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Investigative Report by Mark Lagerkvist

reprinted with permission of NJ WatchDog

TRENTON — New Jersey’s Government Records Council rejected the state Treasury’s latest attempt to avoid disclosing documents related to an alleged $245,000 pension scheme involving Lt. Gov. Kim Guadagno.

By a 4-0 vote on Tuesday, GRC denied the Treasury’s request for a stay and reconsideration of an Aug. 31 order that requires its state pension officials to turn over 26 records for inspection. After review, the council will decide what documents, if any, should be released to New Jersey Watchdog.

Treasury officials gathered the records while reviewing allegations that Monmouth County sheriff’s officer Michael Donovan Jr. improperly collected nearly $85,000 a year in state retirement pay in addition to his $87,500 annual salary.

At the center of the controversy are false statements made by Guadagno when she was Monmouth County sheriff.New Jersey Watchdog first reported the scandal in 2010.

The stakes are high for Guadagno, whose political future could be in jeopardy.

Under state statute, “Any person who shall knowingly make any false statement or shall falsify or permit to be falsified any record or records of this retirement system … shall be guilty of a misdemeanor.”

In 2008, Guadagno hired Donovan, a retired investigator for the county prosecutor, as the sheriff’s “chief of law enforcement division.” She announced the appointment in a memo to her staff.

But there was a problem. As a sheriff’s chief officer — a position covered by the pension system — Donovan would be required to stop receiving pension checks and resume contributions to the state retirement fund.

Guadagno fudged the job title, enabling Donovan to double-dip. In county payroll records, the oath of office and anews release, Donovan was called the sheriff’s “chief warrant officer,” a low-ranking position exempt from the pension system.

A chief warrant officer oversees the service of warrants and other legal documents. In contrast, the sheriff’s official website identified Donovan as “sheriff’s office chief,” supervising 115 subordinate officers and 30 civilian employees.

On Guadagno’s organizational chart, Donovan was listed as chief of law enforcement — and the position of chief warrant officer was conspicuously absent.

The following year, Donovan campaigned for Guadagno and Gov. Chris Christie as Monmouth County chairman of the “Law Enforcement for Christie-Guadagno” team in the gubernatorial election. (Click here for New Jersey Watchdog’s story on LECG’s 12 double-dippers.)

While sheriff’s chief, Donovan pocketed $227,000 in checks from the Police and Firemen’s Retirement System. Since he did not re-enroll in PFRS, he avoided another $18,000 in contributions. If the state decides Donovan violated pension law, he could be forced to repay $245,000.

The Treasury failed to take any conclusive action. Not satisfied with the result, the PFRS Board of Trustees votedin May 2011 to call for a criminal investigation of Donovan — plus parallel instances involving John Dough, of Essex County, and Harold Gibson, of Union County.

The case was referred to the Attorney General’s Division of Criminal Justice. However, its investigation is riddled with a maze of potential conflicts of interest:

  • Guadagno is DCJ’s former deputy director. She held the post from 1998 to 2001.
  • Nearly two dozen DCJ investigators and supervisors are “double-dippers” who collect state paychecks and pensions.
  • Attorney General Jeffrey Chiesa, a Christie appointee, is ultimately in charge of the probe of fellow cabinet member Guadagno. Chiesa is also former chief counsel to Christie.

Christie has not publicly addressed the issue of whether an independent prosecutor should be appointed to handle the case. Spokespeople for Christie and Guadagno have declined to comment.

Representatives for Chiesa have not responded to questions about the investigation. The attorney general also represents the Treasury in its opposition to release of the records sought by New Jersey Watchdog.

The records battle began in March 2011 with an Open Public Records Act request. After Treasury officials refused to release the documentsNew Jersey Watchdog filed its complaint with GRC.

Click here for a copy of the GRC’s order dated Sept. 25.

Click here for a copy of the GRC’s findings.