A trucking and logistics company that won approval for $79 million in New Jersey tax breaks failed to disclose criminal and civil proceedings in its application for the state award, according to a letter sent Thursday by the Teamsters labor union to the New Jersey attorney general and the Economic Development Authority.
The company, NFI, applied in 2016 for the EDA’s tax-credit program – which is now the subject of multiple investigations – to help build an office tower on the Camden waterfront. The application asks the company to certify whether the company or its affiliates have been found guilty of criminal violations, and NFI said no in its sworn response.
But in 2005, an affiliate of the company – Interactive Logistics Inc. – pleaded guilty in federal court in Camden to three counts of wire fraud, according to the letter. Under the plea, the company agreed to pay an $850,000 fine and restitution to the beer-maker Anheuser-Busch, the client it defrauded of about $225,000, court records show.
“While we are confident in the veracity of our application, we take all accusations seriously,” NFI spokesperson T.J. Lynch said. “We are in the process of investigating the allegations that have been made by the Teamsters.”
Lynch said the company would respond further “as soon as we are in a position to do so.”
Court papers show Interactive Logistics was doing business in New Jersey under the name NFI Interactive Logistics Inc. The plea agreement was signed and authorized by company director Sidney Brown – who is NFI’s current chief executive officer and who signed off on NFI’s tax-credit application as well.
The office tower project won approval for $245 million in total tax credits, split among NFI, the Michaels Organization, and Conner Strong & Buckelew, the insurance brokerage headed by South Jersey power broker George E. Norcross III.
EDA has discretion to deny financial assistance to businesses that have criminal convictions involving public or private contracts. The tax-credit application requires a company’s CEO to certify that statements on the submission are true.
The letter from the Teamsters raises more questions about EDA’s oversight of the state’s multibillion-dollar incentives programs. A special task force launched an investigation earlier this year into the EDA’s handling of the tax-credit programs, after a state audit identified significant oversight problems at the agency.
At the time of the guilty plea, according to a December 2005 story in the Press of Atlantic City, Brown issued a statement saying: “We as a company made an isolated error and will work to ensure this never happens again.”
The federal case against Interactive Logistics was pursued by then-U.S. Attorney Chris Christie. As governor of New Jersey, Christie, a Republican, went on to revamp the tax-credit program under the 2013 Economic Opportunity Act, working closely with Democrats in the Legislature.
The tax-credit application also asks if the company is subject to any legal proceedings that allege violations of labor and wage laws. NFI was facing two such lawsuits at the time of its October 2016 application but did not disclose them, the letter says.
One of the suits was brought in November 2015, by truck drivers who made deliveries in Massachusetts, and alleged the company took fuel costs out of their paychecks and failed to pay them for all the miles they drove. The suit remains pending, and NFI has denied wrongdoing.
Another case – Marsh v. NFI Interactive Logistics LLC – alleged the company denied overtime pay to workers in Texas. The company acknowledged in court filings that it received the suit on Oct. 3, 2016, three weeks before NFI submitted its tax-credit application in New Jersey. The parties agreed to settle in November 2017.
The EDA did not immediately respond to a request for comment on the letter, or its procedures for verifying information about legal proceedings involving applicants.
The Teamsters said that 55,000 of its members live and pay taxes in New Jersey and that the state’s “limited resources should not be used to benefit irresponsible, law-breaking employers.”
The letter alleges the company committed a criminal act by lying on its application, and says “NFI should be prosecuted and barred from receiving any financial assistance from the state.”
Late last year, truckers and warehouse workers in Southern California went on strike outside an NFI facility there, with support from the Teamsters. NFI accused the union of “looking to force representation” on the workers, who were classified as independent contractors.
As the task force investigation has progressed, some of the companies whose applications have come under scrutiny are fighting against the inquiry in court.
NFI filed a lawsuit last month against Gov. Phil Murphy, asking a judge to find that the governor didn’t have the power to form the task force and that the task force’s conduct has been unlawful.
Norcross, his insurance brokerage, and three other companies joined NFI in filing the suit.
Norcross and the companies are asking a judge to issue a preliminary injunction that would halt the task force’s inquiry until the court can resolve the litigation. At the judge’s request, the task force has temporarily delayed its proceedings. A hearing has been scheduled for June 17.
The Teamsters’ request for an investigation into NFI comes after WNYC and ProPublica reported in May that the energy company Holtec falsely stated on its application for tax credits that it had never been barred from doing business with a state or federal agency.
A federal agency in 2010 debarred Holtec as a contractor for 60 days. The company also agreed to pay a $2 million fee. WNYC subsequently reported that New Jersey officials had frozen Holtec’s tax credits while they investigate the matter.
Holtec, which moved from Marlton to Camden after it was awarded $260 million in tax breaks over 10 years, has said the incorrect answer on its application was an oversight.
The state comptroller in January issued a report finding that the EDA had failed to hold companies accountable for the investment and job promises they made in exchange for tax credits.
A state grand jury is investigating the tax-credit programs and sent a subpoena to the agency last month.