Ex-justice sought project fee for her son
After leaving the Pa. Supreme Court, Sandra Schultz Newman pushed for her son to benefit from new Family Court construction.
As a state Supreme Court justice desperate to find a way to build a new Family Court building in Center City, Sandra Schultz Newman hired real estate lawyer Jeffrey B. Rotwitt to make the project happen.
Two years later, as Rotwitt's firm was closing in on a $3.9 million payday, Newman - by then a lawyer in private practice - tried to make sure some of the Family Court fees went to her son, a former lawyer in Rotwitt's firm.
The former justice sent an e-mail to Rotwitt in March 2008 saying her son Jonathan, who introduced her to Rotwitt, should get credit for scoring the deal for the firm, Obermayer Rebmann Maxwell & Hippel.
"He brought you the case with my being present," Newman wrote, adding that she wrote a memo memorializing that meeting, according to sources familiar with the message. "I had never heard your name."
If he had earned the full "origination credit" from Obermayer, Jonathan Newman would have received a 20 percent cut of the Family Court business. That could have worked out to $780,000, if Obermayer had received the full $3.9 million.
"I trust you will do the right thing by Jonathan," Sandra Newman wrote.
Nothing came of the request, which Sandra Newman said was not improper. Rotwitt kept the origination credit for himself after Jonathan Newman said he had no interest in it.
Nonetheless, Sandra Newman's e-mail raises new questions about the genesis of the Family Court deal, inside and outside the Obermayer firm.
The head of one Pennsylvania government watchdog group said the e-mail suggested Sandra Newman might have had a private motive in her Family Court decisions.
"Was she making this recommendation to hire Rotwitt because she knew her son would benefit overall?" asked Barry Kauffman, executive director of Common Cause Pennsylvania.
"That certainly leads people to have some very logical suspicions," he said.
He said the e-mail also provided a window into how the public's business is conducted in Pennsylvania.
"Most citizens have no sense whatsoever of how these connections are made, how this power game is manipulated," he said.
The state Ethics Act makes it illegal for public officials to use their offices to benefit relatives. But the Supreme Court has ruled that the law does not apply to its justices or to any other Pennsylvania judges.
Pennsylvania's code of judicial conduct says judges "should not allow their family, social, or other relationships to influence their judicial conduct or judgment."
Sandra Newman said she didn't hire Rotwitt in order to generate fees for her son.
"It may have that appearance, but it wasn't true," she said.
She stressed that she had nothing to do with setting Rotwitt's fees; that happened after she left the court.
Jonathan Newman, former chairman of the Pennsylvania Liquor Control Board, said he told Rotwitt he wasn't interested in sharing the fee.
"I instantly quashed it," he said in an interview last week. "It didn't feel right."
He said he didn't know about his mother's e-mail until a reporter told him about it. He had already left Obermayer by the time the e-mail was written.
"All I can say is my mom has always been ethical and I love her with my heart and soul," Newman said. "And I never saw her do anything inappropriate in my life."
A deal to build a $200 million Family Court facility at 15th and Arch Streets fell apart in May after The Inquirer reported that Rotwitt was on both sides of the deal, earning fees as the court's representative and as a codeveloper with Donald W. Pulver. The state is now developing the courthouse.
Pennsylvania Chief Justice Ronald D. Castille, who took over the project when Sandra Newman left the court, dismissed Obermayer and canceled the Pulver-Rotwitt deal, saying he considered it a potential conflict of interest.
He said he had been in the dark about Rotwitt's dealings with Pulver, and about Sandra Newman's hoping to get fees for her son.
"No such fee-sharing arrangements were ever disclosed to me," Castille said in a statement.
The Obermayer firm then fired Rotwitt. Senior partners, including chairman Martin Weinberg, also said they had known nothing about his codeveloper role until The Inquirer reported it.
Sandra Newman's e-mail, written more than two years earlier, thus gives rise to a mystery: It says she knew Rotwitt was due for a payment from the development side of the project.
"I also understand you will be getting a 'fee' from the builders," she wrote.
She was right. At the time the e-mail was written, Rotwitt had already made his 50-50 development deal with Pulver.
In an interview last week, Sandra Newman said she had heard that from lawyers in the firm. Asked whether that meant Weinberg, she said yes.
Pressed for details, she said she didn't believe Weinberg knew about Rotwitt's arrangement with Pulver.
"I assumed it because Marty told me about it," she said. "Marty told me that when Jeff took on the deal, he always made sure he got something on the back end, too.
"Marty might not have known he was doing this deal, but he sure knew about it on others," she said. "He knew that was Jeff's modus operandi, his style."
Weinberg responded with a brief statement: "I was never aware of any arrangements that Jeff Rotwitt had with any developers until I read the allegations in The Inquirer."
Rotwitt's attorney, Catherine M. Recker, said the e-mail was more evidence that Rotwitt had been open in disclosing his dealings with Pulver all along. She called the e-mail "an example of how his role was generally known."
In May, Sandra Newman had a different account of how she had come to hire Rotwitt. She said her son had nothing to do with it.
"Politics, socially - I just knew Jeff Rotwitt," she said.
Sandra Newman, first elected to the Supreme Court in 1995, was the "liaison justice" for Philadelphia, meaning she had a supervisory role over the city's courts. A former divorce lawyer, she had spent years trying to replace the crowded and dilapidated courtrooms where judges hear custody, adoption, and juvenile-crime cases.
According to Jonathan Newman, Rotwitt approached him and said he thought he could help deliver a Family Court project.
"I remember making an introduction, and him saying he wanted to meet my mother," Newman said.
The three had lunch at a hotel restaurant near her Supreme Court office, Sandra Newman said.
In February 2006, Sandra Newman retained Rotwitt to try to deliver a Family Court facility. The brief letter says any fee for Rotwitt would be paid out of the deal, not by the courts.
At the time, Sandra Newman said she thought Rotwitt could deliver a deal for the building at 1500 Spring Garden St. "I signed this when it was hot and heavy and I was excited" about getting that building, she said in May. But the deal fell through.
Later that year, Sandra Newman began dating Weinberg; both had recently lost their spouses. They were married in January 2007, but the marriage lasted less than a year.
Sandra Newman left the court at the end of 2006 and joined the firm Cozen O'Connor. Castille then took over the Family Court project; it was his decision to start paying the fees to Rotwitt, Pulver, and others.
By the end of 2007, Castille had settled on a site at 15th and Arch Streets and Rotwitt had helped line up the $200 million in state funding.
Within Obermayer, Rotwitt was already talking about a big payout: In November 2007, he wrote an e-mail to four other lawyers (not including Weinberg or Jonathan Newman), saying he expected the firm would get "a large but very fair" fee for his work on behalf of the courts. He also wrote that he had joined Pulver as codeveloper.
Jonathan Newman left Obermayer at the end of 2007. He was "of counsel," meaning he wasn't a partner and didn't share in the firm's profits. Instead, he was paid a $50,000 salary, with the potential for more.
At Obermayer, a firm known for deep political connections and sizable contributions, the compensation structure is tilted heavily toward rewarding lawyers who bring in business. The common description for such firms: "Eat what you kill."
The "originating lawyer" at Obermayer gets 20 percent of the fees. If the lawyer works the case himself, he or she gets 30 percent more. The other half goes to the firm for overhead and profit distribution.
When Rotwitt opened the file in 2006, he wrote that he should get 80 percent of the origination credit. The other 20 percent was assigned to Lawrence J. Tabas, general counsel of the state Republican Party.
In 2005, Tabas served as treasurer of Sandra Newman's court-retention campaign; he's now chairman of one of the transition committees for Gov.-elect Tom Corbett.
Walter Cohen, another Obermayer lawyer, said Tabas had no involvement in the Family Court deal and never received any payment. Instead, he said, Rotwitt apparently felt he owed Tabas for his efforts on other cases.
"He basically never understood it," Cohen said.
In later versions of the billing records, sources said, Rotwitt wrote that he was owed all of the origination credit. Tabas never got paid.
Sometime in 2007, Jonathan Newman said, Rotwitt approached him and asked whether he was claiming a share of the origination fee. Newman said the conversation happened before he left the firm - weeks before his mother sent the e-mail.
"I know I said I have no interest in the origination; it's all yours," Jonathan Newman said. "He basically thanked me and that was it."
On March 18, 2008, Sandra Newman sent Rotwitt an e-mail from her law-firm account with the subject line "Originating Attorney." She wrote that her son should get credit for what she had heard was a huge anticipated fee, describing it as "off the top."
Rotwitt never sent a reply.
In November 2008, Obermayer began to collect $55,000 a month toward the total fee; the firm received more than $1 million before the deal was canceled. Rotwitt also received about half of the approximately $1 million in development fees paid to Pulver.
All told, the courts paid about $12 million in fees before Castille canceled the deal in May. Pulver sued and won a payment of $1.1 million more in exchange for walking away from the site.
Last week, Sandra Newman said she didn't know that Rotwitt had already begun collecting a cut of the development deal.
"If I heard he got money, I would have gone to Ron Castille," she said.
While a Supreme Court justice, Sandra Schultz Newman hired lawyer Jeffrey B. Rotwitt to help develop a new Family Court. Later, when she was off the court, she tried to get Rotwitt to share legal fees with her son, Jonathan Newman.
Nov. 7, 1995: Sandra Newman is first elected to the Supreme Court.
Sept. 17, 1999: Jonathan Newman, a lawyer at the firm Obermayer, Rebmann, Maxwell & Hippel, is named to the Pennsylvania Liquor Control Board. He later becomes chairman.
Feb. 10, 2006: Sandra Newman authorizes Philadelphia courts to hire Obermayer lawyer Jeffrey B. Rotwitt to find a site for a new Family Court. She meets Rotwitt through her son.
Nov. 17, 2006: Sandra Newman announces she will resign from the Supreme Court at the end of the year.
Jan. 2, 2007: Sandra Newman marries lawyer Martin Weinberg, chairman of Obermayer.
Jan. 12, 2007: After a dispute with Gov. Rendell, Jonathan Newman resigns from the PLCB.
August 2007: Sandra Newman and Weinberg have separated by this time, according to an Obermayer spokesman. The marriage is annulled in December 2007.
Nov. 14, 2007: Rotwitt sends an e-mail to four other Obermayer lawyers, predicting a "large but very fair" fee for the Family Court work.
Jan. 9, 2008: Jonathan Newman leaves Obermayer effective Dec. 31, 2007. He opens a wine wholesale business.
March 18, 2008: Sandra Newman e-mails Rotwitt, saying her son deserves credit - and payment - for bringing Rotwitt the Family Court legal work. Jonathan Newman says he had already declined the credit.
Oct. 6, 2008: Date of letter signed by Pennsylvania Chief Justice Ronald D. Castille authorizing the payment of millions in fees to Rotwitt, developer Donald Pulver, and others.
May 21, 2010: The Inquirer reports that Rotwitt has a second role in the project, as Pulver's codeveloper. Gov. Rendell announces the state will develop the courthouse.
May 26, 2010: Castille cancels the Rotwitt-Pulver deal, saying he wasn't aware of Rotwitt's dual roles.
May 27, 2010: Rotwitt is fired by Obermayer partners.