The ongoing battle between James McGreevey, former director of the job placement agency Jersey City Employment and Training Program, and the board that oversees the JCETP, has devolved into accusations of financial mismanagement.
A forensic audit of the program conducted by its oversight board has apparently revealed that millions of dollars are allegedly unaccounted for, dating to when McGreevey served as executive director of the JCETP, a nonprofit that places local residents in jobs in Jersey City.
The oversight board removed McGreevey in January during what some believe was a political struggle behind the scenes in Mayor Steven Fulop’s administration. McGreevey claims he was removed, because in 2018, he fired Eugene McKnight, an employee of JCETP and a top political operative for Mayor Fulop.
McGreevey had served as the 52nd Governor of New Jersey from 2002 until his resignation in 2004.
According to McGreevey, McKnight, himself an ex-offender, is currently under federal investigation for an alleged scheme to collect kickbacks from the salaries of ex-offenders placed in jobs through the JCETP, which is funded in part by Jersey City.
According to a letter sent to Fulop from Michael Critchley, an attorney hired by McGreevey, McKnight was terminated pending the outcome of the investigation. Critchley’s letter, which accompanied a whistle-blower lawsuit by McGreevey against the JCETP board, pointed out that McGreevey’s firing could be interpreted under state and federal law as retaliation.
After McGreevey began questioning whether his temporary replacement, Sudhan Thomas, was providing the training to former prisoners as required under the organization’s charter, the allegations of financial mismanagement against McGreevey surfaced.
Adding to the conflict, Mayor Fulop spokesperson Kimberly Wallace-Scalcione claimed McGreevey and Councilman Michael Yun started questioning the job placement program under Thomas only after McGreevey learned about the investigation into JCETP’s finances.
Wallace-Scalcione said McGreevey allegedly funneled JCETP funds into McGreevey’s personal nonprofit, New Jersey Re-Entry Corporation (NJRC). McGreevey claimed this was a partnership, but the city claims McGreevey allegedly improperly co-mingled city funds with his non-for-profit.
“It would appear they’re attempting to distract from the fact that the results of the audit are alarming,” said Wallace-Scalcione. “We look forward to the next steps by the JCETP board on behalf of Jersey City residents.”
McGreevey strikes back
McGreevey has challenged the JCETP board’s finding of unaccounted money by producing state audits done for the JCETP as required by the state of New Jersey.
“All external audits of both NJRC and JCETP were conducted by Donohue, Gironda, Doria, & Tomkins, LLC, who had full unfettered access to all employees and documents of both organizations,” McGreevey said. “During their audits, the auditors looked at all financial transactions, including cash payments, cash receipts, revenues, grant agreements, and grant reporting. There were no findings.”
McGreevey explained that the New Jersey Department of Labor and Workforce Development audited all federal funding for JCETP annually with the same access to employees and documents, and there were no findings of misappropriation of funds.
“In their audits, they reviewed policies and procedures, cash disbursements, cash receipts, contractual relationships, cost allocation plan, equipment inventory, financial reporting and budgeting, payables and obligations, payroll and benefits, and sub receipt monitoring,” McGreevey said.
Thomas, however, claims the audits McGreevey produced did not provide the kind of review that would have uncovered problems with JCETP’s bookkeeping.
“The forensic audit, on the other hand, was conducted by an outside forensic accounting expert appointed by the Board specifically designed to uncover fraud,” Thomas said.
While the audits McGreevey provided show no problems, the forensic audit done by the board overseeing JCETP after McGreevey’s departure did, according to Thomas. But he could not produce the audit because he said there is an ongoing investigation into the matter.
Thomas never made the audit public despite repeated requests from media and McGreevey.
“The firm was hired the night I was fired with no competitive bid,” McGreevey said. “And now nobody has seen this audit.”
Wallace-Scalcione said the matter has been sent to law enforcement for review.
“City Hall said the JCEPT Board fired McGreevey because they felt there were financial improprieties,” said Wallace-Scalcione. “The audit was done in order to confirm those suspicions.”
She said the audit showed money allegedly unaccounted for, or redirected, out of JCETP and into the McGreevey-run New Jersey Re-entry Corporation.
Thomas said that from 2013 to 2018, JCETP was in a period of steady decline, as evidenced by several “objective factors” revealed in operational audits. The organization’s budget was reduced from $6 million to $2.7 million, while staff was cut from 50 to 25.
Thomas continued, saying significant overlap in staffing and resources with the statewide nonprofit New Jersey Re-Entry Corporation had a negative effect on JCETP’s operational efficiency and employee morale, with many of JCETP’s top executives simultaneously working for NJRC without board authorization for shared services or payment transfer, and in serious violation of Department of Labor rules for usage of restricted funds.
McGreevey, however, claims that NJRC generated money for JCETP after the city started to cut back on JCETP funding, and that JCETP would have failed had it not been propped up by funds raised by McGreevey and NJRC elsewhere in the state.
McGreevey said throughout their partnership, NJRC and JCETP maintained an agreement that benefited both organizations. He said the audits demonstrate that JCETP never provided any monies to NJRC, and in fact, NJRC did provide funds to JCETP for the administration of the Jersey City reentry program. He said NJRC provided JCETP with $1.2 million in administrative expenses over the period of December 2015 to January 2019, in addition to providing JCETP clients with NJRC services including legal and social work services, transportation funding, food, and identification and driver’s license restoration fees.
“During my tenure as executive director, JCETP raised approximately $4.7 million in external grants in addition to the $1.2 million provided by NJRC,” McGreevey said. “These external grants were received from federal, state, and local entities, including the United States Department of Transportation for pre-apprenticeship training, the Fireman Foundation for impoverished single mothers, and the Walmart Foundation for apprenticeship training for skilled craftsmen.”
Political hit or what?
McGreevey also attacked the concept of an independent auditing firm, PKF O’Connors LLP, of New York,hired to do the forensic audit calling the firm “hand-picked” by Fulop surrogates to find some way to justify McGreevey’s firing.
The nine-member board overseeing JCETP saw a dramatic change of membership during the weeks prior to McGreevey’s firing, with many of the new members having strong political connections to Mayor Fulop.
These included Thomas, also the school board president; Rev. Rudolph Daniels, a close personal friend of Mayor Fulop’s; Jeremy Farrell, the former administration corporation counsel for Mayor Fulop; Stacey Flanagan, a Mayor Fulop-appointed city health officer who also works for the mayor’s reelection campaign, and others, including a police officer who is assigned as Mayor Fulop’s driver.
For updates on this and other stories check hudsonreporter.com and follow us on Twitter @hudson_reporter. Al Sullivan can be reached at firstname.lastname@example.org