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Kendall Coffey

Kendall Coffey on Hardball

 

June 24, 2014

Guest: Kendall Coffey, Nicholas Confessore

 

Attorney Kendall Coffey on Hardball with Chris Matthews

Attorney Kendall Coffey on Hardball with Chris Matthews

CHRIS MATTHEWS, HOST:

A bridge too far.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

Let Me Start tonight with Governor Christie`s problems. It`s 
getting hot. Today`s “New York Times” reported that prosecutors in 
Manhattan have zeroed in on a securities fraud case against Christie`s 
administration. It involved New Jersey raising money under the name of the 
Port Authority and then spending it on an expensive state road project. If 
proven, reports suggest it could constitute a felony against whoever in the 
Trenton offices put their hand to it.

Well, the possible securities fraud is being probed along with the 
other pieces of the New Jersey scandal, the closing of the George 
Washington Bridge last September as some form of political punishment or 
whatever, the alleged strong-arm tactics employed against the mayor of 
Hoboken to back a waterfront development project, accusations of a possible 
case of extortion, threatening the loss of government hurricane recovery 
money.

Nick Confessore`s a reporter with “The New York Times” and Kendall 
Coffey`s a former U.S. attorney and founder of the law firm Coffey 
Burlington (ph).

Well, the walls look to be closing in. As I mentioned, the big story 
on the front page of today`s “New York Times,” a second bridge inquiry is 
said to be linked to Chris Christie. Last week, we told you about the big 
news in “Esquire” magazine, which reported that the U.S. attorney in New 
Jersey was closing in on Christie`s office and that indictments against 
four of his allies, including the former chairman of the Port Authority, 
David Samson, were near certain — those words in the report.

The headline in today`s “New York Times” is that the Manhattan 
district attorney and the Securities and Exchange Commission have zeroed in 
on possible securities law violations stemming from a $1.8 billion road 
repair agreement in 2011, according to people briefed on the matter. Well, 
those violations, according to the newspaper, could result in criminal 
charges. That means felonies.Let me go right now to Nicholas Confessore. Explain the various 
bodies now involved in investigating and perhaps getting close to indicting 
the people around the governor, or the governor himself.

 

NICHOLAS CONFESSORE, “NEW YORK TIMES”:

Well, what you have in New 
York state here, Chris, is an extraordinarily powerful statute called the 
Martin Act. It was used heavily by Eliot Spitzer and Andrew Cuomo to 
prosecute Wall Street. But what it basically says is that if you can find 
that somebody has lied or committed a deception in the securities industry, 
you don`t have to prove deliberate intent to deceive.

You have very broad latitude to go after fraud and securities, and 
that includes bonds issued by the Port Authority in this case to pay for 
other projects but which describes the Pulaski Skyway bridge repair as a 
way to fix the access roads to the Lincoln Tunnel, which are miles away.

(CROSSTALK)

CONFESSORE:

It sounds very complicated…

MATTHEWS:

It doesn`t go to the Lincoln Tunnel.

CONFESSORE:

That`s right. But essentially, the issue — what`s at 
issue here, Chris, is whether they told bond holders — they essentially 
deceived bond holders about what capital projects the Port Authority was 
undertaking because they were actually raiding the Port Authority for this 
money to pay for these other road projects to avoid raising the gas tax and 
compromising the governor`s reputation for fiscal probity.

MATTHEWS: Kendall, this is the kind of thing — like, you know, not 
to say that they`re at all the same, like — the way prosecutors got to 
Bill Clinton and Monica Lewinsky was through Paula Jones. I mean, it seems 
like one of these — this is a tributary. Would this investigation have 
occurred were it not for all the noise and focus on the bridge closings of 
the Port Authority bridge itself, the George Washington Bridge?

KENDALL COFFEY, FORMER FEDERAL PROSECUTOR:

Well, perhaps not because 
once the feds are after you, once there`s a lot of law enforcement 
interest, people start picking up the phone and calling, especially those 
who, for whatever reasons, have some real issues with the alleged center of 
the whole controversy.

And let`s emphasize — you`ve talked about three matters which ought 
to be enough to keep anybody awake at night. We don`t know what else is 
out there, but I can assure you that other people are calling about other 
allegations. So there`s a lot of things that Chris Christie has to be 
concerned about right now.

MATTHEWS:

Well, Nicholas, is there a possibility that the Manhattan 
DA, the Securities and Exchange Commission, the — and Paul Fishman, the 
U.S. attorney in New Jersey — they could all be moving toward some sort of 
criminal action here?

CONFESSORE:

It`s very possible. The Martin Act is a New York 
statute. It`s the most powerful such law in the country, which is why the 
Manhattan DA is involved. And remember, the project where they got this 
money from was supposed to be a big tunnel under the Hudson River that was 
going to help New York and New Jersey. So that`s why you have a Manhattan 
DA investigating a scandal in a different state, basically.

And of course, the SEC is involved, as well. It`s a securities 
matter. But what`s amazing here — if I were a Port Authority official 
involved in approving those bond prospectuses or approving the expenditure 
of that money for the Pulaski Skyway project, I would be very worried right 
now.

MATTHEWS:

Well, let me ask you about the larger picture. I mean, I 
follow politics and I follow Christie and his whole career. And when he 
made that decision to basically cancel that rail tunnel to New York, that 
third tunnel, it got a lot of heat.

And then we find out that he was — under this possible scenario, he 
was taking the money that was for that tunnel construction and using it for 
something that had nothing to do with the Port Authority. In fact, had to 
do with the Pulaski highway in the state of New Jersey. And he did that so 
he didn`t have to raise taxes, therefore, he could look like a low-taxer 
but still do big stuff.

CONFESSORE:

Right.

MATTHEWS:

In other words, he was moving stuff around.

CONFESSORE:

He was basically, you know, robbing Peter to pay Paul. 
Look, it`s not — it`s not free money. When you raid $1.8 billion out of 
the Port Authority, it comes out of stuff that the Port Authority should be 
doing, and it can result in things that people feel in their pocketbook 
both in New York and New Jersey. You know…

(CROSSTALK)

MATTHEWS:

Why are we just finding out — I mean, a billion — $1.8 
billion is a lot of money by anybody`s standards. Why didn`t this thing 
get nailed immediately when it happened, when the — when they realized the 
bond money was going to build a better highway in New Jersey?

CONFESSORE:

Well, you know, in fairness, this has been covered a 
while. And I think it goes to your point earlier. We knew that they had 
diverted this money. The political story, the kind of cover line, that the 
cancellation of the other project was because of worries of cost overruns 
was sort of — quickly went up in smoke over the last 12 months.

What was less clear was the fact that they had been describing this 
expenditure out of the Port Authority in a certain way to their investors. 
That`s come to light more recently.

MATTHEWS: Oh.

CONFESSORE:

As you said earlier, once you get prosecutors sniffing 
around, all the prosecutors in that neighborhood, you know, want a piece of 
the action.

MATTHEWS:

Well, Kendall, it seems like this is a very tough act, this 
Martin Act. And what it seems to me is based upon some requirement of the 
prosecutors to be able to make a case without getting into motive. It 
seems to me that just doing it on paper is the crime itself, taking money 
from investors, claiming that the money`s going to be used for one thing 
and then using it for something totally different, in a different 
jurisdiction, in fact. That`s enough information, apparently, according to 
what I`m hearing here, to indict.

COFFEY:

Well, absolutely in the sense that you can charge a 
misdemeanor if somebody had a meaningful involvement in putting a statement 
into the bond documents that was inaccurate. Don`t have to show that 
anybody relied on it to cause damages or that the alleged perpetrators had 
a knowledge that it was inaccurate. That`s a scary thing if you`re sitting 
on the other side of this investigation. That`s a misdemeanor. Of course, 
a felony requires some greater knowledge.

But consider this. You`ve got the SEC involved, too. And almost 
inevitably, where you`re saying that, in effect, the skyway was six miles 
from the Lincoln Tunnel and that that is an access road to the Lincoln 
Tunnel, there`s going to be SEC enforcement action. May not be…

(CROSSTALK)

MATTHEWS:

It`s transparently inaccurate to say that that`s an access 
tunnel — access route to the Lincoln Tunnel when it goes to the Holland 
Tunnel.

COFFEY:

This is an easy case, certainly at the SEC level. They`re 
going to bring this case at some point, and that`s going to be an ugly 
picture for everybody concerned.

MATTHEWS:

Nicholas, are they talking — are your sources talking 
felony prosecution here?

CONFESSORE:

Yes, depends a lot on what`s turned up. And who gets 
charged with what, obviously, depends on their involvement. What we`ve 
seen in the reporting so far is a lot of evidence that the Christie 
administration leaned on the Port Authority, was very intent on getting 
this money reallocated. Whether or not anyone in the administration had 
any involvement in this bond prospectus that would be the exact subject of 
the fraud, I`m not sure we know yet.

MATTHEWS:

Let`s take a look at another point here. The one that 
grabbed me from the beginning was Dawn Zimmer`s — the mayor of Hoboken 
saying that she was approached in a parking lot by the lieutenant governor, 
Guadagno, and told that although it shouldn`t be this way — those were her 
words — if she doesn`t back this waterfront development the governor`s 
pushing and his friends would benefit from, that she won`t get any 
government money for hurricane relief.

That always struck me as having the ring of truth to it. Is that — 
and “Esquire” reported last week that`s one of the three live 
investigations here that may be leading towards prosecution. What does 
”The New York Times” know about that Hoboken case, that piece of this 
thing?

CONFESSORE:

You know, Chris, I`m not sure we have any new reporting 
to share in the Hoboken case on the air tonight. But I think it makes your 
point that there are these various investigations, and not all on the same 
topic. They kind of all go to this question of economic development, how 
money is spent. And so there`s a broader political issue for the governor 
here, I think, this sense that, like, there was a lot of gamesmanship, a 
lot of pressure being applied to get his economic agenda going. And in 
some cases, it may not have been appropriate pressure.

MATTHEWS:

Well, there are five, as you`re reporting now here — there 
are five active investigations right now into Governor Christie`s office. 
State lawmakers continue their investigation. They`ve held four hearings 
now on the bridge closures and will likely hold more later this year. 
That`s the state legislative committee.

The Port Authority inspector general is investigating the agency. By 
all accounts, the U.S. attorney in New Jersey, Paul Fishman, is closing in 
on the governor`s office. A report, as I said, in “Esquire” last week said 
indictments were, quote, “near certain,” close quote.

And now we`ve got significant movement by the Manhattan DA, Cyrus 
Vance, Jr., and the Securities and Exchange Commission, which is a federal 
agency, which are probing $1.8 billion in potentially tainted 
infrastructure deals.

Last word to you, Kendall. What`s it all look like to you from both 
sides, prosecution and defense?

COFFEY:

Well, I think the prosecution`s got a lot of tools, and I 
think there`s going to be prosecutions. You talked about the mayor of 
Hoboken. That is an easy case, if they believe the mayor, and a classic 
case of extortion. These other things — they may go on a while. Don`t 
expect indictments quite as soon as some are suspecting.

But somebody in that “bridge-gate” case — and I think also in the SEC 
– in the other case involving the alleged access road to the Lincoln 
Tunnel — people are going to start rolling and people are going to start 
flipping. And it`s going to go up the ladder. How high? We`ll probably 
know within a matter of months.

MATTHEWS:

Why does this read like “On the Waterfront”? It just seems 
to. Thank you so much, Nicholas Confessore of the great “New York Times” 
and Kendall Coffey.

 

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