New Jersey's Booker Among 28 Sued Over Watershed Waste

Updated on
  • Lawyer says U.S. senator tried to reform Newark's water system
  • Bankruptcy trustees also sue ex-councilman for wasting assets

Corruption was rampant at a nonprofit entity that managed 35,000 acres of watershed for Newark, New Jersey, with the executive director secretly writing checks to herself and squandering public money in high-risk margin trading, state investigators reported last year.

The Newark Watershed Conservation & Development Corp. filed for bankruptcy, and its trustees have now placed blame for the mismanagement on 18 people. They include Cory Booker, who was mayor of Newark before joining the U.S. Senate in October 2013, and Representative Donald Payne Jr., who was City Council president before entering Congress in 2012.

Trustees of the watershed sued Booker, Payne and the others in bankruptcy court for their role in the misappropriation and waste at an entity that got almost $10 million a year to manage the city’s reservoirs and water-treatment plant. Booker’s attorney called the lawsuit frivolous. A Payne spokesman had no immediate comment.

The lawsuit, filed Nov. 6, drew heavily on a February 2014 report by the state comptroller’s office, which said that from 2008 to 2011, “the NWCDC recklessly and improperly spent millions of dollars of public funds with little or no oversight by either its board of trustees or the city.”

Margin Trades

The report described how Linda Watkins-Brashear, the longtime executive director, secretly opened a brokerage account and traded securities on margin, losing almost $500,000 in the 2008 market downturn. She handed out no-bid contracts to friends and her ex-husband, while the NWCDC paid her $800,000 beyond her salary over seven years in the form of checks she wrote herself and severance payments, according to the report.

When questioned by investigators, Watkins-Brashear exercised her constitutional right against self-incrimination. In the past year, an employee and a contractor were indicted for a kickback scheme, and another contractor pleaded guilty to taking part in a bribery scheme. Booker, who attended no NWCDC meetings despite being its chairman, took action to dissolve the entity in 2013 after learning of some of the comptroller’s findings.

Bankruptcy trustees of the watershed sued 28 defendants, including Booker, Payne and 16 other people, plus various groups and companies. They alleged that Booker, a Democrat who was mayor from July 2006 to October 2013, and Payne, also a Democrat, “knew or should have known” of misappropriation and waste by Watkins-Brashear.

‘Insolvency, Demise’

The wrongful acts of defendants “caused the insolvency and demise of the NWCDC,” according to the complaint, which seeks compensatory and punitive damages for creditors who are owed $5.5 million.

The trustees named three groups of defendants: officers and employees of NWCDC who misappropriated funds, including Watkins-Brashear; accountants and other professionals who failed to prevent or curtail the waste; and trustees like Booker who “simply ignored or failed to exercise their fiduciary duties to the NWCDC and the city of Newark.”

A review of written minutes from April 2007 to March 2013 showed that the board “with Booker’s acquiescence abdicated its organizational and contractual responsibilities in a number of ways,” according to the trustees.

Utilities Authority

The board sought to manage the city’s watershed properties through a failed effort to create a municipal utilities authority, which squandered NWCDC assets, according to the complaint. It failed to investigate the NWCDC’s true financial condition or question internal controls for handling cash reserves and awarding no-bid contracts, the complaint said.

Booker attorney Marc Elias, in a statement, questioned the actions of the NWCDC trustees, which he said has spent more than $1 million to shut down the corporation over the past two years.

“They still haven’t accomplished this task and are now filing a frivolous lawsuit against Senator Booker and seemingly anyone else who has ever been within 100 feet of the Newark Watershed -- at least 28 defendants, so far,” Elias said.

Booker fought to reform Newark’s water system but was “repeatedly blocked by opponents,” Elias said. When “serious evidence of wrongdoing” emerged, Booker took “immediate action” to dissolve the corporation, he said.

‘Faithfully, Competently’

“Cory Booker not only faithfully and competently exercised his duties as they related to the watershed, he made the efficient and safe delivery of water to Newark residents the priority it should be,” Elias said.

Watkins-Brashear’s attorney Michael Baldassare declined to comment on the lawsuit.

The efforts to expose the NWCDC’s abuses began several years ago with a group of activists known as the Newark Water Group, which issued a report in 2011 called “Hog Wild.”

“Cory Booker’s oversight of the NWCDC as mayor of Newark was not only irresponsible, it stands as a textbook example of how not to govern,” member Guy Sterling said in an e-mail.

“While it’s likely the corruption preceded his term of office, there’s no doubt it was also going on right under his nose,” Sterling said. “Booker either knew about the corruption inside the NWCDC and decided to look the other way or he didn’t know when it was his duty to know and stop it.”

The case is Newark Watershed Conservation & Development Corp. v. Watkins-Brashear, 15-2397, U.S. Bankruptcy Court, District of New Jersey (Newark).