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More Instances of Fraud and Mismanagement Over New Jersey Tax Incentives Surface in New Report

A hospital connected to New Jersey political boss George E. Norcross III lied to win state tax breaks, a new special task force report says. The report details several other new pieces of evidence of Norcross’ influence over the tax incentive program.

This article was produced in partnership with WNYC, which is a member of the ProPublica Local Reporting Network.

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A task force investigating New Jersey’s controversial tax break program released a report Monday concluding that fraud and mismanagement tainted the $11 billion effort to bring new jobs and businesses to the state.

The report included new evidence of the influence of Democratic Party boss George E. Norcross III in steering tax breaks to favored businesses and nonprofits located along the Camden waterfront. The task force was formed by Democratic Gov. Phil Murphy in January to investigate the program.

It said that a Camden hospital system for which Norcross served as board chairman sought to mislead the state in its application for $39.9 million in tax breaks.

In a November 2014 email included in the report, a Cooper Health executive acknowledged that the hospital did not intend to leave New Jersey but was “quietly” seeking a lease quote for office space in Philadelphia to satisfy the tax break program’s legal requirements.

The email from Cooper vice president Andrew Bush to a realty firm in the Philadelphia area suggested that the hospital had decided to move its administrative offices to Camden but needed a quote on a cheaper space across the river to qualify for the breaks.

“I need a credible location that is LESS expensive than [Camden],” Bush wrote. “I need a full service number of $24 per square foot or less to make the numbers work.’’ He added: “Quietly? No probability of us moving” to Philadelphia.

The preliminary task force report found that Cooper Health’s questionable claim that it might leave New Jersey added leverage to its proposal. State officials increased its tax break to $39.9 million.

Thomas Rubino, Cooper Health’s vice president for communications, in a statement said the report was biased “with inaccurate assumptions, verifiably incorrect legal arguments, and misleading insinuations to support predetermined conclusions.”

The report was released just minutes after Mercer County Judge Mary Jacobson rebuffed an effort by Norcross to block its release. Norcross and some of his business partners contend in a lawsuit that the task force is a political tool created by Murphy to gain leverage inside the state’s fractious Democratic Party.

In an hourlong oration from the bench, the judge cited audits, going back to 2017 that found the tax break program was mismanaged and susceptible to fraud.

“The public interest is that the task force be allowed to report,’’ Jacobson concluded.

George Norcross released a letter Tuesday to a legislative committee that is also investigating the tax break program, asking to be given an opportunity to testify. He said the judge’s decision “does not represent the end of this process. We will continue our litigation in an aggressive manner to protect our rights.”

In its report, the task force found that special interests helped craft the 2013 tax break law to benefit a select group of companies, and that the state was ill-equipped to vet and monitor tax break applicants.

The law “was structured to favor certain parties while disfavoring others,’’ according to the 79-page report. The tax break law also gave unique advantage to Camden applicants, the report found.

The task force has made several criminal referrals to unspecified law enforcement agencies, and a state grand jury is looking into the program, which is administered by the state Economic Development Authority.

In May, the task force focused a hearing on tax breaks for Cooper Health and other Camden firms connected to Norcross. An insurance firm owned by Norcross received an $86 million tax break in 2017 to play a part in building a luxury office tower.

The report said that Norcross’ insurance company and his two business partners publicly announced that they would move to Camden a year before they applied for the breaks, offering lease proposals for competing locations out of state.

“This meant that their certifications in their applications that jobs were ‘at risk’ of leaving New Jersey were, at best, dubious,” the report said.

The report also said that the $86 million tax break for Norcross’ insurance company, Conner Strong & Buckelew, would have been much smaller without language added to the tax law by Parker McCay, the South Jersey law firm headed by his brother Philip Norcross.

“An award of that size would have likely been impossible if not for statutory

amendments that Parker McCay played a pivotal role in incorporating into the legislative design,’’ according to the report.

Parker McCay helped write the 2013 tax break law, suggesting specific language that was embraced by state officials.

Since the program came under scrutiny, every company receiving a New Jersey tax break has been asked to go through recertification, and some companies have volunteered to terminate their awards. Other recipients, according to the report, have been referred to either the Treasury Department, the EDA or law enforcement.

The state is reviewing a large award to Holtec International, a Camden nuclear firm, after WNYC-ProPublica discovered a misleading sworn statement in its application form. The company said the mistake was inadvertent.

So far, more than $500 million worth of tax breaks have been terminated, either voluntarily or through legal action.

Speaking at an unrelated press conference on Tuesday, Murphy said the task force report proves the law was written by special interests. He said he’d veto any measures to extend the program past its expiration at the end of this month.

Murphy said the tax credits are the result of a “rigged system.”

ProPublica and WNYC are spending the year investigating the power and influence wielded by party bosses in New Jersey’s political system. If you know something about the state’s controversial tax incentive program, we’d like to hear from you. We’d particularly like to hear from:

  • Past or present state employees who can tell us about the mechanics of the tax break program
  • Past or present employees at companies that received tax breaks since 2013 who can tell us about the application process

If you have something to share with us, here’s how to do it:

  • Via email: [email protected]
  • Via phone call, text. You can also reach us through this number on Signal or WhatsApp, which are more secure: 347-244-2134
  • Here’s more information on ways to send us documents and other materials.

This story has been updated to include comment from Cooper Health, George E. Norcross III and Gov. Phil Murphy.

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