco, the non-profit was set up as a consortium of leaders from business, government, labor, civic, social service and academic organizations committed to revitalizing Union County’s economy and quality of life.
By 2008 that focus changed radically, but it would take until 2011 before serious questions were raised by LocalSource about the way the UCA was operating without any oversight and spending taxpayer dollars on things that had nothing to do with the county’s economy or quality of life.
At the end of January New Jersey Comptroller Marc Larkins became involved in this issue, releasing the results of an investigation they undertook after the questions in the press about the $1.5 million the county handed over to the non-profit over a four-year period remained unanswered.}
The comptroller’s report found the UCA relied almost entirely on public funding but operated with virtually no oversight or recordkeeping.
This is also what LocalSource found in August 2011 when it began an investigation into the UCA after reports the nonprofit was not producing anything but two newsletters for the taxpayer dollars it was receiving from the county.
The comptroller’s report dug deeper into the financials of the UCA, focusing on a series of annual no-bid contracts from 2008 to 2011 through which the county paid the UCA $1.5 million to promote economic development in the county.
According to Larkin’s report, the only material work completed by the UCA during that period was the twice-a-year publication of the newsletter Union County Directions, which cost $120,000 a year to publish and mail. The county continued to renew its contract with the UCA, the comptroller said, without considering other competition, using the excuse that this service could not be provided by other vendors.
Larkins, though, did not agree.
The comptroller discovered the county renewed its contract with the UCA each year without alteration or reassessment of terms. Larkins came to the conclusion that producing the newsletters did not require any specialized expertise and the county could have either produced the newsletter in-house or opened competitive bidding in an attempt to save the public tax dollars.
The comptroller also found the county’s justification for bypassing competitive bidding was further compromised by the UCA hiring additional vendors and consultants to perform work on the newsletter that had questionable ties to the UCA president.
One of those companies was former UCA president Michael Murray’s former wife, who was paid $108,000 for research and editing. Murray’s former wife also worked at Kean University and was involved in approving $167,000 in payments from the university to the UCA for advertisements placed in the newsletter.
The UCA also did not follow its own bylaws, Larkins said, which resulted in a lack of oversight and control of the UCA’s spending.
In serious question, the comptroller said, was that a former board chairman received $2,000 monthly payments, which Murray described as “an allowance.” In fact, from 2008 through 2011 the board chairman received $82,000 in “allowance” without any justification or receipts for these payments.
Larkins said the UCA’s bylaws did not authorize such payments to board members but that was just the beginning of the discrepancies found.
Murray’s contract called for “extras”, but from 2010 to 2011 he claimed that these extra expenses came to $171,257 but the comptroller found he actually received $387,104. Due to the lack of accurate record keeping, Larkins said it was impossible to tell whether he received more than he was entitled.
Also questionable was the former UCA president’s use of a UCA debit card. Some examples of these questionable expenses that had no receipts or documentation backup were charges to motels and restaurants in Cape Cod and liquor stores on Long Beach Island, among others.
The UCA also donated thousands of dollars of public funds, the comptroller said, to various non-profit organizations, local sports teams and even an out-of-state college sports team. The UCA, during the time Murray was president, also handed over $38,000 to vendors for services provided to the county-sponsored and embattled Musicfest without explanation.
The comptroller made it clear the results of this investigation did not stop with the release of his report. He said the entire report would be referred directly to the Internal Revenue Service because of the lack of supporting documentation the UCA had on its 990 tax submissions.
He also forwarded the report to the Department of U.S.Treasury, Division of Taxation and NJ Department of Labor and Workforce due to the financial discrepancies uncovered during the investigation.
The UCA first came under fire by LocalSource in August 2011 when multiple inconsistencies were uncovered and Murray was unable to explain where this non-profit was spending money that was 80 percent funded by county taxpayer dollars.
At that time the county was handing over $322,125 a year to the UCA “to provide bi-partisan leadership and support for the continued economic advancement and growth of Union County,” with no oversight in how the money was being spent.
When documentation showed Murray, who previously held the position of county communications director, was earning $115,861 a year to produce two tab-sized Democrat focused newspapers but doing little else, it was glaringly apparent something was amiss.
Despite the questions raised, though, the county continued to award this non-profit $322,125 in taxpayer dollars annually without any safeguards in place to ensure the people working for the UCA were actually doing their jobs.
In response to LocalSource’s probing into the matter, county officials would only say the nonprofit was a “vendor” and it was not their responsibility to oversee how the money was being spent.
It soon became evident from financial records LocalSource obtained using the Open Public Records Act that the non-profit was spending money without any oversight. For example, when the 2009 IRS tax records were analyzed it showed the UCA had expenditures totaling $481,181 for conferences, conventions, meetings, a six-figure salary for Murray and no evidence he had done anything but produce two newsletters.
When pressed, Murray was unable to substantiate or produce any documentation showing where the $322,125 was being spent. Eventually he said the 2009 tax form must have been submitted incorrectly and would be immediately corrected and resubmitted. The UCA did provide a copy of the 2009 amended tax return, but that also failed to explain Murray’s expenditures.
Eventually Murray resigned under pressure in 2012 because he continued to be under fire for these expenditures and there was a public call for him to step down.
From that point the UCA floundered under several temporary presidents, but the county still continued to fund the non-profit even though there was no evidence it was doing more than producing the two newsletters a year.
In 2013 the county slashed the amount they were giving the UCA by $100,000, but, as before, there was little to show for where these tax dollars were going. When LocalSource followed up using OPRA to obtain documents and correspondence, it was discovered the UCA was working to complete a Brownfields Resource Guide and Inventory, which Murray maintained he completed, but never did.
Although the comptroller recommended in its report that the county should either solicit bids, use other competitive means to produce the newsletters, or produce it in-house, the county did not follow through with any of those suggestions.
Larkins suggested that if an outside vendor is used, the level of funding should be “appropriately connected to deliverables actually provided.”
Also mentioned was that the county should take steps to ensure that vendor contracts include provisions designed to protect public funds, including clear language detailing the work to be done.
Finally the comptroller pointed out that if the county uses a non-profit vendor, they should “take steps to ensure the vendor is not used simply as a means to circumvent rules and regulations.”