Investigation of the Waterfront Commission of New York Harbor

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III. ALLEGATIONS AND METHODOLOGYOn May 7, 2007, then-Governor Eliot Spitzer referred to the Inspector General thecomplaint of an employee of the Waterfront Commission alleging misconduct of GeneralCounsel Jon Deutsch and New Jersey Commissioner Michael Madonna, as well as hiringirregularities within the Police Division. Around the same time, the Inspector Generalreceived similar allegations from other sources.Preliminary interviews and review of documents revealed an array of problems atthe agency, including misuse of Waterfront Commission property, lack of writtenprocedures in the Police Division, complaints about leadership, and lack ofcommunication and cooperation between the divisions.In addition to investigating the specific allegations detailed above, the InspectorGeneral conducted a review of the Commission’s licensing and registration processes,and the audit process.The Inspector General interviewed more than 75 witnesses, including everymember of the Police Division. Several witnesses were interviewed multiple times.Thousands of documents were reviewed, including personnel folders and files ofstevedoring companies and registrants.The Inspector General regularly informed the Commission of its findings duringthe investigation so that problems could be addressed immediately.The Waterfront Commission’s Initial Non-Compliance and Challenge to anInspector General’s SubpoenaIn addition to the Inspector General’s statutory authority under New York StateExecutive Law Article 4-A to investigate allegations of corruption, fraud, criminalactivity, conflicts of interest and abuse in agencies within its jurisdiction, on October 15,2007, Governor Eliot Spitzer issued an Executive Order (No. 18) directing the InspectorGeneral “to study, examine, investigate, review and make recommendations with respectto the management and affairs of the Waterfront Commission of New York Harbor.”This Executive Order authority was subsequently extended by Governor David A.Paterson.Pursuant to state law and the Governor’s Executive Order, the Inspector Generalserved a subpoena on the Waterfront Commission on October 17, 2007, demandingvarious documents relevant to the allegations received. Initially, both CommissionersAxelrod and Madonna agreed to cooperate and produce the documents. However, shortlyafter the document production began, the Inspector General was notified that Madonnano longer wished to comply with the Inspector General’s subpoena. WhileCommissioner Axelrod remained fully cooperative with the Inspector General’sinvestigation, because of the legal requirement that both Commissioners agree on anyofficial action taken by the Waterfront Commission, it was the position of the WaterfrontCommission that the requested documents could not be disclosed to the Inspector General11
and, therefore, the Waterfront Commission would not comply with the InspectorGeneral’s subpoena.On December 11, 2007, just prior to Madonna’s decision not to comply with thesubpoena for documents, Sergeant Ramon Martinez 8 was served with a subpoenadirecting him to appear at the offices of the Inspector General on December 17, 2007 togive testimony. On December 13, 2007, Martinez filed a federal action in United StatesDistrict Court, District of New Jersey, seeking a court order quashing the InspectorGeneral’s subpoena, claiming that the Inspector General lacked authority to conduct thisinvestigation.On January 30, 2008, the United States District Court rejected Martinez’s actionto quash the Inspector General’s subpoena, dismissed his federal complaint, and foundthat the Inspector General possessed the jurisdiction to complete this investigation. 9Eventually, Madonna reconsidered his position against cooperating with the InspectorGeneral, and the Waterfront Commission resumed document production.Upon his appointment in July 2008, Commissioner Goldstock continuedCommissioner Axelrod’s pledge of cooperation with the Inspector General. Goldstockmet personally with the Inspector General and again later accompanied by newlyappointedExecutive Director Walter Arsenault.After reviewing the Inspector General’s report furnished to the Commission forits response, Madonna argued by letter that he never “withdrew his previous agreement tocooperate” but rather “questioned the Inspector General’s jurisdiction” and awaited theCourt’s ruling on the subpoena served on Sergeant Martinez before agreeing to continuerecord production. Madonna’s claim that, rather than cooperating with the mandates of abi-state investigation of the Waterfront Commission, he thought it prudent to await theresult of a private litigation wholly unrelated to his duties as one of two heads of theCommission is misguided. Indeed, given that Martinez was represented by the PBA’slocal attorney and, as discussed below, Madonna dually served as head of the policeunion, Madonna’s response raises further questions about his objectivity and potentialconflicts of interest.IV. INVESTIGATIONThe Inspector General found systemic failures at the Waterfront Commission,resulting in an inability to meet its obligations under the Compact. Audits required forcompanies to obtain permanent licenses were as much as 14 years behind and,astonishingly, not one auditor was aware that a current, completed audit was neededbefore a permanent license could be issued. The agency lacked policies addressing manyimportant functions, and communication among divisions was extremely poor. The8 Ramon Martinez retired from the Waterfront Commission on February 28, 2009.9 Martinez v. New York, ___ F.Supp.2d ____, 20008 WL 343556 (D. NJ 2008).12
Page 1 and 2: State of New YorkOffice of the Insp
Page 3 and 4: STAFF FOR THIS INVESTIGATION AND RE
Page 5 and 6: Personal Use of Waterfront Commissi
Page 7 and 8: mandated core responsibilities. 2 T
Page 9 and 10: enforcement officer, he was hired a
Page 11 and 12: II. BACKGROUNDHistoryIn the early 1
Page 13 and 14: Commission regulates the employment
Page 15: There was virtually no communicatio
Page 19 and 20: did identify individual instances o
Page 21 and 22: Maria that he “should have been m
Page 23 and 24: Q.: Why did it change?Deutsch: Beca
Page 25 and 26: all the things that has gone on wit
Page 27 and 28: Police Division. That testimony not
Page 29 and 30: had been completed within the curre
Page 31 and 32: epercussions of his felony convicti
Page 33 and 34: Michael DeCotiis testified to the I
Page 35 and 36: offending companies, although Kelly
Page 37 and 38: Web sites were blocked by software
Page 39 and 40: At all of the police academies, the
Page 41 and 42: epresenting the Waterfront Commissi
Page 43 and 44: training facility has been created
Page 45 and 46: Madonna’s other recommended candi
Page 47 and 48: Madonna denied providing the exam t
Page 49 and 50: which car they would drive, they ne
Page 51 and 52: F. ABUSE OF PUBLIC RESOURCESPersona
Page 53 and 54: A Waterfront Commission Vehicle Was
Page 55 and 56: Wolf also attempted to disclaim res
Page 57 and 58: determining the outstanding forfeit
Page 59 and 60: non-federal share of expense, and t
Page 61 and 62: comptroller received this informati
Page 63 and 64: Commissioner Madonna compelled the
Page 65 and 66: Fiscal Management• The Commission
Page 67:
JON S. CORZINEState GovernorOFFICE
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Investigation of the Waterfront Commission of New York Harbor

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