III. ALLEGATIONS AND METHODOLOGYOn May 7, 2007, <strong>the</strong>n-Governor Eliot Spitzer referred to <strong>the</strong> Inspector General <strong>the</strong>complaint <strong>of</strong> an employee <strong>of</strong> <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong> alleging misconduct <strong>of</strong> GeneralCounsel Jon Deutsch and <strong>New</strong> Jersey <strong>Commission</strong>er Michael Madonna, as well as hiringirregularities within <strong>the</strong> Police Division. Around <strong>the</strong> same time, <strong>the</strong> Inspector Generalreceived similar allegations from o<strong>the</strong>r sources.Preliminary interviews and review <strong>of</strong> documents revealed an array <strong>of</strong> problems at<strong>the</strong> agency, including misuse <strong>of</strong> <strong>Waterfront</strong> <strong>Commission</strong> property, lack <strong>of</strong> writtenprocedures in <strong>the</strong> Police Division, complaints about leadership, and lack <strong>of</strong>communication and cooperation between <strong>the</strong> divisions.In addition to investigating <strong>the</strong> specific allegations detailed above, <strong>the</strong> InspectorGeneral conducted a review <strong>of</strong> <strong>the</strong> <strong>Commission</strong>’s licensing and registration processes,and <strong>the</strong> audit process.The Inspector General interviewed more than 75 witnesses, including everymember <strong>of</strong> <strong>the</strong> Police Division. Several witnesses were interviewed multiple times.Thousands <strong>of</strong> documents were reviewed, including personnel folders and files <strong>of</strong>stevedoring companies and registrants.The Inspector General regularly informed <strong>the</strong> <strong>Commission</strong> <strong>of</strong> its findings during<strong>the</strong> investigation so that problems could be addressed immediately.The <strong>Waterfront</strong> <strong>Commission</strong>’s Initial Non-Compliance and Challenge to anInspector General’s SubpoenaIn addition to <strong>the</strong> Inspector General’s statutory authority under <strong>New</strong> <strong>York</strong> StateExecutive Law Article 4-A to investigate allegations <strong>of</strong> corruption, fraud, criminalactivity, conflicts <strong>of</strong> interest and abuse in agencies within its jurisdiction, on October 15,2007, Governor Eliot Spitzer issued an Executive Order (No. 18) directing <strong>the</strong> InspectorGeneral “to study, examine, investigate, review and make recommendations with respectto <strong>the</strong> management and affairs <strong>of</strong> <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong> <strong>of</strong> <strong>New</strong> <strong>York</strong> <strong>Harbor</strong>.”This Executive Order authority was subsequently extended by Governor David A.Paterson.Pursuant to state law and <strong>the</strong> Governor’s Executive Order, <strong>the</strong> Inspector Generalserved a subpoena on <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong> on October 17, 2007, demandingvarious documents relevant to <strong>the</strong> allegations received. Initially, both <strong>Commission</strong>ersAxelrod and Madonna agreed to cooperate and produce <strong>the</strong> documents. However, shortlyafter <strong>the</strong> document production began, <strong>the</strong> Inspector General was notified that Madonnano longer wished to comply with <strong>the</strong> Inspector General’s subpoena. While<strong>Commission</strong>er Axelrod remained fully cooperative with <strong>the</strong> Inspector General’sinvestigation, because <strong>of</strong> <strong>the</strong> legal requirement that both <strong>Commission</strong>ers agree on any<strong>of</strong>ficial action taken by <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong>, it was <strong>the</strong> position <strong>of</strong> <strong>the</strong> <strong>Waterfront</strong><strong>Commission</strong> that <strong>the</strong> requested documents could not be disclosed to <strong>the</strong> Inspector General11
and, <strong>the</strong>refore, <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong> would not comply with <strong>the</strong> InspectorGeneral’s subpoena.On December 11, 2007, just prior to Madonna’s decision not to comply with <strong>the</strong>subpoena for documents, Sergeant Ramon Martinez 8 was served with a subpoenadirecting him to appear at <strong>the</strong> <strong>of</strong>fices <strong>of</strong> <strong>the</strong> Inspector General on December 17, 2007 togive testimony. On December 13, 2007, Martinez filed a federal action in United StatesDistrict Court, District <strong>of</strong> <strong>New</strong> Jersey, seeking a court order quashing <strong>the</strong> InspectorGeneral’s subpoena, claiming that <strong>the</strong> Inspector General lacked authority to conduct thisinvestigation.On January 30, 2008, <strong>the</strong> United States District Court rejected Martinez’s actionto quash <strong>the</strong> Inspector General’s subpoena, dismissed his federal complaint, and foundthat <strong>the</strong> Inspector General possessed <strong>the</strong> jurisdiction to complete this investigation. 9Eventually, Madonna reconsidered his position against cooperating with <strong>the</strong> InspectorGeneral, and <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong> resumed document production.Upon his appointment in July 2008, <strong>Commission</strong>er Goldstock continued<strong>Commission</strong>er Axelrod’s pledge <strong>of</strong> cooperation with <strong>the</strong> Inspector General. Goldstockmet personally with <strong>the</strong> Inspector General and again later accompanied by newlyappointedExecutive Director Walter Arsenault.After reviewing <strong>the</strong> Inspector General’s report furnished to <strong>the</strong> <strong>Commission</strong> forits response, Madonna argued by letter that he never “withdrew his previous agreement tocooperate” but ra<strong>the</strong>r “questioned <strong>the</strong> Inspector General’s jurisdiction” and awaited <strong>the</strong>Court’s ruling on <strong>the</strong> subpoena served on Sergeant Martinez before agreeing to continuerecord production. Madonna’s claim that, ra<strong>the</strong>r than cooperating with <strong>the</strong> mandates <strong>of</strong> abi-state investigation <strong>of</strong> <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong>, he thought it prudent to await <strong>the</strong>result <strong>of</strong> a private litigation wholly unrelated to his duties as one <strong>of</strong> two heads <strong>of</strong> <strong>the</strong><strong>Commission</strong> is misguided. Indeed, given that Martinez was represented by <strong>the</strong> PBA’slocal attorney and, as discussed below, Madonna dually served as head <strong>of</strong> <strong>the</strong> policeunion, Madonna’s response raises fur<strong>the</strong>r questions about his objectivity and potentialconflicts <strong>of</strong> interest.IV. INVESTIGATIONThe Inspector General found systemic failures at <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong>,resulting in an inability to meet its obligations under <strong>the</strong> 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 <strong>the</strong> <strong>Waterfront</strong> <strong>Commission</strong> on February 28, 2009.9 Martinez v. <strong>New</strong> <strong>York</strong>, ___ F.Supp.2d ____, 20008 WL 343556 (D. NJ 2008).12
- Page 5 and 6: Personal Use of Waterfront Commissi
- Page 7 and 8: mandated core responsibilities. 2 T
- Page 9: enforcement officer, he was hired a
- Page 12 and 13: on August 5, 2009, Governor Corzine
- Page 14 and 15: provides no details or guidance as
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- Page 22 and 23: withdrew,” and that was a clue to
- Page 24 and 25: Licensing-Related Abuses by Deutsch
- Page 26 and 27: Acting Chief of Police McGowan. Deu
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- Page 36 and 37: Audit and Control Director Frank Na
- Page 38 and 39: Although new hires are granted the
- Page 40 and 41: 2008. Overall, while each location
- Page 42 and 43: Organized Crime Unit, the US Depart
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- Page 48 and 49: asked De Maria if he would be termi
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APPENDIX