The $15 million upgrade of the treatment plant eventually reached $30 million due to cost overruns, leaving the SMUA to seek financial relief through the courts. The SMUA sued various contractors associated with the project, but the suit dragged on, partly because some of them went out of business or were bought up by out-of-country concerns. At the same time, Lynch sued the SMUA and, in turn, was counter-sued by the agency. In suing, Lynch claimed the SMUA owed him money and that the firing significantly damaged his reputation in the engineering field. He has been seeking $5 million in damages.
Settlement attempts failed over the last few years. This year, both sides of the suit agreed to arbitration, but in September, Lynch showed signs that he still wanted to force the matter into court. According to one SMUA official, if the matter goes to arbitration, hearings could begin this month.
The history
Lynch said that since the 1990 bid-rigging trial, he has been plagued by rumors of wrongdoing - so much so that in November of 1990, his company was forced to file for bankruptcy, partly due to payments he failed to receive.
Lynch's complicated suit seeks to get $500,000 in fees he says he's owed for work on the treatment plant. He has expended thousands in legal fees. The town of Secaucus has expended over $3 million defending itself against the suit. (Although the SMUA is an autonomous agency, its funds come from the town's budget.) And in all of this, no one in the case has proven Lynch guilty of any wrongdoing.
SMUA officials have sought to settle Lynch's suit and the subsequent counter-suit against Lynch, but Lynch decided not to settle after the court reversed its decision in August to admit a witness favorable to Lynch's case. According to SMUA officials, the SMUA had offered Lynch $1.1 million to settle, and Lynch had agreed to go to arbitration with a settlement in mind. Lynch, however, said the SMUA offered him $2 million, and that he agreed to lower his demands from $5 million to $4 million.
Lynch explained two weeks ago, "Our damages are way in excess of what we're asking. Our operating loss has been $5 million over 10 years. The town owed us $500,000 when it fired us and with interest that's $1 million. Over the 10 years, we lost $900,000 in operating expenses."
In May, Lynch and the SMUA agreed to send the lawsuit to binding arbitration, resolving the last and most significant portion of the case after settling other aspects of the suit out of court earlier in the year. In accepting the arbitrator, both sides would agree to pay whatever figure was determined, and the matter could not be appealed to a higher court.
"We agreed on a list of three names for arbitrator," said Town Administrator Anthony Iacono last week. "The first person told us he would not be able to hear the case for six months. Joe Lynch declared the process void and said we have to go to court. The town contends that the process is still valid and that we still have two other names to choose from or we can wait for another six months so the original arbitrator can hear the case."
An arbitrator was selected from a list of three. This list was narrowed down from a larger list submitted to the SMUA by Lynch's attorney.
Must go to arbitration
But in a last-minute move over the summer, Lynch apparently changed his mind, seeking to bring the matter back to court. Saying the case can wait until the arbitrator is free to hear it, Superior Court Judge John A. McLaughlin ruled in July in the SMUA's favor.
McLaughlin said Lynch had no grounds to back out of an agreement to have the case heard by an arbitrator. "We have since heard from the original arbitrator," said Mike Altilio, chairman of the SMUA. "He expects to be able to start doing telephone interviews as early as [this month], and possibly begin the hearing as of next February."
Altilio said the court's ruling in September said that if Lynch refuses to submit to arbitration the case can be dismissed, voiding all of Lynch's claims.
But some believe that Lynch is trying to find ways to force the matter into court anyway.
Based partly on sworn testimony given by Patricia Horan - one of the people convicted in the bid-rigging case (see sidebar) - on Sept. 6, Lynch has asked the court to reinstate two people previously released from his suit: Assemblyman Anthony Impreveduto and former Secaucus mayor Paul Amico.
"Those two people should never have been removed from this suit," Lynch said two weeks ago. "They have never been questioned about what went out and they may have valuable information."
Horan had claimed in her written statement to the court in a September, 2000 statement that her company had "experienced great support from not only the SMUA employees that we bribed, but from town officials and the mayor as well."
Horan, however, in 1992 testified in U.S. District Court that Amico had never received any bribes, and Assistant U.S. Attorney Donald Davidson said there was no evidence of any quid pro quo between Amico and Horan. Both Amico's name and Impreveduto's were dropped from the suit in 1996, leading SMUA officials to speculate as to why this move was made this late in the game.
"[Lynch] is looking for a way to force this thing into a trial," Iacono said. "But we're not going to let that happen. He agreed to binding arbitration and that's where we're going."
Iacono believes this is an effort by Lynch to get the matter into court because the inclusion of the Impreveduto and Amico into the case would change the nature of the lawsuit and could void the original agreement for arbitration.
Impreveduto called the effort to restore him to the case "ludicrous," noting that he and Amico had been cleared of any involvement.
Possible conflict of interest?
A possible conflict of interest with a law firm representing the SMUA also arose this year, but that firm has since left the agency's employ.
Local officials said recently that they were not aware, when the law firm of DeCotiis, Fitzpatrick & Gluck of Teaneck was hired earlier this year to represent the SMUA, that a principle partner of the firm had represented the James Horan Company in a 1988 indictment for racketeering.
Dorothy and Patricia Horan - owners of the Horan Company - were later convicted of bribery, money laundering and charges in connectino with mob-related activities as a result of the 1988 indictment. The Horans were also later convicted of bid-rigging in conjunction with the 1989 upgrade of Secaucus' sewerage facility in which the SMUA's chairman Joseph Pini Sr., his son, Joseph Pini, Jr., and the SMUA's executive director, Virginia Maione, were also convicted. No local official contacted in this regard seemed aware of the possible conflict. "That was before my time," said Altilio, the SMUA chairman, recently.
Mayor Dennis Elwell also claimed recently he had not been aware of this fact, but noted that he had not looked deeply into the case, and that the case is currently winding down.
"I do not believe the Horans are still involved in the lawsuit," Elwell said.
Iacono, who is also a member of the SMUA, said the fact had no bearing on the case since the DeCotiis firm did not have day to day dealings with the case currently in litigation.
Donald Scarinci, former town attorney and one-time attorney for the SMUA, said recently that his firm - Scarinci & Hollenbeck - were restricted from discussion involving the case because he represented the Horans in another matter years earlier.
"If the case came up, I had to leave the room," he said. "We were under a court order not to participate." Lynch, one of the people involved in the SMUA's lawsuit, said three principle firms representing the SMUA had close ties to Horan, and that he and his attorneys were aware of the fact for years.
If disclosure was made, no officials said they remembered it, and no mention was made of the fact when the SMUA hired Michael DeCotiis, of DeCotiis Fitzpatrick & Gluck in Teaneck, as its legal counsel in January, replacing Frank Leanza, who left the firm in January.
But the firm resigned from the SMUA in June and were replaced with another attorney. Elwell said this was an effort to avoid a possible conflict with a golf course project in Lyndhurst with whom the SMUA may soon do business.
How the bid-rigging scandal happened
Federal authorities say Dorothy and Patricia Horan got into the sewerage treatment construction business in 1983 after James Horan, the founder of the James Horan construction company, died. The mother and daughter team decided to take advantage of new state Department of Environmental Protection regulations that forced local municipalities to upgrade to a better system for sewerage treatment.
Unfortunately, according to testimony, the Horans decided to secure bids by way of bribery and to extort money from subcontractors to whom they eventually issued work.
Federal authorities claim that the Horan Company made inroads in Secaucus and Jersey City by approaching Frank Deven, then the administrator for the Secaucus Municipal Court. Federal authorities described Deven as a small-time operator who helped broker the bid-rigging. Deven has steadfastly denied this, though he later pleaded guilty to tax evasion charges when federal authorities failed to prove their claims.
Deven said he was never part of the meetings between SMUA Chairman Joseph Pini Sr. and Horan that allegedly occurred at the Coach House Restaurant in North Bergen, where federal authorities contend that the plot to secure the expansion bid was hatched.
Virginia Maione, the then-executive director for the SMUA, later confessed to helping the Horans procure the contract illegally. Apparently, Maione found out what the lowest bid was on the work, then, holding a blank bid document with the Horans' names on it, read off at a public meeting a figure lower than the lowest bid. Federal authorities later estimated that SMUA officials received about $50,000 in bribes.
But after Horan was awarded the bid, Maione and Joseph Pini Sr., the SMUA chairman, began to demand more money from Horan. According to federal authorities, between March 1987 and June, 1988, Horan paid an estimated $100,000 in cash. Between October 1988 and October 1989, they paid an estimated $30,000.
The Horans and the SMUA officials later confessed to stalling the project and increasing the cost of the work, raising the total cost of the project by millions. What started out as $15 million project soon grew into $21 million and kept growing after that.
Perhaps local officials should have been warned when in Nov. 1988, the Horans were among 15 people charged in federal court on a variety of conspiracy and racketeering charges. Among the defendants of that group were Louis A. "Bobby" Manna, the reputed number three figure in the Genovese crime family, and Secaucus resident Rocco J. Napoli, a local union official. The Horans were later convicted of charges involving a Jersey City construction project as well as one in Bayonne, which the federal government said were linked firmly to organized crime.
Problems began to take emerge in Secaucus in late 1988 when Horan requested a six-month extension to complete the work, then requested three more months when that ran out in early 1989. The DEP - fed up with the delays - fined Secaucus $106,700. By this time, the project was 16 months behind schedule. Horan blamed Mayo-Lynch - the SMUA's engineers - for the delay, claiming the plans Mayo-Lynch designed were "incomplete and deficient." Joe Lynch of Mayo-Lynch claimed Horan said this only after Lynch recommended no extension of time be given to Horan. SMUA Member Howie Elwell - who knew nothing of the criminal conspiracy between the Horans and Pini - got into heated arguments as to why Pini kept taking Horan's side.
The SMUA hired Carella, Byrne, a firm based in Roseland, to review contracts for the project, make recommendations towards possible legal action, and represent the SMUA in dealing with the DEP. The SMUA also sought to collect money from Horan's performance bonds - a deposit the company has to put up in case the work is late or badly done. The bonds turned out to be worthless.
The SMUA then filed suit against the Horans and various contractors seeking to get back cost overruns. Joe Lynch was included in this suit. Unpaid subcontractors on Horan's Jersey City project led to an investigation.
Local SMUA officials might have escaped the scrutiny of the federal investigation. But the Horans agreed to cooperate with federal authorities, and began to reveal the complicated trail of bid-rigging and kickbacks that led directly to the SMUA. Through the use of phone taps and hidden microphones, the FBI eventually prosecuted and convicted Pini, his son, and Maione, although Maione helped in gathering evidence.
In 1990 - for reasons that remain unclear - the SMUA fired Lynch. Lynch sued the SMUA claiming it owed him $500,000 in unpaid bills. The SMUA counter-sued, and has sued others in an effort to gain back the nearly $15 million in cost overruns.
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