Earlier today, former New Jersey assemblyman Joseph Coniglio was sentenced to 30 months for extortion and mail fraud. (Expect he'll be out in about 19-20 months to a halfway house.) Federal prosecutors charged him with a series of abuses stemming from his purported consulting for a hospital while using his government position (especially, being on a state budget committee) to steer grants to the same hospital paying him. You see, in New Jersey, legislators are also part-time, so Coniglio did the "consulting" for the hospital while being a state legislator able to steer grants its way. But a legislator is not a lobbyist. See the problem?
Prosecutors charged that Coniglio really did no (or very little) work, and the consulting payments were bribes in disguise. The arrangement posed a clear conflict of interest, and the quid pro quo amounted to an abuse by Coniglio of his elected position for personal gain (if not outright extortion) and an unfair advantage to the hospital over its competitors (other hospitals in the region, which were not paying Coniglio). As we've learned from the recent Supreme Court hearings for "Sonia from the block" Sotomayor, a preference towards some equals discrimination towards others.
Good and noble purpose, you might ask? Coniglio's attorney argued that the grants were useful in funding a new cancer center, but this did not change the final analysis in either the jury's mind, or mine.
(For another example of a very similar case, Google the name "Wayne Bryant" and add the acronym "UMDNJ." Mr. Bryant is now a guest of the government.)
This translates well to the slush fund abuses. Each time a government grant goes to one non-profit organization, that money is by definition not going to someone else. Anything making this process less than fair is thus ripe for challenge. When we have (as alleged) legislators creating non-profit organizations in order to receive government monies, which then are largely used to "employ" the legislators and their friends and family, it yields the following objectionable elements:
(1) an abuse of an elected position
(2) to bestow preferential treatment upon one non-profit
(3) with such preference coming at the expense of the public at large and each and every non-preferred entity
(4) for direct and personal financial gain
(5) with the entire arrangement posing an obvious and strong conflict of interest.
Readers should find each of these five features to be objectionable, if not criminal. Certainly, it is wrong.
How could these situations be remedied? In each case, the problem is the personal gain element. Legislators seeking to cash in -- while doing no real work -- are the problem. These are not cases of altruism. They are cases of greed.
But what if Coniglio was doing real work? In Coniglio's case, had he been doing plumbing consulting for the hospital, using his professional background as a plumber, even the federal prosecutors (namely, top former deputy Michele Brown) admitted in a prior press conference after Coniglio's conviction that such work would have been legal. Here, the concern was that this was a "no show" or "sham" job. Expect this to also be the concern with the City Council slush fund for non-profits, and to see the claim that these organizations essentially exist only on paper and really exist only for the personal gain of their organizer/benefactor legislator.
In both New Jersey and New York, we have a diversion of the grant monies away from other purposes (item 3 above). This element explains where and how there is palpable harm to the public. This is not a victimless crime.
Let's make it simpler, class:
Public funds + private gain = Federal felony indictment.
Now, if you object to Coniglio getting 30 months in jail, that is a different issue. Some may argue that he should have been booted from office, or de-barred (disqualified) from holding any public employment. Certainly there were options to resolve this, to deter future transgressions in keeping with a primary prosecutorial objective of deterrence, without using up a precious cot on an elderly man when dangerous terrorists are out there -- dangerous, I tell ya -- and that is a topic worth discussing...and will be treated at length in the future.
You may also raise concerns as to whether some officeholders are on the proper notice regarding the legality or propriety of their actions. The vagueness of some federal statutes (such as the "honest services" statute which even Supreme Court Justice Antonin Scalia has criticized) leaves opportunities for prosecutorial abuse and overreaching and jeopardizes politically vulnerable targets. From a legal perspective, I would think that elected or appointed officeholders need to consider retaining skilled white collar criminal and civil regulatory attorneys (hint, hint) who understand that proper risk-averse guidance to clients means consulting both state laws and regulations, federal laws and regulations, and the uncodified, unwritten rules of state and federal prosecutors regarding the practices they find objectionable enough to try to develop a criminal case.
A final note. Credit goes where it is due. This investigation was started by the United States Attorney's Office, while it was run by Chris Christie. Mr. Christie has recently been subject to much criticism, including on this site, but his office deserves the credit for this investigation...which Acting U.S. Attorney Ralph Marra assures us is "continuing." Let's see what happens here. Curiously, no one from the hospital -- the major beneficiary in the Coniglio arrangement -- has been charged, although at least one key hospital administrator received immunity in exchange for his testimony against Coniglio. That just doesn't strike me as right.
Eric Dixon is a New York lawyer and strategic analyst who engages in crisis management and other matters. Mr. Dixon cautions readers that this article is not legal advice. Mr. Dixon may be contacted for further comment through edixon@NYBusinessCounsel.com, or at 917-696-2442.