Solar scam's Birdsall pleads GUILTY

The 2011 document used to sell the solar deal to the Sussex County Freeholders was called the Solar Proposal Evaluation Report. It was the work of a committee that was formed to sell the solar scheme -- the Sussex County Evaluation Team.  Here are the members of the team:

- John Eskilson Sussex County Administrator

- Dennis McConnell, Sussex County Attorney

- Bernard Re, Sussex County Treasurer

- Steve Pearlman, a lawyer with Inglesino, Pearlman, Wyciskala & Taylor

- Deb Verderame, a lawyer with Inglesino, Pearlman, Wyciskala & Taylor

- Gerry Genna, Birdsall Services Group

- Tom Brys, Birdsall Services Group

- Douglas Bacher, NW Financial Group

- Heather Litzebauer, NW Financial Group

- Steven Gabel, Gabel Associates

- Richard Preiss, Gabel Associates

- Cadence Bowden, Gabel Associates

The evaluation team was put together by John Eskilson.  Two Birdsall cronies were on the team.  Eskilson later got rewarded with a position as a trustee with the Sussex County Community College.  The Freeholders who voted for that were Phil Crabb, Richard Vohden, and Dennis Mudrick.

Yesterday, Birdsall's CEO pleaded guilty to criminal political corruption.  We'll let Star-Ledger reporter S. P. Sullivan take it from here:

Birdsall CEO pleads guilty in huge N.J. pay-to-play scheme

The former CEO of what was one of the state's most politically connected engineering firms is facing four years in state prison after admitting to his role in a $1 million scheme to circumvent New Jersey's pay-to-play laws.

Howard Birdsall, 72, pleaded guilty Thursday to corporate misconduct in Superior Court in Ocean County, according to the state Attorney General's Office.

Birdsall, of Brielle, was the top corporate officer and largest shareholder of Birdsall Services Group, the now-defunct Monmouth County firm that folded after investigators found executives and employees were reimbursed by the company for campaign donations to politicians. 

Under a plea deal, Howard Birdsall faces the prison time and will pay $49,808 — the total amount of political donations he personally made in the scheme. Acting Attorney General John Hoffman said in a statement Thursday that Birdsall's plea "should serve as a warning to any corporate officials who would engage in this type of criminal scheme."

Birdsall's attorney, John P. McDonald, declined to comment.

Birdsall exec pleads guilty in pay-to-play scheme

In 2013, the company pleaded guilty to first-degree money laundering and second-degree making false representations for government contracts, crimes for which it paid a $1 million fine. It was later sold to a California firm that pledged not to make political contributions in New Jersey.

Company records obtained by The Star-Ledger that year showed that hundreds of politicians, from mayors and freeholders to major state power brokers, received money from the firm. Those donations came in the form of personal checks from shareholders and firm employees, who were reimbursed through bonus payments and other means, authorities said. 

Three other former Birdsall employees — chief administrative officer Scott MacFadden, of Brick, marketing director Philip Angarone, of Hamilton, and Eileen Kufahl, of Bradley Beach, previously pleaded guilty to participating in the scheme and are awaiting sentencing, authorities said.

A former executive vice president at the firm, Thomas Rospos, of Belmar, is scheduled to go on trial on Feb. 22.

An epidemic of single-bidder contracts

As prosecutors get down to unraveling the complex web of relationships behind the "solar gold rush" that resulted in some politically-connected firms getting a lot of money while taxpayers in counties like Sussex were left holding the bag, they will no doubt focus on who knew whom way back in 2005 when these political alliances were forming.  The social circles these people travelled in -- gatherings in upscale Manhattan and the political cocktail circuit of some of the more expensive communities in Morris and Somerset Counties.  And let's not forget the hot tub parties hosted at a multi-million dollar shore house.  All gathering grounds for the chic and well-connected to play, exchange information, and make deals.

The result of all this was a notable absence of competition to facilitate the "solar gold rush" in New Jersey.  While some states saw scores of engineering and other vendors line up for a taste of taxpayer dollars, too often New Jersey saw a single bidder looking for a too narrowly-written contract.  This trend was getting noticed even before Sussex County decided to try its hand at going solar.

Consultants get a cut from North Jersey solar energy projects

JULY 24, 2011    LAST UPDATED: MONDAY, JULY 25, 2011, 6:37 PM

BY JOEL SCHECTMAN

STAFF WRITER | 

THE RECORD

Two politically connected firms at the front of the solar energy development gold rush are teaming with North Jersey improvement authorities to sell projects to local governments and school districts.

In the latest push, the firms, together with the Passaic County Improvement Authority, are pitching a no-money-down solar-paneling solution to the county’s municipalities and districts to help reduce electricity costs. It’s asking them to sign on to a 15-year pact in which a developer would install the panels and then charge the government entities rates lower than those currently paid.

Bergen County is using a different approach — private financing and smaller scale.

So far, Passaic County’s efforts have met with mixed results after numerous presentations. For instance, Clifton has signaled interest, and both the borough of Ringwood and the Lakeland school district signed on to the plan this month, but North Haledon’s Borough Council recently heard the pitch and took a pass, expressing concern about unknowns of the cost structure.

"The advantage of the program is having an outside agency look at the proposals and make sure there are real cost savings," said Clifton Mayor James Anzaldi.

But the project would include layers of professional fees from the collaborative efforts of the legal firm of Decotiis, Fitzpatrick and Cole LLP based in Teaneck and New York, and the engineering firm Birdsall Services Group of Sea Girt. The two firms have already spearheaded the same solar development model in Morris, Union and Somerset counties and are now helping evangelize the plan throughout Passaic County.

Decotiis is responsible for the legal side of the project, writing the contracts with the developers and drafting the wording of resolutions to bind local governments to agreements. Birdsall Services Group is responsible for the engineering side — helping governments select sites for the construction and vetting developers to build the panels once bids are sought.

 Former Decotiis partner Steven Pearlman, called the "godfather" of the plan by one county administrator, created the concept when he was general counsel for Morris County in 2008. The $21.6 million project is estimated to save the county $3.8 million over the 15-year life of the project. The plan became known as the "Morris Plan," and Pearlman pitched it to the Somerset County freeholders in 2009, signing the county onto the plan in 2010. Over the next year Union County brought the same team in to develop the plan for its towns.

Somerset County Improvement Authority project manager Yvonne Childress said that although the county went through a competitive selection process before signing on with the firms, the three companies selected were the only ones to apply: Birdsall; the Decotiis firm; and Inglesino, Pearlman, Wyciskala & Taylor LLC — a firm Pearlman helped found after leaving Decotiis.

Pearlman’s new law firm handled the bonding for the project, obtaining credit through the county. Birdsall, Decotiis and Pearlman did not respond to requests for comment.

"We have learned that more law firms are starting to model this program, so going forward, there may be more players in this game," Childress said in an email.

Both firms have contributed generously to election campaigns statewide, and have received impressive contracts from state and local governments.

Birdsall has contributed at least $669,910 to state and local elections since the solar push began in 2008 through 2010, the last date for which complete contributions are tallied. During that same period, the company received $70 million on all its state public-works contracts. The improvement authorities have not yet provided The Record with contract amounts for the solar projects.

Decotiis employees gave at least $200,000 to state and local campaigns, according to state election records. The firm received $45.7 million in New Jersey contracts in the same three years, according to public records.

In Passaic County, the group of consultants, along with the PCIA, has pitched the proposal to towns that include Hawthorne, Woodland Park and West Milford.

Nicole Fox, PCIA executive director, said she would not be available for comment by deadline.

In the solar-paneling project, the construction costs would all be paid by the developer, using cheaper credit from bonds written through the county. The builder would make back his money by charging the governments involved for the electricity produced and used by those governments. The firms pitching the deal are offering significant savings to government over the life of the program — Clifton, for example, would save as much as $85,000. Bonding through the county could, presumably, offer a lower rate than private financing and help the developer to pass on the savings to taxpayers.

In Passaic County, the developer, which hasn’t yet been selected, will have to charge governments enough to recoup construction costs and make a profit over a 15-year contract, and it also will have to add in the fees for Birdsall and Decotiis, according to the PCIA.

John Bonanni, commissioner of the Morris County Improvement Authority, the first to use the plan, noted those add-ons as significant.

"But someone has got to pay them," he said. "[The fee] gets baked into the cake."

Passaic County’s local governments and school districts have until the beginning of August to sign on — the PCIA will request proposals from developers by the end of that month, Fox said. Construction would start in fall and last one year.

Bergen County’s solar projects are of a smaller scale and without financing through public bonds. Instead a private solar financing company, Sunlight General Capital, is putting up the money and charging for the electricity. Bergen has built panels on the  Prosecutor’s Office in Paramus and the parking garage of the County Administrative in Hackensack.

Crabb cover-up: 1800 words, Evaluation Report not mentioned

Giving unprecedented access to its pages, the New Jersey Herald permitted Freeholder Director Phil Crabb to pen an 1,800 word apology in today's edition that presents itself as an explanation of the solar mess, while it slyly attempts to blame Parker Space. 

So let's see, you have a lawyer, a bureaucrat, an accountant, a talk show host, a pharmaceutical salesman, and a union boss... and they want us to believe that the farmer did it.  Really?

Space was one of the Freeholders who voted for the concept in 2011.  He was an Assemblyman when the project went bad and required a taxpayer-funded bailout.  Space opposed the bailout and joined Freeholders Phoebus and Graham in asking the state Attorney General to initiate an investigation.  That investigation has begun.

As reported in the Herald, the Star-Ledger, the Advertiser, and Sparta Independent, the Express-Times and other media, a document called the Solar Proposal Evaluation Report  was  the sales document used to convince the Sussex County Freeholders that the solar plan was viable.   

Why then -- in his 1,800 word statement in the Herald -- didn't Freeholder Crabb mention the Solar Proposal Evaluation Report even once?

Because Crabb is trying to mislead the Herald's readers.  Because Crabb is attempting to protect the guilty.

Here is what really happened:

How it was sold to the Freeholders

In 2011, the Sussex County Board of Chosen Freeholder was composed of the following members:  Freeholder Director Rich Zeoli, Deputy Director Sue Zellman, and Freeholder members Phil Crabb, Rich Vohden, and Parker Space.  Vohden and Space were new to the  Board.  On November 14, 2011, the Freeholder Board voted unanimously to take the solar deal offered by SunLight  General.  How did it happen? 

Watchdog has uncovered the document used to sell the deal to the Freeholders, but first, let's look at the committee that was formed to sell the solar scheme.  It was called the Sussex County Evaluation Team and it was composed of the following people/organizations:

- John Eskilson Sussex County Administrator

- Dennis McConnell, Sussex County Attorney

- Bernard Re, Sussex County Treasurer

- Steve Pearlman, a lawyer with Inglesino, Pearlman, Wyciskala & Taylor

- Deb Verderame, a lawyer with Inglesino, Pearlman, Wyciskala & Taylor

- Gerry Genna, Birdsall Services Group

- Tom Brys, Birdsall Services Group

- Douglas Bacher, NW Financial Group

- Heather Litzebauer, NW Financial Group

- Steven Gabel, Gabel Associates

- Richard Preiss, Gabel Associates

- Cadence Bowden, Gabel Associates

This is the committee that recommended to the Freeholder Board that they agree to the solar scheme.  These are the promises they made to the Board: 

"The SunLight/MasTec team possesses high quality management, installation capabilities, and sound solar development experience.  In addition, the SunLight/MasTec proposal provides Sussex benefits in the following key areas:

- It provides substantial direct energy cost savings;

- It provides the Local Units the potential for additional savings through the sharing of revenues from the sale of Solar Renewable Energy Certificates (SRECs) and other environmental benefits;

- Due to SunLight/MasTec's proposed capital investment, which reduces the required size of the Authority bonds, it provides a strong level of protection for Sussex from financial risk;

- It provided additional financial protection for Sussex in the form of a debt service reserve fund; and,

- It includes a restoration security providing for additional Local Unit protection at the end of contract."

The entire process was open to public bid, but only one bidder showed up.  Another showed up late and was disqualified.  Some wanted to redo the bid, but that suggestion was brushed aside.  Only one bidder?

The Aftermath

While Sussex County continues to pay these lobbyists and consultants, neighboring Morris County has taken action. 

Lawyer Pearlman and his firm were asked to resign by Morris County and they complied.  Gabel Associates was also asked to resign and complied.  That is 5 of 12 members of the Sussex County Evaluation Team .

In 2013, Birdsall Services Group pleaded guilty to charges of public corruption  and was ordered to pay $1m in penalties, as well as $2.6 million to settle a civil forfeiture action brought by the attorney general’s office.  Individual cases against seven executives are pending. 

That makes 7 of the 12 members of the Sussex County Evaluation Team.

But while they have suffered sanctions from Morris County or from the New Jersey Attorney General, Sussex County Freeholder Director Phil Crabb continues to be more than happy to do business with these people.

Maybe Sussex County taxpayers should think about recalling some of these Freeholders who continue to do business with the people who ripped off Sussex County?

Watchdog is read by 11,000 residents in Sussex County, either by email or online.  Let us hear from you.  Tell us what you think we should do...

Do you want your tax dollars to continue to pay the Sussex County Evaluation Team members who have been fired by Morris County or who have pled guilty to actions brought by the New Jersey Attorney General?

Let us know:  info@sussexcountywatchdog.com

Sussex Solar Mess: This will shock you

Once upon a time five directors at a French bank named Societe Generale decided that they would form a corporation to cash in on the solar energy programs being pushed by the Obama administration.  They got together with a few of their Wall Street buddies, came up with a scheme and looked for a market.  Of course, few of these solar schemes have worked as advertised and none have worked without huge infusions of taxpayers' money.  

The corporation -- SunLight General -- pitched its product to those "backwards" Republican counties who hadn't already jumped onto the politically correct Obama solar bandwagon.  To get the job done, they partnered with a few politically-connected goodfellas, including Birdsall Services Group, a New Jersey firm that got caught in a corrupt pay-to-play scandal:

In March 2013, seven BSG executives were charged on suspicions of involvement in a scheme to circumvent New Jersey’s so called pay-to-play laws. Prosecutors allege that the executives routinely made – or asked employees to make- illegally reimbursed donations to secure public contracts.  By bundling multiple personal political contributions worth less than $300 (which by NJ law do not have to be disclosed) the scheme avoided disqualification under state laws that prohibit public contracts being awarded to firms that have made corporate political contributions to the campaigns of public officials responsible for granting those contracts.

On March 26, 2013, a court order authorized the state Attorney General’s office to freeze Birdsall’s assets, then valued at $41.6 million, prompting the firm to file for Chapter 11 bankruptcy protection.  The following month, Birdsall Services Group agreed to pay $2.6 million to settle a civil forfeiture action brought by the attorney general’s office so it could access its bank accounts and pay employees who had temporarily been furloughed.  On June 13, the firm pled guilty and was ordered to pay an additional $1m in penalties, fines and institutions.  Edwin Stier, who was appointed by a federal bankruptcy judge in April to lead the company, said that “This guilty plea is an acknowledgement on behalf of (Birdsall) of the serious wrongdoing that occurred and accepts the consequences of those actions while still protecting the interests of the innocent employees, clients and creditors”.  

Individual cases against the seven executives are pending.

How did a crew like this sell Sussex County on a solar deal?