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State v. Thompson

August 1, 2008

STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
ROBERT K. THOMPSON, HAROLD E. FOX, DAVID M. GAVIN, CARMELA L. THOMPSON, KAREN M. WOOD, JANICE A. ECKSTEIN, REMY P. DEVARENNE, SR., AND SANDRA L. BIELANSKI, DEFENDANTS-RESPONDENTS.



On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Mercer County, Indictment No. 06-08-00090-S.

The opinion of the court was delivered by: Lisa, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued May 29, 2008

Before Judges Cuff, Lisa and Lihotz.

By leave granted, the State appeals from an order dismissing thirty-six counts of a forty-two-count indictment. Thirty-two of the dismissed counts charged six State employees and two employees of an outside vendor contracting with the State with official misconduct, N.J.S.A. 2C:30-2; the remaining four counts charged two of the State employees and the two employees of the outside vendor with engaging in a pattern of official misconduct, N.J.S.A. 2C:30-7.*fn1 We affirm in part and reverse in part.

I.

The indictment was the result of an investigation by the Division of Criminal Justice into the receipt of personal benefits by six Department of the Treasury employees from the sales director (Sandra L. Bielanski) and the senior vice president of sales (Remy P. deVarenne, Sr.), of OSI Collection Services, Inc., a vendor engaged by the State to collect tax deficiencies and delinquencies. OSI allegedly provided these benefits in the form of lunches, dinners, drinks, entertainment, spa treatments, and golf outings, over the course of about five years between 1999 and 2004.

The Department of the Treasury (Department) manages the receipt and payment of State funds, and has under its administrative jurisdiction the Division of Taxation (which collects the State's taxes), the Division of Revenue (which processes the State's receipts and manages the State's accounts receivable), and the Division of Purchase and Property (which oversees the procurement of items for the State's agencies and employees). The State employees charged in the indictment, and their positions during the relevant period, are Robert K. Thompson (Director of the Division of Taxation), his wife, Carmela L. Thompson*fn2 (manager of the Division of Taxation's word processing unit), Harold E. Fox (Deputy Director of the Division of Taxation), David M. Gavin (Assistant Director of Compliance in the Division of Taxation), Karen M. Wood (Assistant Director of Technical Services in the Division of Taxation), and Janice A. Eckstein (Assistant Director of Revenue Management in the Division of Revenue).

The trial judge dismissed the thirty-six counts now before us based upon legal insufficiency. Accordingly, it was unnecessary for him to reach defendants' arguments that the evidence presented to the grand jury was factually insufficient or that the indictment should be dismissed on grounds of selective prosecution. These issues should be determined in the first instance in the trial court. Accordingly, on those counts that we order reinstated, defendants may again present these issues for determination upon remand.

Through a competitive bidding process, the Department outsources the collection of its tax deficiencies and delinquencies. OSI's predecessor was the successful bidder on the tax delinquency contract in 1995, which continued in effect, with nine extensions, through July 31, 2004. In 1999, OSI's predecessor was awarded the tax deficiency contract, which was extended five times and remained in effect through February 28, 2006. Both contracts prohibited the vendor from giving items of value to State employees.

When the State submitted the tax delinquency contract to a new round of bidding in May 2004, the State received proposals from three bidders, including OSI. The contract was awarded to OSI. We will later discuss in more detail the circumstances of this award.

Twenty-eight of the counts before us can be grouped into fourteen "pairs." These counts alleged that OSI employees provided benefits to the State employees on specified dates and in specified amounts, of the nature we have previously described. The State treated each of these exchanges of benefits as two separate incidents. Thus, one count in each of these pairs charged one or more State employees and an OSI employee*fn3 (as an accomplice under N.J.S.A. 2C:2-6)*fn4 with the receipt of the benefit. Then, in the corresponding other count within that pair, the State charged the State employee(s) with failure to report the receipt of the benefit to the appropriate ethics authority. We will refer to these as "receiving counts" and "failure to report counts."

All of the receiving and failure to report counts charge defendants with violation of N.J.S.A. 2C:30-2b, which is committed by refraining from performing an official duty with a purpose to obtain a benefit or to deprive another of a benefit. To a large extent, the State relied upon the Department's Code of Ethics as the source of the duty allegedly breached by the State employees. The receiving counts generally charged the State employees with receiving a benefit from OSI (dinner, a golf outing, etc.) in violation of their duty to refrain from accepting such benefits, with the purpose to obtain that very benefit. The corresponding failure to report counts generally charged that the State employees refrained from performing their duty to report the receipt of the benefits identified in the receiving count with the purpose to deprive the Department of a benefit, namely the opportunity to enforce the New Jersey Conflicts of Interest Law and the Department's Code of Ethics.*fn5

Because of the multiplicity of counts of official misconduct against them, Thompson and Gavin were also each charged with a count of engaging in a pattern of official misconduct, N.J.S.A. 2C:30-7, as were Bielanski and deVarenne, in their capacity as accomplices, N.J.S.A. 2C:2-6.

In addition to the fourteen pairs of receiving and failure to report counts and the four counts of engaging in a pattern of official misconduct, there are four additional counts before us that were dismissed by the trial judge. Each of the remaining four counts charged State employees with official misconduct in connection with their alleged wrongful failure to recuse themselves under specified circumstances. We will now describe those counts.

Count seventeen charged Thompson with official misconduct. Although the charge was under N.J.S.A. 2C:30-2b, the allegation was unlike those in the receiving and failure to report counts. In December 2002, an OSI employee submitted a letter to the State questioning the legality of OSI's billing practices with the State. The employee asked for a full investigation. The Chief of Staff of the Department forwarded the letter to Thompson, with the question, "Is this something that you think we should follow-up on?" Thompson forwarded the letter to Fox with the subject line "FYI." The next day, Thompson had lunch with deVarenne at a Trenton restaurant to discuss the "employee complaint." DeVarenne paid for the lunch. The next day, Bielanski responded to the accusation in an email, which Thompson forwarded to Fox, again with the subject line, "FYI."

The State contended that Thompson involved himself in the matter through the lunch discussion with deVarenne, Thompson "refrained from performing his duty to recuse himself from the process of determining whether any action should be taken" regarding the allegations of OSI's improper billing, and Thompson "refrained from performing his duty to direct the allegation to another employee of the Department of the Treasury who would not be perceived to be under a conflict of interest for evaluation."

The remaining three counts all charged violations of N.J.S.A. 2C:30-2a, which makes a public servant guilty of official misconduct who commits an unauthorized exercise of his or her official functions with a purpose to obtain a benefit for himself or herself or another or to deprive another of a benefit. Count eighteen charged Thompson; count thirty-five charged Fox and Gavin; and count thirty-six charged Gavin. The general thrust of these three counts alleged that the receipt by Thompson, Fox or Gavin of certain benefits from OSI created the impression of a conflict of interest, and that these three individuals nonetheless acted on matters involving OSI when they should have recused themselves pursuant to the Department's Code of Ethics. Unlike the seventeenth count, alleging only that Thompson failed to recuse himself, these three counts alleged a failure to recuse and an additional affirmative act.

Count eighteen alleged that Thompson "did commit an act relating to his office but constituting an unauthorized exercise of his official functions, knowing that such act was unauthorized or he was committing such act in an unauthorized manner," namely, knowing that OSI had given him things of value in the past and with the purpose to obtain additional things of value, Thompson "recommended that a State of New Jersey contract with OSI Collection Services, Inc., be extended six months."

According to the evidence presented to the grand jury, OSI's tax deficiency contract was scheduled to expire at the end of August 2005. The Division of Purchase and Property requested a three month extension of the contract. However, Thompson suggested a six month extension. An extension was deemed appropriate because bids would not be received for the new contract until after the end of the current contract, time was needed for the evaluation and award process, and, if a new company was selected, additional start-up time would be required because of training and equipment issues. The Division of Purchase and Property accepted Thompson's recommendation. The State contends that Thompson should have recused himself and should not have undertaken discussions over the extension of the contract.

Count thirty-five charged that Gavin and Fox, each responsible in some degree for the enforcement of the tax laws, "participated in the selection of other State government employees to serve on an Evaluation Committee, which committee was to evaluate bids to later provide the services then provided by OSI Collection Services, Inc., and expecting that OSI Collection Services, Inc., would submit a bid to continue to provide those services," despite the prior receipt of gifts or benefits and with the purpose to receive future benefits. As we have previously noted, OSI's tax delinquency contract expired at the end of July 2004. The State issued a request for proposals (RFP) several months prior to that date. An evaluation committee must be created to review the bids, evaluate them, and recommend that the State award the contract to a particular vendor. The State presented evidence to the grand jury to the effect that Gavin and Fox participated in the selection of the members of the evaluation committee.

Count thirty-six alleged that Gavin, "in the evaluation of responses to the request for proposals . . . participated in the formulation of specifications for the request for proposals for the rebidding of the tax delinquency contract," despite the prior receipt of benefits and with the purpose to receive future benefits. This count further alleged that in addition to the expectation that he would receive future benefits, Gavin also acted with a purpose to obtain a benefit for OSI.

The evidence on this count indicated that Gavin urged the inclusion of two unusual conditions in the RFP: (1) that the winning bidder maintain an office within twenty-five miles of Trenton, and (2) that the winning bidder guarantee a minimum revenue to the State. According to an employee of the Division of Purchase and Property, these specifications "raised a red flag" because of the potential chilling effect on competition and because they tended to favor the incumbent. Ultimately, the minimum ...


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