NJ News & Views

[Editor's Note: At 12:57 p.m. on January 18 and at 7:09 p.m. on January 29, 2011, this story was edited for style, content and accuracy.]

For some New Jersey residents, 2010 was a very good year.

But not for others.

In 2010, Michael Reina increased his combined earnings as part-time mayor of Jackson and as full-time security guard at a nuclear power plant after accepting an offer of confidential aide from the state Department of Transportation (DOT). In July, the same month Reina was sworn into office for a full 4-year term as mayor of Jackson at $29,500 per year, he began work for the DOT at $78,000 per year.

Total cost to New Jersey taxpayers: $107,500.

Following public criticism, Reina agreed to give up his part-time salary of mayor, which was reduced by a Friday furlough, but not the position of mayor, which was a conflict of interest with his position working for the state.

New Jersey taxpayers may not be getting the full value of their tax dollars in the performance of Reina's duties in both positions.

In the days following a post-Christmas 2010 blizzard, Reina reportedly rode a township snow plow, digging out grateful constituents in Jackson, instead of reporting for work at his employer's offices in Trenton or riding New Jersey commuter buses the DOT reportedly hired him to assess for security threats to them.

According to an unidentified DOT records custodian responding to an Open Public Records Act (OPRA) request, no video was available of Reina ever entering or leaving DOT offices for work in Trenton during 2010.

Last year was also profitable for Lakewood Executive Director of Economic Development Yisroel (Steven) Reinman.

In 2009, board members of the Lakewood Development Corporation (LDC), a township agency that oversees the township's Urban Enterprise Zone (UEZ) program, met in closed session to appoint Reinman to the position of Executive Director of Economic Development. Members did not publicly disclose his salary following his appointment.

Upon his appointment, Reinman became director of the Lakewood Industrial Commission (LIC), which generates revenue through the sale of public land, and head of Lakewood Airport.

Committeeman Robert Singer, Republican liaison to the LDC in 2009, maintained that the township would continue to employ airport director Bertram Albert because Reinman was not qualified to take over his responsibilities.

In June 2010, the Lakewood Township Committee approved a resolution that also gave Reinman responsibility for oversight of the LDC. Committeemen maintained they did not intend to eliminate the duplicate position of LDC Executive Director Patricia Komsa.

Less than two years after Reinman took over as head of the LIC, the township agency is almost broke, according to township financial records.

So is the LDC after the state took millions of dollars in UEZ project funds from Lakewood and other UEZ municipalities two years in a row, then turned the monies over to school districts across the state - including Lakewood - as extraordinary aid.

The Lakewood Board of Education ended the 2006-7 school year over $1 million in deficit. In October 2008, the state auditor began an audit of district finances, which was not completed until 2010 - after the district received UEZ funding two years in a row as extraordinary aid.

In 2010, the state auditor reported evidence of district malfeasance in Lakewood, but did not identify all individuals charged in the report with committing it. The omissions obstructed their arrest or conviction.

Reinman is unlikely to significantly improve LDC earnings since neither the state nor the township can afford to subsidize its projects anymore.

In 2009 and continuing into 2010, Lakewood Township reportedly stopped paying its share of the cost to manage the township Web site, referred to in municipal budgets and by township committeemen as "public relations," and increased the amount paid by the LIC and LDC to subsidize its operation.

Last week, Lakewood Township Clerk Mary Ann Del Mastro responded to an Open Public Records Act (OPRA) request by providing Reinman's starting salary and current salary. According to Del Mastro, Reinman's starting salary in 2009 was $75,000 per year.

After the Lakewood Township Committee established a salary range for his new position of director of economic development/LDC, with a maximum of $125,000, Del Mastro said Reinman received a raise to $92,000, retroactive to January 1, 2010.

On October 27, the industrial commission reported a total of all account balances of $47,717.26 - a decrease of $41,698.57 from July. The following month, the township raised Reinman's annual salary to the top of the salary range committeemen established for his new position in June: $125,000, retroactive to January 1, 2010.

In December, Lakewood asked the state Civil Service Commission to approve a plan to lay off 13 municipal employees, including five police officers, that township officials said they could not afford to retain.

In several 2010 memos, Reinman discussed the need to sell the Hagaman Property, a site on Route 9 north near the border with Toms River. The site is comprised of public and private property. Reinman said the proceeds from a public land auction of the site were needed to continue operation of the LIC.

One of the parcels on the site was formerly owned by the Hagaman family. Over two decades ago, the township condemned the Hagaman parcel, which it alleged Glenn Hagaman used to bury contaminated waste. A decade after the state Department of Environmental Protection (DEP) remediated the site, the township received U. S. Environmental Protection Agency (EPA) and state Brownfield funding to remove abandoned construction equipment and miscellaneous items from the site, as well as trash and litter.

The Hagaman Property is located in a heavily-wooded buffer separating a Route 9 strip mall from residential housing behind it, off Chestnut Avenue.

Instead of leaving the wooded parcels as a privacy buffer for homeowners, the LDC funded water testing on the site for future redevelopment of it.

In 2005, Lakewood businessman Ovadi Malchi sought to purchase a portion of the Hagaman Property to expand his proposed supermarket's parking lot, located on Route 9 north in the Lakewood UEZ.

Last year was a good year for Malchi as well.

His former business partner, Brooklyn resident Menachem Schmulovich, agreed to settle a 2007 lawsuit he and his wife, Tova, filed in United States District Court in Trenton. The lawsuit charged Malchi with fraud and misrepresentation, Schmulovich told a reporter. According to the couple, who discussed their lawsuit with NJ News & Views, Malchi applied for a $360,000 mortgage on the supermarket after its construction, but did not disclose to the bank lending the money that Schmulovich and Malchi's brothers, Zichroni and Ofer, were also investors in it.

In an August 8, 2005 letter to the township, Malchi attorney Abraham Penzer requested that the township sell two public lots owned in the area for construction of additional parking for his client's proposed business, a neighborhood supermarket.

"Please be advised that this office represents Ovadi Malchi who is the principal of 1161 Route 9, LLC," Penzer wrote Mayor Charles Cunliffe, Township Manager Frank Edwards and Planning Board Chairman Stanley Banas. "Mr. Malchi has come up with a plan to do an addition of stores which will create a nice rateable and will cause a good use to be made of the property. However, in appearing before the Planning Board Tech Meeting it was realized that there is not enough parking to make this project happen."

Penzer asked township officials to consider selling Hagaman's Property to Malchi.

"The adjacent parcel to the north is lot 1, block 1064 and lot 3 to the south along River Avenue is part of the Hagaman Dump Site," Penzer wrote. "It was indicated by the Board that this property would lend itself perfectly for a parking lot due to the environmental considerations."

The township did not sell the individual parcels to Malchi. Instead, Reinman is seeking to negotiate the purchase of all privately-owned blocks and lots on the site for public auction of a contiguous tract.

Tova Schmulovich said Malchi did not pay off the mortgage after plans to expand the property fell through. She also said she and her husband did not realize a dime from the investment.

"We didn't see any of the rent money since day one," she said. "We started to get suspicious."

Tova Schmulovich said the investment venture was a mistake.

"We were naïve," she said. "We trusted him."

Following settlement of the lawsuit in March 2010, Schmulovich also filed a complaint with Manchester police, who transposed Malchi's first and last name in their report.

"The victim, Menachem E. Schmulovich, reported on April 14, 2010, that during a federal court proceeding involving his business partner, Malchi Ovadi, he discovered that Ovadi wrote a business check, Commerce Bank Check 1101, paid to the order of Menachem Schmulovich, in the amount of $6,061 for money that Mr. Ovadi allegedly owed to Mr. Schmulovich," Manchester police reported. "Mr. Schmulovich reported that his signature was forged on the back of the check and that Mr. Ovadi later presented the check for payment to a check cashing service, identified as Norman Spiegel Services, located (in)…Manchester Township. Mr. Schmulovich reported that he never received this check or any payment from this check from Mr. Ovadi."

Schmulovich said he presented Manchester police with a copy of the canceled check as evidence of the forgery.

Manchester police reported investigating the complaint by deposing Malchi and Spiegel.

Spiegel signed a statement waiving his Miranda rights before being deposed.

"During this investigation, Norman Spiegel provided a taped statement acknowledging that he operated a check cashing service while he was employed as a parking enforcement officer within Lakewood Township," the Manchester Police Report continued. "On many occasions he conducted check cashing transactions with Mr. Ovadi."

Lakewood Police Chief Robert Lawson responded for comment by asserting the township was not aware that Spiegel was operating a check cashing business in the municipality.

Del Mastro told NJ News & Views that the township hired Spiegel as a part-time parking enforcement officer on June 12, 2000.

"Mr. Spiegel acknowledged he would receive checks from Mr. Ovadi, provided him cash, and then later deposit those checks into his own personal bank accounts," Manchester police reported. "Mr. Spiegel acknowledged that he never conducted these transactions while at his residence or anywhere within Manchester Township but that all these transactions occurred while in Lakewood Township."

Lakewood does not require home-based businesses to register with the township.

"Mr. Spiegel further acknowledged that he has no knowledge of an individual identified as Menachem Schmulovich and never conducted any check cashing transaction with him," Manchester police reported. "Based on this statement, Mr. Schmulovich was advised to report this incident to the Lakewood Township Police Department for further investigation."

Manchester police taped the depositions and had them transcribed. The tape and transcriptions were included with the Manchester police report of the Schmulovich complaint.

Manchester Police Records Office Manager Patricia Mongiardini denied a reporter for NJ News & Views access to the Schmulovich police report and deposition transcripts.

Manchester Police Chief William C. Brase did not return a call for comment.

Instead of advising Schmulovich to litigate the case in Manchester, where Spiegel deposited the forged check he said he cashed for Malchi, Manchester police referred Schmulovich to Lakewood police, even though there was no evidence linking the alleged crime to that municipality.

As instructed by Manchester police, Schmulovich said he reported the crime to Lakewood police, who provided a copy of their police report to NJ News & Views. However, Lakewood Municipal Court personnel declined to provide the Schmulovich case file for public inspection before adjudication of the complaint, which was downgraded from forgery to a disorderly persons charge.

Following adjudication in October 2010, NJ News & Views contacted Lakewood Municipal Court Clerk Carol Jenkins. Jenkins told a reporter that Lakewood Municipal Court Judge Scott Basen dismissed the complaint filed by Schmulovich.

Schmulovich said an attorney for the Ocean County Prosecutor's Office also referred him to Lakewood.

A reporter for NJ News & Views contacted the county prosecutor's office for comment.

An attorney that responded for comment told the reporter the complaint should not have been adjudicated in Lakewood, where Spiegel said he cashed the forged check for Malchi, but in Manchester, where Spiegel deposited the forged check in his bank account.

The attorney defended the county prosecutor's referral of the complaint of forgery to municipal court based on lack of sufficient evidence to prosecute it in state Superior Court in Toms River.

According to the state Banking Commission, Spiegel is not licensed to cash checks in New Jersey.

Money laundering is an indictable offense under state and Federal racketeering laws.

So is bank fraud.

According to county clerk online records, Spiegel registered the company name of Norman Spiegel Services with the Ocean County Clerk's Office on September 9, 2006 - five months after cashing a forged check he received from Malchi, then depositing it under his company name at the PNC Bank in Manchester.

On December 28, 2006, the same year Spiegel told Manchester police he went to Malchi's electronics store in Lakewood to cash the forged check, Lakewood police dismissed Spiegel.

Malchi did not return a call for comment.

For another supermarket owner in Lakewood, 2010 was also a very good year.

LDC Chairman Avrohom (Abraham) Muller, a Lakewood police chaplain, opened Kosher West in Westgate Plaza, a commercial shopping center located in the township's largest residential development, which is still undergoing buildout.

Last year, Muller paid off a $23,254.09 Federal tax lien on the supermarket after failing to pay all Federal income taxes on the property in 2007, 2008 and 2009.

This year could be even better for Muller if the LDC succeeds in convincing the state UEZ Authority (UEZA) to approve a boundary modification in the Lakewood zone to include Westgate Plaza and his supermarket.

2010, as well as 2011, are both good years so far for supermarket owner Edmond Tielman of Manchester, owner of Block 169, Lot 21 in Lakewood. His supermarket, named Cream O Land on the deed recorded on the county clerk Web site, was proposed by the LDC in 2009 for removal from the zone, even though it is also located in a residential development built on wetlands.

2010 was not a good year for Lakewood taxpayers. The LDC proposed in 2009 and 2010 to remove a portion of the township-owned Lakewood Airport safety zone, which ensures safe landings and takeoffs from the airport's runway.

The past four years have not been good years for Lakewood real estate investors John and Pat DeFilippis of Toms River, their partner, Robert Altieri of Marlboro, or Shraga Liebb of Lakewood.

In 2007, Liebb hired a Brooklyn real estate agent to negotiate the purchase of the partners' property, a former Italian restaurant at 314 Fifth Street, between Route 9 north and Clifton Avenue in downtown Lakewood. According to wife Pat DeFilippis, now a widow, she and her husband, John, agreed to sell the professional building - one of the few downtown properties with its own parking lot - to a limited liability corporation owned by Liebb, who failed to close on the sale after all lease tenants vacated it in June 2009.

The same year Liebb sought to buy their downtown property, the couple and their partner proposed to sell 314 Fifth Street to the LDC for redevelopment as an additional municipal parking lot. LDC Executive Director Russell Corby said the township could not consider the offer unless the building was empty of lease tenants.

After the owners of 314 Fifth Street contracted with the LDC to sell the building last year, Liebb filed suit, demanding the refund of his non-refundable $90,000 deposit on the property, but continuing to refuse to buy it for the contracted price of $950,000 - which he could not afford, according to Pat DeFilippis.

Liebb did not return a call for comment.

At the November 23, 2010 LDC meeting, members discussed the status of the lawsuit, as well as Liebb's offer to sell the former Roey's breakfast restaurant located in the Franklin Street Redevelopment Project at Main Street and Cedarbridge Avenue in downtown Lakewood.

"He wants an astronomical amount of money, well beyond what he paid for it," Komsa told members. "The offer we made to him was extremely generous."

Muller, who did not recuse himself from the discussion, even though he stands to profit from it if the state approves his Kosher West supermarket in the Lakewood UEZ, asked Komsa about Liebb's lawsuit.

"What's his name - Liebb?" Muller asked. "He wants a lot of money and he's holding us up on litigation."

Muller asked if the litigation was for breach of contract.

"He thinks Pat - Mrs. DeFilippis - is in violation (of it)," Komsa responded in a taped recording of the meeting. "Technically, her attorney is saying you've dragged this out for two years (and) time is of the essence."

Another man interjected to remind LDC members that the matter should be heard in closed session.

LDC members continued their public discussion of the litigation.

"I think, if we want to save the downtown, I imagine this project is going to cost us a fortune," Muller said.

Komsa defended the purchase of the parcels.

"A lot of the money (paid toward purchase of the land) is pretty much already allocated," she said, then referred to stalled purchase of the DeFilippis parcel. "I believe we need one more project to finish. We're just one project away from doing the demo and construction. The money is already in place over by 5th Street. We're held up on litigation."

Muller continued to press Komsa for a total cost.

"Let's have a price tag on this thing," he said.

At the March 2, 2010 LDC meeting, members approved $1.2 million for the purchase of a boarding house at 312 Fifth Street, adjacent to 314 Fifth Street. Komsa later told NJ News & Views that the purchase price included an $82,000 down payment towards the $880,000 purchase price of the DeFilippis property.

Both lots are planned for redevelopment as one municipal parking lot.

Because local government has not rezoned downtown Lakewood to require property owners to install their own parking, more public parking is needed.

A property owner located on the same block at 316 Fifth Street operates a car rental business. Many of the rental cars are parked curbside, further reducing available area parking.

DeFilippis said she and her husband and their partner Altieri bought 314 Fifth Street in 1986. The DeFilippis operated their business, Windows From Us, a home improvement and window replacement company, in the Lakewood building.

For years, the DeFilippis permitted their neighbors as well as their tenants to park on their property.

No more.

Pat DeFilippis said she had no other choice but to chain off the entrance to the property once all lease tenants had vacated the premises.

DeFilippis is a UEZ member.

Others would like to join those ranks.

According to Komsa, the LDC plans to ask the state to include the town's two institutions of higher learning - Beth Medrash Govoha and Georgian Court University - in the Lakewood UEZ.

Komsa acknowledged there was no benefit to putting the rabbinical college and university in the UEZ - except for one.

"Sometimes, when they're going after different grants, state or Federal, they may do better, so to speak, from being located in an Urban Enterprise Zone," she told members.

The state no longer permits UEZ municipalities to increase or reduce the size of the entire zone. In order to include new members, Lakewood must receive state approval to remove current members.

In 2009, the LDC proposed to remove a portion of the Eagle Ridge Golf Course, owned by LIC member Jan Kokes, who developed The Fairways adult development adjacent to it.

"The golf course doesn't avail themselves of UEZ benefits," Yehuda Abraham, LDC Director of Business Development and UEZ Co-coordinator, explained in response to a reporter's question following adjournment of the September 1, 2009 LDC meeting.

Instead, the LDC proposed that the Eagle Ridge Golf Course restaurant be inserted, even while a portion of the golf course adjacent to Faraday be removed.

The LDC has continued to ask for inclusion of the former Little League baseball field between 9th and 10th Streets, which NJ Transit would redevelop into a parking lot and bus stop. In the meantime, the township has permitted motorists to park on the vacant lot.

Last month, motorists had to request that their vehicles be towed from the site after torrential rains mired them in mud.

The LDC is also asking the state to approve $105,000 in funding to operate a fleet of nine buses the township purchased with Federal grant dollars, but cannot afford to operate. The buses would be merged with the UEZ Job Link bus service, which the LDC no longer operates full-time due to lack of passengers.

If the UEZA approves the proposal, state and local taxpayers would be subsidizing the growth of non-profit businesses, according to public comments during the November 23 LDC meeting.

"This economy grows education," one Lakewood businessman said.

"No one wants to help us," a Lakewood businesswoman told the LDC before Muller closed the public forum.

During the meeting, the LDC did not propose to remove a 36-acre residential subdivision of a 400-acre parcel located in a UEZ industrial park, where Lakewood developer Raphael (Ralph) Zucker is building out Pine River, a former age-restricted development on Cedarbridge Avenue. Pine River is adjacent to FirstEnergy Park and the Cedarbridge Corporate Park site, which is owned by Beth Medrash Govoha.

The LDC is still seeking to include the site of Washington Square, a mixed-use development built on the other side of Cedarbridge Avenue by Moshe and Minna Shvarzblat, the owners of Dina's Dinettes. The couple relocated their downtown retail store there after selling the mixed-use development upon buildout.

The Shvarzblats converted their warehouse, sandwiched between Greenwood Cemetery and Washington Square, into an expanded retail store.

Washington Square consists of residential apartment buildings, which received a 5-year tax abatement, and a commercial building that is tax-exempt, according to township tax assessment records.

Property owners that receive a 5-year tax abatement pay a reduced schedule of assessed taxes on improvements to their land, which is assessed at full value during the abatement.

Property owners that receive a tax exemption pay no taxes on land or improvements to it.

The Washington Square mixed-use development is also located on Cedarbridge Avenue, but is only partially inside the zone.

The state is unlikely to realize a return on its investment in either project.

"It comes down to tax dollars," Muller said on November 23. "If you're in the zone boundary, it means less tax dollars are going to come to the state."

That is exactly why the state should just say no to the Lakewood boundary modification proposal.

2011 would be a better year for New Jersey taxpayers if Governor Chris Christie reformed the state's UEZ program.

Last year, the state auditor released a report identifying malfeasance in several UEZ municipalities that were audited, including Lakewood, but failed to identify the specific municipality charged with the specific act of malfeasance.

That information is critical toward reforming the UEZ program.

Instead of restricting membership in the UEZ to businesses located in a designated geographical area, the state should limit membership to qualified businesses that generate the UEZ fund through interest earned on repayment of microloans or to qualified businesses that collect state sales tax.

All UEZ members would have to provide documented evidence on a monthly basis that they continue to employ the required number of Lakewood residents to remain eligible for zone benefits, and that those employees are filing Federal and state income taxes.

Retailers such as Muller's Kosher West, which collect a state sales tax, could be eligible for UEZ membership as long as they are not tax-exempt properties and not in arrears on payment of local, state or Federal taxes - as Muller was for three years.

Christie has proposed increasing state aid funding for institutions of higher learning. That would benefit Beth Medrash Govoha, which needs to expand its parking, as well as Georgian Court University, which already provides van transportation for students and staff that need it.

Instead of permitting UEZ municipalities to overlook illegal transportation services, which do not pay taxes or township fees, the state needs to hold local government accountable for protection of registered limousine and taxi companies, which enable passengers to arrive safely at their destinations.

Instead of approving funding to operate a fleet of municipal buses that benefit a single business, the state should buy them back from Lakewood and sell the buses at a discount to registered commuter bus services, such as those Jackson Mayor Michael Reina was reportedly hired to assess for terrorist threats.

The state action would not only save taxpayer dollars, but promote business and job opportunities in urban municipalities that need them - which is the goal of the UEZ program.

State and local government have a responsibility to reduce the cost of urban redevelopment to taxpayers through the judicious use of eminent domain. Eminent domain enables property owners such as DeFilippis to sell their land for needed redevelopment without other Lakewood investors holding it for ransom.

"John died in 2009," Pat DeFilippis told a reporter last week. "All we wanted to do was sell a building, retire and move on. How many years does it take to sell a building?"