NJ News & Views

[Editor's Note: At 3:18 p.m. on October 27 and at 4:25 p.m. on October 29, 2011, this story was edited for style, content and accuracy.

On November 17, 2011, Lakewood Deputy Mayor Steven Langert denied posting questions reported in this story pertaining to participation in sheriff's auctions.

Langert, who earns a living as a real estate investor, did not deny forming an unannounced advisory committee of developers and their professionals to make zoning recommendations from which he may have personally profited.

On Tuesday, November 8, 2011, voters re-elected Langert to another 3-year term on the Lakewood Township Committee.]

Less than a 2-hour commute from the concrete canyons of Wall Street, the practice of insider trading has found a new home in the municipal corridors of Main Street.

In Lakewood, New Jersey, the state's fastest-growing municipality, government officials with inside information about public land policy may be profiting from it.

Insider trading refers to a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties. The practice is considered a breach of a fiduciary or other relationship of trust and confidence, or where the non-public information was misappropriated from the company.

According to testimony introduced into evidence at the September 12 meeting of the Lakewood Zoning Board of Adjustment, public officials that earn their living as real estate developers are meeting without the public's knowledge to promulgate public land policy.

That was not the case several years ago.

In 2005 and 2006, the Lakewood Township Committee publicly appointed an advisory committee to make recommendations to update the municipality's code book, referred to as the Unified Development Ordinance (UDO), and its Master Plan.

Times change.

Last month, a former member of the advisory committee publicly disclosed during testimony heard by the Lakewood Zoning Board of Adjustment that one or more of those same officials are continuing to meet with elected officials and recommend zoning policy, even though the Lakewood Township Committee did not announce their appointments this year.

"Isn't there a committee that meets monthly that targets areas for housing?" attorney Abraham Penzer asked planner Brian Flannery during the September 12 remanded hearing of a request for a use variance by developer Aharon (Aaron) Rottenberg.

Flannery said yes.

The zoning board did not request to hear Flannery's professional qualifications and vote to accept or reject them before hearing his testimony.

Three years ago, a reporter for NJ News & Views observed the same omission, which would be grounds to appeal any zoning board approval based on his professional testimony.

Based on testimony elicited by Penzer at last month's zoning board meeting, the board should have rejected Flannery's qualifications.

Flannery has a conflict of interest.

So does Penzer.

Both men are former members of the UDO and Master Plan Advisory Committees.

So is zoning board member Elliott Zaks.

At the beginning of the year, Brook Road residents Michael and Catherine Stillwell filed suit against the zoning board and Rottenberg based on the board's November 1, 2010 vote to approve Rottenberg's request for a use variance.

Michael Stillwell is Chairman of the Lakewood Shade Tree Commission.

According to the Stillwell lawsuit, Zaks is Rottenberg's nephew through marriage, but improperly participated in the zoning board vote. His vote gave Rottenberg the majority he needed for approval.

This past spring, the appeal was remanded back to the zoning board, which heard the request again on September 12.

This time, Zaks recused himself by not attending the meeting.

His attendance did not matter.

After two hours of testimony, zoning board attorney Russell Cherkos announced that the board did not have the jurisdiction to hear the appeal. The announcement was made after resident Gerri Ballwanz told the board during the public forum that the blocks and lots listed on the zoning board agenda were not the same ones advertised in the legal notice published before the hearing.

Although the appeal was rescheduled for the board's October 3 meeting, it was not heard on that date.

The board's next meeting is scheduled for November 14.

Rottenberg and his development partners are seeking zoning board approval to build a 22-lot townhouse unit with a total of 66 attached townhouses, referred to as a "triplex," instead of the permitted 44. Each triplex building, built on 18,000-square-foot lots in the R-15 zone, would include three dwelling units and a rentable basement apartment.

The site is located in the R-15 zone off Brook Road and near Ridge Avenue, which becomes 7th Street.

"Brian, wasn't one of those high-rises (planned) for 7th Street?" Penzer asked Flannery on September 12, referring to the road located near the proposed site.

Flannery said yes.

"As Mr. Penzer implied, the town is planning (there)," Flannery told the zoning board during his testimony.

Rottenberg is seeking to build a dense "transition" development with an access onto Brook Road, a narrow, winding county road, and an easement through White Oak, a development with narrow, winding interior roads that access onto Ridge Avenue.

Rottenberg was the high bidder during a 2008 public land auction for parcels comprising the site. After the auction, he described the land to a reporter as mostly "wet."

Township officials permitted Rottenberg to participate in the land auction, even though he was in arrears on payment of all property taxes owed to the township.

In a legal notice published in the Asbury Park Press on August 20, 2008, the township announced that it was foreclosing on two land parcels owned by Kedma 1, Inc., Rottenberg's development company.

The legal notice stated that as of May 21, 2008, Kedma owed a total of $143.40 in back taxes and interest on Block 202, Lot 5 and a total of $148.77 in back taxes and interest on Block 202, Lot 8.

On October 30, 2007, the township held a tax sale on each parcel. At that time, Kedma owed $35.36 in back taxes on Block 202, Lot 5 and $33.10 in back taxes on Block 202, Lot 8.

By November 2008, the township estimated that Rottenberg would owe a total of $160.50 in back taxes and interest on Block 202, Lot 5 and a total of $167.97 in back taxes and interest on Block 202, Lot 8.

Despite Rottenberg's debt to the township, committeemen permitted him to bid at a public land sale held on August 28, 2008.

Rottenberg paid a total of $55,000 for six blocks and lots he won at auction, but not one cent of the $291.17 he owed in back taxes on property he already owned.

Resident Gerri Ballwanz asked committeemen during the meeting's public forum why Rottenberg was allowed to participate in the auction if he owed the township back taxes.

Township Attorney Steven Secare said one thing had nothing to do with another.

He's wrong.

Municipal government has an obligation to its' taxpayers to first collect what is owed them in order to reduce their collective tax burden as much as possible - not to raise additional revenue by selling taxpayer assets to a property owner in arrears.

Instead of creating a stream of revenue by selling the land to Rottenberg, who was already in arrears, committeemen increased the amount of uncollected taxes due it.

According to Rottenberg's 2010 development application papers, which a reporter inspected through the Open Public Records Act (OPRA), many of the Lots on Blocks that comprise the site are encumbered by third party tax liens, in delinquency, not owned by Rottenberg, or do not exist.

A Real Estate Tax Affidavit submitted with Rottenberg's zoning board application reported on September 29, 2010 certified that all real estate taxes assessed against the blocks and lots that comprised the Brook Road site, like many of the properties he owned before being permitted to participate in the public land auction to win them, were in arrears.

Third parties reportedly owned tax liens on Lots 37, 38, 39, 14-S, 40, 44, 45, 46 and 47 of Block 190.04; Lot 41 was delinquent; and Lots 42 and 43 were current.

Third parties reportedly owned tax liens on Lots 141 and 142 of Block 190.05.

A third party reportedly owned the tax lien on Lot 2 of Block 199; Lots 1 and 3 were delinquent; and the tax department reportedly had no record of Lot 4.

Third parties reportedly owned tax liens on Lots 4 and 7 of Block 200; Lots 1 and 5 were delinquent; and the tax department reportedly had no record of Lots 2, 3 and 6.

Lot 1 of Block 201 was reportedly delinquent; the township owned Lot 13; and the tax department reportedly had no record of Lots 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 14.

Third parties reportedly owned tax liens on Lots 5 and 8 of Block 202; Lot 1 was delinquent, Lot 10 was current; and the tax department reportedly had no record of Lots 2, 3, 4, 7 and 11.

According to the September 12 zoning board meeting agenda, but not in the legal notice published prior to the meeting, Rottenberg also proposed to develop Block 203, which Penzer said he was negotiating to buy.

Had Ballwanz not disclosed the error and the board had approved Rottenberg's request, the approval could have been challenged in court - again.

Based on information reported in a September 14 e-mail that Lakewood Township Clerk Mary Ann Del Mastro sent to a reporter for NJ News & Views, every zoning board and planning board approval made in 2011 could face an expensive legal challenge.

"I have spoken with the Deputy Mayor, and he formed an exploratory group, of Professionals, at the beginning of the year, (Future Planning Committee)," Del Mastro told the reporter. 

At the January 2011 Reorganization meeting of the Lakewood Township Committee, committeemen voted to appoint Steven Langert to the position of Deputy Mayor.

Langert is seeking re-election to the Lakewood Township Committee in the November 8 General Election.

Langert is also the committee liaison with the Office of the Township Clerk.

"This is a working group, not an official board, and they have no powers," Del Mastro told the reporter. "They are working in conjunction with the Smart Growth Plan, looking into potential growth and density of Lakewood over the next 15 years."

Although Lakewood submitted its Smart Growth Plan as part of the process of seeking state Plan Endorsement, the state has not approved it or granted Lakewood Plan Endorsement, which would benefit developers.

According to documents posted online by the state, Lakewood officials must first address issues that include water and sewage and update the Cedarbridge Corporate Park Redevelopment Plan/Agreement to ensure balanced mixed uses.

Prior to submission of the 2009 Smart Growth Plan to the state Office of Smart Growth, which last year was renamed the New Jersey Office of Planning Advocacy, local officials conducted visioning workshops and held a required public hearing to give the public a voice in the expenditure of tax dollars.

That did not happen this year.

The reporter e-mailed Del Mastro an OPRA request for the names of all appointees to Langert's Future Planning Committee, their dates of appointment, meeting minutes from each meeting that took place, and copies of the front and back of all financial disclosures filed by each of the appointees in 2011.

Del Mastro said there were none.

The members of any advisory group formed by a public official to make recommendations for public policy, and whose recommendations are entered into testimony at a public meeting of the zoning board of adjustment by a member of the group, should have been required to file financial disclosures with the office of the township clerk and to maintain meeting minutes for public inspection.

Absent those documents, anyone vested in the township through payment of taxes, performance of contracted work or employment in a pensioned position are as much at a disadvantage as any investor in the stock market that does not have the same information as someone that engages in insider trading.

Without public disclosure, there is no public oversight of possible conflicts of interest.

In the Winter 2005/2006 edition of a newsletter published by the Lakewood Development Corporation (LDC), which oversees the largest Urban Enterprise Zone (UEZ) in the state, a front page article without an author's by-line announced the appointment of 25 members to the Master Plan Advisory Committee, also referred to as a board.

"Ever wonder how the future development of your town is decided?" the article asked readers. "How important historic landmarks are preserved or how it is decided what land can be built upon and what land cannot? With the idea of benefiting the community in mind, the Advisory Board analyzes the Master Plan."

To accomplish that goal, members of the Lakewood Township Committee appointed members of a political interest group that endorsed each of them for election, as well as developers and their professionals and attorneys.

Members of the advisory committee, whose names were posted on the township Web site in 2006, included Glenn Bradford, Adam Buckwald, Carlos Cedeño, Vincent Corsaro, Ester Coven, Mitch Dolobowsky, Brian Flannery, Ben Heinemann, Meir Hertz, William Hobday, Kevin Kielt, Aaron Kotler, Sam Landman, Michael McNeil, Abraham Penzer, Steven Pfeffer, David Quinn, Janet Scher, Michael Sernotti, Charles Silberberg, Stanley Slachetka, Martin Truscott, Moshe Weisberg, Elliot Zaks and Raphael (Ralph) Zucker.

After months of denying any records were kept by an advisory committee examining the Master Plan, township officials finally released them in 2006 to a reporter for NJ News & Views that requested the documents under the Open Public Records Act (OPRA).

The requested documents included 2005 and 2006 financial disclosures that some members of the advisory committee had filed, but not all, and advisory committee meeting minutes prepared by Planning Board Secretary Kevin Kielt.

Advisory committee meeting minutes reported that Brian Flannery was appointed to head a subcommittee examining "incorrect and inconsistency in the zoning map of Lakewood."

According to documents posted on the Ocean County Clerk's Web site, Flannery is a Lakewood real estate investor that owns multiple properties in addition to his primary residence.

Flannery's subcommittee was tasked with researching all zoning board appeals made over the past five years in order to "understand the scope of the requested variances."

At the May 24, 2006 meeting, Flannery reportedly handed out a map of areas recommended for rezoning. On the site of the Franklin Street Redevelopment Project, bordered by Cedar Bridge Avenue and Main Street (Route 88), up to the railroad tracks, Flannery recommended construction of mid-to-high-rise buildings.

The site is located in the Lakewood Urban Enterprise Zone (UEZ), which the Lakewood Development Corporation (LDC) oversees.

Earlier this month, Lakewood UEZ Coordinator Patricia (Trish) Komsa said during an October 11 LDC meeting that the township committee had frozen approved funding for the urban renewal project following a change in state policy that financed it.

Flannery's recommendations also included a site miles from downtown Lakewood.

At the June 21, 2006 advisory committee meeting, Flannery recommended that an area of Route 70, near the Lakewood border with Brick, east of New Hampshire Avenue and west of the Garden State Parkway, be rezoned for mixed-use development - which the township committee approved in 2008.

The advisory committee meeting minutes also reported that Flannery recommended rezoning the southwestern area of Lakewood, near the border with Jackson.

In late 2005, the state Urban Enterprise Zone Authority (UEZA) approved a request by Lakewood for boundary modification to remove the area from the township UEZ, which township officials told a reporter was instead planned for residential development, despite its proximity to an industrial park.

The reports for each of the 2006 advisory committee meetings were signed and submitted by zoning board Chairman Michael Sernotti, a real estate salesman employed by Waxman Realty.

P.G. Waxman, the owner of Waxman Realty, is a former member of the Lakewood Township Committee. For the past decade, Waxman has served as a member of the Ocean County Tax Board.

Lakewood public policy has not changed in the past five years since NJ News & Views requested documents local officials were required to file according to deadlines established by state law.

Neither has state policy in the two decades since public disclosures became public law.

The current format of state-required financial disclosures would not have identified the personal relationship between Zaks and Rottenberg. The state only requires financial disclosure by an official and his or her immediate family.

The penalty for officials that are found to have committed ethics violations is usually minimal.

In 2006, the state found that Michael Kafton, a member of the Jackson Township governing body, had committed an ethics violation by participating in a 2001 vote to approve payment of bills to a company with which he had a personal business relationship.

The state fined Kafton just $100 for the infraction.

After NJ News & Views reported the state finding, Kafton issued a press release confirming it.

Payment of the offense did not affect his political fortune any more than it had his personal finances.

Two years after the state released its finding, voters elected him to the Jackson Township Council, which in turn appointed him Council President.

Next month, voters will determine the political fate of Lakewood Committeeman Steven Langert, who served as mayor of 2010.

According to www.manta.com, Langert is the head of SNS Investments, a real estate investment company founded in Lakewood in 1992. The company, employing 1-4 persons, is estimated to earn from $1-2.5 million annually.

In October 2008, Langert sought the online guidance of other investors posting on a sheriff's auction Web site.

"Are there any state rules/laws pertaining to the bidding at the sheriff sale auction?" Langert asked in a comment posted on www.bergenjerseyforclosures.com. "If yes(,) can you provide me with a link so I may review them? Thank you."

In an October 29, 2008 response posted on the blog, a man identified only as Tom told Langert, "There's a lot you need to know."

Tom provided Langert with a link to the post "How to Buy Foreclosures at Auction." He also suggested Langert get "a book or two" on the subject before investing in a sheriff's sale property.

In an October 30, 2008 post, Langert thanked Tom for his prompt reply. He clarified his request.

"I think I was not specific enough," Langert told Tom. "What I need is a link to wherever the NJAC (New Jersey Association of Counties) might reference public bidding. I want to know if bid rigging, shadow bidding, collusion in bidding, etc. is mentioned anywhere in the law. Thank you."

Tom said that bid rigging and shadow bidding were not necessary to win a sheriff's auction.

"This isn't like these 'public land auctions' that are not held by government entities like the Sheriff's Department," Tom said in an October 30, 2008 posted response. "The mortgagor, or other interested party can openly bid at auction to protect their interest. As for collusion…between who?"

Tom told Langert that whoever made the winning bid at a sheriff's auction was required to pay a deposit of 20 percent of the total purchase price. If the remaining balance was not paid within 30 days, Tom said he believed the deposit was forfeit.

"I believe most statutes include provisions for 'fraud and collusion' but that's something you'll have to be able to prove in court," Tom told Langert. "Not a cheap proposition."

Tom said that ultimately, the best way Langert could protect his investment was to do his research and set a limit he would not exceed in his bids.

Tom also reminded Langert he might not win the auction.

"There are a lot of complications that can (arise) from foreclosures," Tom told Langert. "Even after you make a winning bid(,) you have to worry about other's rights of redemption."

Langert expressed concern that the condition of a property won at auction might be as costly to remediate as any attempt to win it.

"Is there any way of knowing that a condition exists if it was never reported to the dep (Department of Environmental Protection) or another agency?" Langert asked Tom. "One is not allowed to enter the premises or test soil conditions until you own the property!"

Tom offered a suggestion to minimize any potential risk beforehand.

"I would say check with the local building department for any permits that would indicate that oil was ever used and any indications that there were underground tanks installed," Tom advised Langert.

As a member of the Lakewood Township Committee, Langert has served as liaison to the Lakewood Inspection Department.

"By the way, are you looking at foreclosure auctions for investments or for a primary residence?" Tom asked Langert in a November 3, 2008 post.

"Investment," Langert responded one week before winning a seat on the Lakewood Township Committee. "Thanks for your help."