Jersey City Mayor Dogged by Scandal Faces Ex-Bond Trader

Jersey City Mayor Jerramiah Healy, 62-year-old veteran of political hazards that include a drunken nude photo and an FBI sting, wants a third full term. Backing him are President Barack Obama and Newark Mayor Cory Booker.

Healy’s main challenger in today’s election, Steven Fulop, a 36-year-old city councilman who left Sanford C. Bernstein & Co.’s trading desk to campaign, says it’s time for Healy to quit embarrassing New Jersey’s second-most populous city, four minutes by train beneath the Hudson River to Manhattan. Fulop’s backers include Appaloosa Management co-founder David Tepper and Pennant Capital Management founder Alan Fournier.

The two candidates are frontrunners for control of a city government savvy enough to coax Goldman Sachs Group Inc., UBS AG and Citigroup Inc. to open offices there, earning it the nickname “Wall Street West,” yet powerless to shake a 100-year reputation for crooked Democratic politics.

“It really is a test case in terms of a new guard entering the fray,” said Brigid Harrison, a professor of politics and law at Montclair State University. “That old guard has retained power. When people conjure up images of the city, it’s one in which party machines are enormously important.”

Healy and Fulop are registered Democrats, though today’s race, which has two others on the ballot, is nonpartisan. If no candidate receives more than 50 percent of the vote, the top two will compete in a June 11 runoff.

Hudson Democrats

Jersey City, 15 miles (24 kilometers) square, became known for political corruption starting in 1917 under the 30-year rule of Democrat Frank Hague, whose hallmark was boss-style patronage and election fraud framed by his declaration, “I am the law.” Mayor Thomas Gangemi Sr., an Italian immigrant, resigned in 1963 because he had never become a U.S. citizen. Mayor Thomas Whelan was convicted of extortion in a 1971 federal case.

In 1991, Mayor Gerald McCann was convicted in a savings-and-loan scheme linked to a marina development. Released from federal prison in 1994, he was hired as a city incinerator inspector and elected as trustee for Jersey City schools, the first ever taken over by the state of New Jersey, in 1989, for poor performance.

Healy, a former prosecutor, municipal judge and councilman, became mayor after winning a November 2004 special election to succeed Glenn Cunningham, who died of a heart attack. He was re-elected in June 2005 and again in June 2009.

Nude Photo

The mayor declined to be interviewed for this story, said Joshua Henne, a campaign spokesman.

In 2004, while Healy was still a councilman, a photo of him sleeping nude on his front porch was posted on the Internet. The New York Times quoted Healy saying in 2006 that he didn’t remember how he got on his porch after drinking six to eight beers at a local bar.

In an interview this year with the Star-Ledger, Healy was quoted as saying that “three Hispanic girls” lured him outside, pulled off the towel wrapped around him and did “filthy” things to him. He chased them off, then sat on the porch, and was then photographed by a political enemy, he was quoted by the paper as saying.

In 2006, the mayor was arrested and convicted of a disorderly-persons offense after scuffling with police outside a Bradley Beach bar owned by his sister. Four years later, the state Supreme Court’s disciplinary review board admonished him for the incident, and the Jersey Journal of Jersey City called for his resignation.

Bid Rig

In 2009, Jersey City was rocked by “Operation Bid Rig,” the largest Federal Bureau of Investigation corruption sting in New Jersey history, which netted 44 public officials and rabbis across the state. The case led to prison sentences for Healy’s deputy mayor, Leona Baldini, who had been his campaign treasurer, and several other aides and allies.

Healy, recorded on an FBI hidden camera meeting with an undercover informant, was never charged in that case. Fulop used the footage in a campaign ad with a tagline, “Mayor Healy got away with it.” Healy’s campaign issued a cease-and-desist letter that called the material defamatory.

The mayor said that under his leadership, crime in his city of nearly 250,000 people has dropped by a third. While other major cities fired police officers to close budget gaps, Healy has hired nearly 300, according to his campaign website.

‘Same Values’

Healy, who was co-chairman of Obama’s New Jersey campaign, said he and the president “share the same values that make up the bedrock of the Democratic Party.” Obama, in his March 20 endorsement of Healy, said “we need more leaders like my friend, Jerry Healy.”

“He’s made Jersey City a vital engine for economic growth, innovation and opportunity,” Obama said.

Healy’s endorsements also include Booker, a rising Democratic star and possible U.S. Senate candidate; Boston Mayor Tom Menino and New York City Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP.

Fulop has no comparable banner-name backing, though both the Jersey Journal and the Star-Ledger have endorsed him.

“We have John from Gifford Avenue and Paul from Duncan Avenue,” Fulop, referring generically to neighborhood support, said in an interview. “It really speaks to the grassroots thing.”

Tepper Committee

Fulop, who had worked for Citigroup and then Goldman before leaving to serve with the Marines in Iraq, has been able to draw campaign interest from Wall Street. Better Education for New Jersey Kids, a New Brunswick, New Jersey, political-action committee started in 2011 by Tepper and Fournier, has funded mailings supporting him.

“Fulop has a long history of putting the interests of the public-school kids first, and standing up against the status quo,” said Michael Lilley, a spokesman for Better Education.

Healy tried to get a Superior Court judge in Hudson County to force the group to stop producing campaign ads. In a May 10 lawsuit, Healy accused it of engaging in “explicit advocacy of Fulop’s candidacy” and skirting campaign-finance laws.

“Filing a frivolous lawsuit is what a desperate campaign does when the state’s largest paper, The Star-Ledger, calls the mayor ineffective, unethical and often downright embarrassing,” said Bruno Tedeschi, a spokesman for Fulop.

Fulop’s campaign received $52,000 from Tepper, of Livingston, and Fournier, of Far Hills, according to Healy’s lawsuit. Neither responded to e-mails for comment on the race.

As of May 2, Fulop had raised more than Healy, $955,964 to the incumbent’s $804,028, according to campaign-finance records.

Fulop says his success will depend on voter turnout.

“Our greatest obstacle is apathy,” Fulop said in an e-mail to supporters. “If the turnout is large on election day, we win. If it’s not, we lose.”

Before it's here, it's on the Bloomberg Terminal.