Members of the Hoboken City Council discussed the matter at the June 20 council meeting. Also at the meeting, the council discussed creating a local Ethics Board after tabling an ordinance to require the mayor to make quarterly reports regarding his second job.
The council may take an initial vote on creating the ethics board as soon as the next council meeting on July 11.
On June 13, the New Jersey Supreme Court censured Bhalla after the state’s Supreme Court Disciplinary Review Board recommended censure for failing to properly fund his former employee’s retirement account in 2008 and 2009.
According to the 16-page Dec. 14, 2017 decision of the board, Attorney Alexander Bentsen worked for Bhalla in 2008 and 2009 (before Bhalla joined the City Council in July 2009). Bentsen, who had a salary of $60,000, asked Bhalla to withhold 10 percent of his gross income to be deposited in an IRA account which Bhalla would match by up to 3 percent. According to the decision, Bhalla did not make the required deposits.
This left Bentsen’s IRA underfunded by $6,208. Bhalla also did not send Bentsen’s 2008 Social Security withholding taxes, totaling an additional $4,000, until 2013 or 2014, the decision alleged.
The mayor told the disciplinary board, according to the document, that he thought the payroll company he had hired took care of the funds for Bensten’s IRA account. According to the decision, after Bhalla was interviewed by the Office of Attorney Ethics seven year later, Bhalla remedied the situation.
“Ravi Bhalla accepts, but respectfully disagrees with the ruling,” said Rob Horowitz, private spokesman for Bhalla, in an email last week. “This was an inadvertent payroll mistake, resulting in the underpayment of an employer match on an IRA retirement program more than 10 years ago when Mr. Bhalla operated his own small law firm. The employee never informed Mr. Bhalla and then waited seven years and filed an ethics complaint. As soon as Mr. Bhalla realized there was an underpayment, he immediately paid the amount due.”
According to the decision, “Bentsen made numerous requests of respondent [Bhalla] to rectify the matter…he did not return ‘the funds’ to Bentsen until 2016 and 2017, only after Bentsen had filed a grievance against him, in August 2015.”
Of this, Horowitz said, “We believe that is overstated. As soon as Bhalla realized he owed the money, he moved to pay it.”
There are five ways attorneys in New Jersey can be disciplined, including admonition, followed by reprimand, censure, suspension, and disbarment.
The board voted 4-3 to recommend censure instead of a three-month suspension of Bhalla’s law license. Three judges out of nine voted for Bhalla to receive a three-month law license suspension, four voted for the censure, and two did not participate.
The disciplinary board said that Bhalla’s actions would have warranted only a reprimand if he had not been admonished once already in 2010 for alleged record-keeping violations and for allegedly paying a client and himself from a check that had not cleared, according to the 16-page Dec. 14 decision.
“In our view, respondent’s nonchalance regarding Bentsen’s missing monies, over the course of six years, including while he was under investigation and then disciplined in another matter, justifies enhancement from a reprimand to a censure,” states the decision.
Bhalla has had brushes with state boards before. He was accused of a state ethics law violation after he voted, on the council in 2010, to award a city contract to the lawyer with whom he shared an office lease. A judge initially ruled against Bhalla, but after another ruling and counter-ruling, the appellate division ruled in Bhalla’s favor in 2016.
“In our view, respondent’s nonchalance regarding Bentsen’s missing monies… justifies enhancement from a reprimand to a censure.” –Dec. 14 decision
Meanwhile, the majority of the council, seven of whom are not allied with Bhalla,
introduced an ordinance last month which would require the mayor to report, each quarter, his income from the job, as well as clients or contracts.
In February, the legal firm of Lavery, Selvaggi, Abromitis & Cohen, P.C. based in Morristown announced that it had hired Bhalla to an “of counsel” position. According to his contract, they will pay him $60,000 annually as well as a commission for generating new clients.
After council members were concerned about potential conflicts of interest and that the job might take time from Bhalla’s full-time, $116,000-per-year office, Bhalla responded that his sole focus was Hoboken.
A second vote on the council’s proposed ordinance was tabled at the June 20 council meeting after the city attorney informed the council that it was unenforceable.
According to a memo from the city’s Legal Department, the proposal is invalid as the ordinance “attempts to pass an ethics requirement … which may only be done if the city establishes a local municipal ethics board.”
It also notes that disclosure of clients may violate attorney client privilege.
In response to the tabled ordinance, Bhalla issued a memo to the city council stating that since joining the firm he has “been as transparent and upfront as possible.” He released his employment agreement with the firm after the council questioned it.
He noted that since submitting his answers to 26 questions the council asked him, he had not received any follow-up questions.
In the memo, he stated that as of June 1 he had generated one client to the firm, the Borough of Englewood Cliffs, a town in Bergen County. He said that he had received no commissions as of June 21.
Asked about this contract and how such referrals occur, city spokesperson Santiago Melli-Huber said Bhalla did not know the exact dollar amount of the contract between the Borough of Englewood Cliffs and the firm, but his understanding “is that it was for a few thousand dollars.”
Mellii-Huber said the referral was “routine.” He explained, “A legal colleague involved in the matter had a conflict of interest and asked Mayor Bhalla if the firm would be able to assist.”
As a result of the council having to table the ordinance asking for quarterly disclosure, Council President Ruben Ramos said the Hoboken City Council may seek to create a Local Ethics Board. He had directed the Law Department to have a draft prepared by the July 11 meeting.
According to state law, each municipality of the state may, by ordinance, establish a municipal ethics board that would have six members appointed by the governing body.
The board can review complaints and hold hearings regarding possible violations of the municipal code of ethics or financial disclosure requirements by officials and city employees.
It can also give opinions to local officials or employees as to whether a given set of facts and circumstances would constitute a violation of any provision of the municipal code regarding ethics or financial disclosure requirements.
According to Melli-Huber, Mayor Bhalla supports the decision of the council to create an Ethics Board “if this would further the public’s interest in more transparency and accountability from our elected officials.”
Marilyn Baer can be reached at email@example.com.