Bridge work in N.J. faces SEC inquiry

Probed for possible security law breach

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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


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