County, towns caught up in Birdsall probe

State protests firm’s bankruptcy filing, claiming assets are ‘criminal proceeds’

Staff Writer

 Howard Birdsall Howard Birdsall Monmouth County and a number of area towns received subpoenas from the state Attorney General’s Office as part of its ongoing investigation into possible “pay-to-play” law violations by executives of Birdsall Services Group (BSG).

Subpoenas requesting all records, documentation, bids, contracts, communications and other information relating to the Eatontown based engineering firm were sent to Eatontown, Holmdel, Tinton Falls and Long Branch in late summer 2012, according to various officials.

According to county spokeswoman Laura Kirkpatrick, BSG is currently contracted for 10 Monmouth County projects, totaling close to $1.6 million.

The earliest of those projects, initiated in August 2011, involved BSG providing airquality testing services at various county buildings at a cost of $44,000 per year.

The most recent project was initiated last month. The $286,000 contract calls for BSG to provide safety compliance, loss prevention and record-keeping services for the county through the end of the year, Kirkpatrick said.

A subpoena, she added, was sent to the county last summer. The county, along with each of the towns that received subpoenas, responded to the requests.

Following the March 26 indictments of BSG executives/shareholders, including former CEO Howard Birdsall, the state seized BSG’s assets as part of its ongoing investigation, preventing the firm from paying its more than 300 employees.

BSG then filed for bankruptcy on March 29. In response, the Attorney General’s Office submitted a filing to the New Jersey District of U.S. Bankruptcy Court on April 1, claiming that BSG could be trying to circumvent the state’s seizure order by filing for bankruptcy, and calling for the motion to be denied.

Prior to the bankruptcy motion, the state discussed a potential resolution with BSG that would allow the firm to continue oper- ating as long as an impartial auditor was brought in to review the company’s books and prevent future misconduct, according to the filing. BSG filed for bankruptcy instead, in what the Attorney General’s Office said could be an effort by the firm to sidestep the state’s seizure and divert funds from investigators.

“The debtor’s [BSG’s] rejection of the retention of an independent auditor has raised concerns regarding evasion of the seizure order by the withdrawal and transfer of assets into other entities to avoid the consequences of the ongoing criminal and civil proceedings,” the state’s filing reads. The state also refers to BSG’s assets as “the proceeds of criminal activity,” which “cannot be sanitized by the mere filing of a bankruptcy petition.”

Following an April 1 bankruptcy court hearing, U.S. District Judge Michael Kaplan ruled that BSG could pay its employees close to $1.7 million in payroll for last week and this week, the Attorney General’s Office confirmed.

The payment is a one-time disbursement, according to Attorney General’s Office spokesman Peter Aseltine, and the ruling has no bearing on the larger bankruptcy case.

When asked if the Attorney General was considering appealing the ruling, Aseltine said the office is “considering its options.”

None of the named defendants will be eligible for the funds, he added.

Repeated calls to a BSG spokesman and the firm’s bankruptcy attorney, David Stein, of Wilentz, Goldman & Spitzer, were not returned.

The state’s investigation, which dates to 2011, looked at BSG’s contracts, some of which are still outstanding in local municipalities.

Eatontown Borough Attorney Gene Anthony said the state’s subpoena called for all borough documents dating from 2008, when BSG was appointed as the town’s primary engineer, to 2010.

“Everything that was sent to them … had to do with the work they did in Eatontown for those two years.” Anthony said. “A lot of stuff that I had reviewed was from the Planning Board.”

Eatontown Mayor Gerald Tarantolo, speaking at a meeting last September, said the borough had to provide “communications such as letters, and all electronic and digital versions which concern, refer or pertain directly or indirectly to and all contracts or other commercial or professional arrangements with [BSG] and any affiliates, subsidiaries and shareholders, officers or employees.”

BSG replaced T&M Associates as Eatontown’s official engineer in 2009. T&M had served as borough engineer for 43 years. BSG served as engineer until Jan. 1, 2011, and was then named special projects engineer for the borough in 2011-12.

Anthony said the purpose of that position was for BSG to finish any outstanding contracts from the previous years. In Holmdel, where BSG currently serves as a consulting engineer, the firm was awarded a $700,000 contract for sanitary sewer maintenance and sewer operations in July 2011.

Holmdel Mayor Patrick Impreveduto said on April 1 that he was unsure of the status of the project, which is scheduled to continue through the end of 2014 at a cost of more than $200,000 per year.

“We will be having our next committee meeting on [April 2],” he said. “We should know more about everything then.”

As of Monday, neither Impreveduto nor Township Attorney Duane Davison could say if the governing body planned to cancel the contract.

Deputy Township Clerk Barbara Kovelesky confirmed that Holmdel had received a subpoena from the Attorney

General’s Office last summer.

“They requested any information we had, really, that had to do with Birdsall,” she said.

“We submitted our response shortly afterward.”

Since then, Kovelesky said, the township has not received any communication or information regarding the state’s investigation. BSG previously served as the official engineer for Long Branch, City Attorney James Aaron said.

“Birdsall used to be the city engineer years ago,” he said. “The city went to a pool system of engineers in an effort to get better pricing on everything, and Birdsall is part of that pool,” he said.

According to Aaron, the engineering company has been awarded approximately $70,000 in contracts, but has not had much work in Long Branch in recent years.

“In the last three or four years, they’ve had minimal engineering work to do,” he said.

Long Branch Borough Clerk Kathy Schmeltz confirmed that the city received a subpoena last year.

“We gave them our records, and we haven’t heard anything back from them,” she said.

Tinton Falls Borough Clerk Maureen Murphy confirmed Monday that the borough had also been subpoenaed.

Howard Birdsall, along with six other BSG executives and shareholders, were indicted March 26 on charges of conspiring to violate the state’s “pay-to-play” law by disguising illegal corporate political contributions as personal contributions of employees of the firm.

Birdsall, a major shareholder and former CEO of BSG, was also chairman of the Brookdale Community College board of trustees. He resigned in May 2011 after more than 20 years on the board, shortly after it was revealed that then-college president Peter Burnham had misused funds.

In a statement last week, Brookdale officials said Birdsall’s involvement with the board had no impact on college projects.

“At no time during his tenure as a member of the board did Brookdale conduct business with Birdsall Services Group,” the statement read. “The bylaws of the board of trustees clearly state that ‘no board member or employee shall have a direct or indirect interest, financial or otherwise, in a contract with the college,’ and this conflict-ofinterest policy is strictly enforced.”

The indictment, announced by New Jersey Attorney General Jeffrey S. Chiesa last week, alleges that instead of making corporate political contributions to campaigns and political organizations, which would disqualify it from public contracts, shareholders and employees of the firm allegedly made personal political contributions of $300 or less, which are not required to be reported.

According to Chiesa’s office, shareholders and employees were illegally reimbursed by BSG, directly or indirectly, through added bonus payments.

The firm falsely omitted the contributions in documents filed with the Election Law Enforcement Commission (ELEC) and with government agencies that awarded the firm engineering-services contracts, according to a press release.

All of the defendants face first-degree counts of conspiracy and money laundering, as well as other charges.

Howard Birdsall, retired CEO; Thomas Rospos, executive vice president; William Birdsall, semi-retired senior vice president; Alan Hilla Sr., executive vice president for business development; Scott MacFadden, chief administrative officer; James Johnston, president of environmental consulting; and Robert Gerard, former chief marketing officer, have all been charged with making illegally reimbursed political contributions ranging from $45,797 to $241,000.