NEW YORK — Investigations into the administration of New Jersey Gov. Chris Christie and the Port Authority of New York and New Jersey have zeroed in on possible securities law violations stemming from a $1.8 billion road repair agreement in 2011, according to people briefed on the matter.
While the inquiries were prompted by the politically motivated lane closings at the George Washington Bridge last year, these investigations center on another crossing: the Pulaski Skyway, the crumbling elevated roadway connecting Newark and Jersey City. They are being conducted by the Manhattan district attorney and the Securities and Exchange Commission.
The inquiries into securities law violations focus on a period of 2010 and 2011 when Mr. Christie’s administration pressed the Port Authority to pay for extensive repairs to the Skyway and related road projects, diverting money that was to be used on a new Hudson River rail tunnel that Mr. Christie canceled in October 2010. Again and again, Port Authority lawyers warned against the move: The Skyway, they argued, is owned and operated by the state, not the Port Authority, according to dozens of memos and emails reviewed by investigators and obtained by The New York Times.
But the Christie administration relentlessly lobbied to use the money for the Skyway, with Mr. Christie announcing publicly that the state planned to use Port Authority money even before an agreement was reached. Eventually, the authority justified the Skyway repairs by casting the bridge as an access road to the Lincoln Tunnel, even though they are not directly connected. In bond documents describing the Skyway reconstruction and other repairs, the Port Authority has called the projects “Lincoln Tunnel Access Infrastructure Improvements.”
The accuracy of this characterization is now a major focus of the investigations, according to several people briefed on the matter. Under a New York state law known as the Martin Act, prosecutors can bring felony charges for intentionally deceiving bond holders, without having to prove any intent to defraud or even establish that any fraud occurred.
Two veteran prosecutors in the Manhattan district attorney’s office Public Corruption Unit are working with two SEC lawyers who are experts in such bond issues, one person briefed on the matter said, and another noted that while the agencies were each conducting separate parallel inquiries, they were working together. In addition to criminal charges under the Martin Act, the investigations could result in civil action under the Martin Act or by the SEC, under federal securities laws.
The office of Manhattan District Attorney Cyrus R. Vance Jr. and the SEC declined to comment.
Since the lane closing scandal widened earlier this year, Mr. Christie’s office has been the subject of investigations from the U.S. attorney in Newark, Paul J. Fishman, and the New Jersey Legislature. Mr. Christie also ordered an internal investigation of his office, an effort that cost millions and that cleared him of any wrongdoing.
At a moment when the governor’s stewardship of state finances has faced mounting scrutiny, the Skyway investigations could undermine his carefully cultivated image as a responsible spender, as he tries to move beyond the political fallout from the lane closings.
In addition to the Pulaski Skyway, the Manhattan district attorney is also in the early stages of investigating repair projects on the Goethals and Bayonne bridges, among others. While prosecutors have issued dozens of subpoenas, no formal accusations have been made, and the precise targets of the inquiry remain unclear.
The lane closings on the George Washington Bridge are still the subject of a federal investigation.
Among those who have received subpoenas from Mr. Vance’s office is former U.S. Sen. and New Jersey Attorney General Jeffrey Chiesa, a close friend of Mr. Christie’s for more than two decades. He served as the governor’s chief counsel in 2011, when the authority’s lawyers amended the funding resolution with what critics have said was a questionable legal justification. A person familiar with that subpoena said Mr. Chiesa was not a target of the investigation.
One person briefed on the matter said the funds had been used to fill a hole in the New Jersey state budget, noting that the inquiries seek to determine whether the fiscal contortions were creative politics or criminal maneuvers.
The Christie administration said it wanted to pay for the Skyway repairs soon after the trans-Hudson tunnel was canceled. At the time, the state had limited funds for major transportation projects, and Mr. Christie resisted increasing the gas tax to raise more. The justification for using the tunnel money for the Skyway was first reported by The Record of Hackensack, N.J.
In November 2010, Port Authority lawyers prepared a memo saying the agency could not help with the Skyway. Bill Baroni, deputy executive director and Mr. Christie’s top staff appointee at the agency, sent the memo to Deborah Gramiccioni, then director of the governor’s authorities unit, on Nov. 2. (Mr. Baroni resigned amid the George Washington Bridge scandal; Mr. Christie chose Ms. Gramiccioni to replace him.)
Mr. Christie’s office had also sent specific questions to the Port Authority, asking whether the money from the tunnel project could be used to fund road and bridge projects. Neither was possible, they were told.
Bondholder covenants, the lawyers explained, limited the kinds of projects the agency could spend money on, and previous court decisions had found that the Port Authority had “no authority” to build roads that were not on the property of airports or marine terminals controlled by the agency.
Mr. Christie was undeterred. At a news conference in January 2011, he announced his intention to use the Port Authority money to pay for the Skyway repairs, trumpeting the span’s relationship to the Holland Tunnel — a move that took some Port Authority administrators by surprise. Agency lawyers warned that any connection to the Holland Tunnel would not legally justify the expense. Because that tunnel predated the Port Authority, lawyers concluded, the agency was not authorized to pay for access roads to it.
In meetings, emails and letters between November 2010 and February 2011, administration officials including James Simpson, the New Jersey transportation commissioner, and Richard Bagger, the governor’s chief of staff, continued to press the Port Authority for funding. Mr. Baroni wrote that Port Authority lawyers could find “absolutely no support” for repairing the Skyway.
But in March, state transportation officials announced they intended to spend the Port Authority money on the Skyway anyway. Christopher Hartwyk, then a deputy counsel at the Port Authority, emailed Mr. Baroni, quoting a popular children’s book about the nature of endless demand: “If you give a mouse a cookie, he is going to want a glass of milk.”
Days later, though, Mr. Baroni made clear to colleagues at the agency that he had been given no choice. “It’s evident to say, but we gotta figure this out,” he emailed Mr. Hartwyk on March 24.
Later that day, Christie held another news conference announcing his plans to use the Port Authority money, arguing that it would allow the state to reduce its reliance on borrowing for state road projects. Overnight, lawyers for the Port Authority refined a resolution to justify the spending.United States - North America - United States government - New York City - New York - Chris Christie - New Jersey - U.S. Securities and Exchange Commission - New Jersey state government - Manhattan - Port Authority of New York and New Jersey - Cyrus Vance Jr. - Paul Fishman - Jeffrey S. Chiesa - Jim Simpson - New Jersey Attorney General's Office - New Jersey Department of Transportation