EXCLUSIVE: Fulop challenges Bloomberg News article

Jersey City mayor pushes back against 'implied wrongdoing'

Mayor Steven Fulop
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Mayor Steven Fulop

Jersey City Mayor Mayor Steven Fulop and people associated with his one-time political aide Tom Bertoli are challenging conclusions raised in a Bloomberg News article published on June 28 that raises questions about possible conflicts of interest between Fulop and companies doing business with the city.

It also details an investigation into possible federal tax evasion charges Bertoli may face.

Fulop and his press representatives say the Bloomberg News story misrepresented facts in a way that implies wrongdoing where there was none.

The primary issues raised in the article concerning the mayor are whether Fulop violated the city’s code of ethics by using contractors with property holdings in Jersey City to work on his two homes; loans he received from Bayonne Community Bank where the city had funds deposited; whether his administration took actions that benefited businesses that had contributed to the Coalition For Progress political action committee he was expected to benefit from in a run for governor; and whether his wife’s business  – which leases from one of the developers that does business with the city – got special treatment.

The other questions involved Bertoli’s role as a private expediter helping development companies navigate through Jersey City’s cumbersome permit process in exchange for hefty fees, and whether Bertoli used his influence with Fulop to further his business.

The article said Fulop hired Dixon Advisory Services, “the real estate arm of an Australian company” with property holdings in Jersey City, to help rebuild his home in Jersey City and build a new vacation home in Rhode Island. It also said that Fulop received loans from Bayonne Community Bank, in which the city has deposits.

Another focus of the article is the mayor’s relationship to Mack-Cali, described as “a publicly traded real estate company with billions in holdings across the northeast and a substantial footprint in Jersey City.” Both Mack-Cali and Dixon Advisory Services contributed to a political action committee, Coalition for Progress, which was established in 2015 and allowed Fulop to explore a possible run for governor, although the PAC president said the fund was designed to support a number of candidates.

Fulop and those close to Bertoli have blasted the Bloomberg News story as vague and misrepresenting facts.

A Kushner connection?

One of the people subpoenaed by the grand jury looking into these matters is Charles Kushner, a prominent developer who in the past has been the subject of investigative stories by Bloomberg News.

Kushner, according to the story, is being considered as a witness.

According to a source close to Bertoli, Bloomberg News has been a staunch critic of Kushner for years, but apparently allowed Kushner to sell this narrative against Fulop and Bertoli.

A source close to Bertoli believed this was an attempt to divert attention away from Kushner’s business activities, including those of his son – Jared Kushner, son-in-law of President Donald Trump.

“This comes after the convicted felon Charlie Kushner tried to push a negative story about the mayor because the mayor won’t approve a tax abatement,” said Jersey City Spokesperson Kimberly Wallace-Scalcione. “Bloomberg found no evidence to the contrary against the mayor.”

Mack-Cali allegations

The Bloomberg News story went on to claim that Mack-Cali stood to benefit from the Fulop Administration designating the Exchange Place area as a special improvement district because this allowed the city to impose a surcharge on the area’s 500 businesses. The story claims that Fulop  appointed a board to oversee how these funds are spent.

But several members of the Fulop Administration called this idea absurd, pointing to other SIDs in the city, and the fact that the budgets of each must be approved by a vote of the city council.

The story also questioned whether Fulop had conflicts because his wife Jaclyn owns a business that leases space from Mack-Cali, calling this a possible violation of the city’s ethics code by the mayor.

“This lease was signed before the mayor and Jaclyn were married,” said Wallace-Scalcione.

Jaclyn Fulop established her business in 2011, two years prior to Fulop becoming mayor and four years before their marriage.

Fulop has provided evidence that he recused himself of any issues pertaining to Mack-Cali where they could have a financial benefit.

“I recused myself as soon as I found out about this,” Fulop said, providing documents to The Hudson Reporter that showed he withdrew from all interactions between the city and Mack-Cali.

Home building and improvements

The Bloomberg News article also questioned Fulop’s use of Dixon for work done on Fulop’s Jersey City and Rhode Island homes.

Alan Dixon, chief executive officer of Dixon Advisory, is a personal friend of the Fulops. The article claims that Dixon Advisory – one of the largest landlords in the city – also benefited from Fulop’s delaying of a tax reevaluation originally set for 2013 but not completed until 2017.

Dixon was opposed to the 2013 reevaluation as well as the 2017 one ordered by the state, and he backed a council candidate that espoused that opinion in the 2017 municipal election.

Wallace-Scalcione said the Bloomberg story implied that by having Dixon’s construction unit work on Fulop’s homes that there was some benefit. Dixon Advisory and BCB bank also had a part in upgrading the Fulop’s summer home in Narragansett, RI.

According to documents supplied by Wallace-Scalcione, Fulop paid Dixon $485,000 to overhaul Fulop’s Odgen Avenue home in Jersey City Heights, and some of this was financed through BCB.

The Fulops bought the Rhode Island home for $820,000, razed it, and began to replace it with a three-story structure. The new home was designed by architects from Dixon. BCB gave the Fulop’s a $650,000 line of credit.

Wallace-Scalcione said the Bloomberg News story implied but did not prove that this somehow was in exchange for the Fulop Administration transferring pension funds and allowing BCB to open more branches in Jersey City. But Fulop provided documentation showing that the pension funds were deposited into BCB prior to his taking office as mayor.

Wallace-Scalcione said the Bloomberg story raised suspicion of conflicts without offering any proof.

“The mayor paid market rate for his construction, and his mortgage is the same as anyone could get based on public rates – there was no benefit,” Wallace-Scalcione said. “Nobody has ever found anything to refute that which speaks to the mayor never getting special treatment. Bloomberg found that the mayor pays exactly market rate for his mortgage and that BCB has had a relationship with Jersey City since before the mayor took office.”

 Bertoli as ‘The Janitor’

Sometimes called “The Janitor” for his role in cleaning up messes, Bertoli is portrayed in the Bloomberg story as a key political operative who helped Fulop win elections for the city council and the mayoralty. Bertoli had contracts with various developers to expedite their applications through the complicated permit process in Jersey City, and the article implies that Bertoli may have allegedly used his connections to Fulop to aid his business.

Bertoli in the past has never denied that he made his living off of helping developers, and said that the permitting process is often cumbersome, and he was able to broker contracts to help developers sort through the red tape. He also pointed out that the Fulop Administration has since developed an office for this same purpose.

A source close to Bertoli confirmed that a grand jury is looking into some of these issues.

One of the chief witnesses in this grand jury investigation, however, is Charles Kushner, a developer who has been at odds with Fulop and Bertoli.

Fulop is being sued by Kushner after he canceled approvals for a Kushner project in Journal Square and refused to give other benefits to help the project move ahead when Kushner could not come up with the financing he promised.

While the article reported that Bertoli also worked for Kushner on the Trump Bay Street project, people with knowledge of the situation said the relationship ended badly, and that Bertoli refused to work with Charles Kushner again, even going so far as to steer a $30 million waterfront project away from Kushner to Mack-Cali.

Unpaid taxes charge may not be real

While the Bloomberg story said that the investigation also alleges that Bertoli is facing criminal charges due to 10 years of unpaid taxes, a source close to Bertoli said a recent audit showed no such debt.

When this accusation first emerged, Bertoli apparently hired a CPA to reexamine his books and could not find anything improper, according to a knowledgeable source. This same source said federal investigators have subpoenaed nearly all of the businesses Bertoli represents.

This source believes the federal investigation may be an attempt to intimidate Bertoli into cooperating with a broader investigation, something similar to the Bid Rig III investigation that lead to the conviction of more than a dozen local public figures a decade ago. Bertoli has statewide connections, and would be seen as a significant asset in such an investigation.

Bertoli apparently has refused to cooperate, which may be why he has become the target of the investigation, this source said.

This source believes that this pressure on Bertoli may be part of an effort to get Bertoli to give up information about Fulop, who has not been charged with any crime.

A grand jury has subpoenaed a number of people, including developers and others associated with Bertoli.

“Federal agents even showed up at the front door of a woman who once gave him a $1,000 check and demanded to know more about it,” this source said.

 Fulop foes demand an investigation

The article has prompted Council President Rolando Lavarro -a political opponent of Fulop – to call for a federal investigation into some of Fulop’s personal finances.

“I’m deeply concerned with the developments brought to the public’s attention by [the] article in Bloomberg News,” Lavarro wrote in a letter to U.S. Attorney Craig Carpentino. “The article details potential improprieties in connection with Mayor Fulop and several real estate developers, possibly resulting in a serious conflict of interest and critical violations of the public trust.”

“The story questioned the behind-the-scenes activity of Bertoli and suggested Fulop may have had conflicts of interests when using local banks and contractors to work on two homes he has built, “Lavarro continued. “The Bloomberg account details alarming connections between organizations engaged in activities of possible pecuniary benefit to Mayor Fulop.”

For updates on this and other stories check hudsonreporter.com and follow us on Twitter @hudson_reporter. Al Sullivan can be reached at asullivan@hudsonreporter.com