June 24, 2014
Guest: Kendall Coffey, Nicholas Confessore
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.
It sounds very complicated…
It doesn`t go to the Lincoln Tunnel.
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.
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?
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.
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.
In other words, he was moving stuff around.
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…
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?
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.
As you said earlier, once you get prosecutors sniffing around, all the prosecutors in that neighborhood, you know, want a piece of the action.
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.
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…
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.
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.
Nicholas, are they talking — are your sources talking felony prosecution here?
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.
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?
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.
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?
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.
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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