Thursday, June 21, 2018

Kraft: Fees Paid to GPA Solicitor a Misappropriation of County Funds (Updated)

Ken Kraft
"No dogs or ponies were harmed," quipped County Council Finance Chair Ron Heckman yesterday at the conclusion of a meeting he called to try to get a handle on what's going on at the beleaguered General Purpose Authority (GPA). Heckman was responding to GPA Chair Shawn Langen's gripe that it would be nothing more than a dog and pony show. The nearly two-hour meeting was actually quite productive.

What's at stake is a $38.5 million project to replace or repair 32 of the county's 119 bridges. They have been conveyed to the GPA for construction and a 10-year maintenance period, after which they will be returned to the county. The contractor is Kriger Construction, and Benesch Engineering has been providing third-party oversight. The work Benesch is doing has been in turn been monitored by GPA Chair Shawn Langen. He has billed the county for his work, but NorCo Exec Lamont McClure refuses to pay. In addition, GPA Solicitor John Lushis and his firm, Norris, Mclaughlin and Marcus has been paid $813,000 in 2016 and 2017. McClure refuses to pay any of the 2018 bills, but is paying Kriger for its work as milestones are met.

Ron Heckman
In recent months, there's been increasing friction between the GPA and the County. The GPA, without seeking any competitive bids, hired Philadelphia firm Conrad O'Brien after John Lushis told them that the County was about to sue. Instead, this law firm wants authority to sue the County. After receiving several negative reports from McClure, County Council invited the GPA to appear at its Finance Committee. Langen complained he wanted an invitation in writing, and then when he got it, complained about the short notice. But he was at yesterday's Finance Committee, along with fellow members Shawn Donahue, Paul Anthony and Peg Ferraro. Benesh Engineer Greg Kuklinski also appeared. Executive Lamont McClure was at a meeting of the Lehigh Valley's Planning Commission to ensure that the Meadows bridge in Lower Saucon Township is expedited.

1) Does the third-party checker need to be checked? -  Kuklinski told Council there's no need for a separate set of eyes and ears to watch him, in stark contrast to what the GPA has been doing. Langen stated that he has been spending too much time doing this, and wants proposals for someone else to do this work  This appears to be both unnecessary and redundant.

John Cusick
2) Who picked the 32 bridges being repaired or replaced? - Not us, said Langen for the GPA. Not us, said Benesch Engineer Kuklinski. Last week, I reported that only nine of these bridges are actually considered structurally deficient.  Now no one likes to admit that they read this here because I am a bottom feeder, but everyone was pretty quick to deny involvement in bridge selection. So are we spending money unnecessarily? Kuklinski said he never really examined the bridges to determine whether the work is actually needed. But he said the majority of them are 60 years old and are mostly single lane bridges. He believes this raises safety concerns, although people in Lower Mount Bethel want to retain single lane bridges along Little Creek Road because they are part of a designated scenic byway.

The person who came closest to answering this question is a Matt Dietz. He believes the bridges were to be spread out so there is no unnecessary traffic burden on any one municipality. But that answer makes no sense because eight bridges in this round are located in Lower Mount Bethel.

Lori Vargo Heffner
3) How is the project itself going? - Ken Kraft notes that we've already paid $5.6 million and only one bridge is done. But the project itself seems to be going well. According to Kuklinski, the County is finishing Bridge #202 (Ott Road, Lower Mount Bethel) and expects to start three bridges in the next few weeks. In 2019, Kriger plans to repair or replace another nine bridges. The DEP has given 10 of 13 permits. There has been only one change order, and that is one that actually benefits the county by returning Meadows bridge. Kriger is on track to be finished by January 2021.

4) How about that $813,000 legal bill? - In February, I reported that GPA Solicitor John Lushis and his law firm, Norris, McLaughlin and Marcus, were paid $813,039.30 in 2016 and 2017 as a result of their affiliation with the GPA  The money came mostly from the County and the GPA, although it also included $30,000 for a St.Luke's bond. During yesterday's meeting, both Shawn Langen and Financial Specialist David Hughes attempted to cast doubt on that figure, and in a way that cast doubt on me.

"Where are you coming up with $800,000?" Langen huffed to Cusick. I laughed to myself because neither Cusick nor Ken Kraft, who said he learned of it during a meeting in January, wanted to admit they read it here. After all, I am a bottom-feeding blogger who dives into garbage cans. But I also know how to file and pursue Right-to-Know requests.

Robert Werner
What Hughes did was disingenuous. He handed up a list of the billing over the past two years that are "relative to the P3." I listed all the sums paid to this law firm, whether it was P3, GPA, "special legal services," or the $30,000 paid by St.Luke's as a result of a bond. As I have previously reported, they add up to $813,039.20.

According to Hughes, the amount paid was only $607,027.33. That's incorrect.

Ken Kraft picked up on this immediately.

"Where's the other $153,000 bill for the P3 jail thing that was never approved by this Council?"

Hughes then produced that bill. He never provided the actual GPA bills or the money that came from St. Luke's. I have gone over my figures with several county sources, and they are accurate. What the GPA attempted to do was minimize excessive billing.

Once the numbers were out there, Langen tried to argue that soft costs like these are reasonable for a $38 million project, and even suggested that Council is unaware of this kind of finance.

Actually, it is

John Lushis
5) What about the billing at $700 per hour? - The GPA's agreement with Lushis' law firm authorized payments of $250 per hour, but he submitted bills that included charges of $700 per hour from one of the attorneys in his firm, and that's a lawyer who isn't even admitted to practice in Pa. Kraft asked for an explanation.

"The $700/hour fee comes from litigation," said Financial Specialist David Hughes. That's very interesting, especially when you consider that this lawyer has no license to practice in this state. But the information Hughes gave is again incorrect. As a county employee, he should make more of an effort to be accurate.

I have the bills. As you can see in the excerpt of one of them below, "PDH" charged $700 for one hour's worth of emails concerning prisons in Pennsylvania, and if he actually practiced here, he'd know they are called jails. He charged $1,260 for 1.8 hours to review a John Lushis memo concerning prison legislation that Lushis was lobbying before the Pa.legislature. "PDH" charged another $1,750 for 2.5 hours to talk with Lushis about, among other things, "political issues" that might arise with the sponsorship of this state legislation.  These guys were charging outrageous legal fees to talk to each other and were acting as lobbyists and politicians, not lawyers. "PDH" has no law license in Pa, so he may be unaware that he should have registered as a lobbyist. .

I could cite additional examples, but I made my point. Hughes was feeding Council bullshit burgers.

They deserved the truth.
6) Who authorized Lushis to research P3 projects like the jail, which are outside the scope of the bridges project? - According to Langen, former Executive John Brown. At a meeting in February 2017, Brown told them  he'd like to use P3 for another 66 bridges, a new jail or adaptive reuse of the existing jail, a warehouse, forensic center, purchase of the Human Services building and a new parking facility. He had run none of this by County Council. Ron Heckman, who read the minutes of that meeting, told Langen that GPA pledged that it would be fully engaged, but Langen explained that the GPA would only work on a new P3 if it was "fully vetted and approved by county council."

Langen eventually complained he was being asked John Brown questions. "You want to ask questions to somebody who's not in the room," he protested. Ron Heckman said no one expects him to speak for Brown, but the only way they could find out what is going on is by asking questions.

7) How were the bills paid? - Ken Kraft managed to establish that there was absolutely no oversight. According to Hughes, Brown just authorized payment of bills that followed a rather circuitous route. Lushis would present a bill to the GPA. Langen insisted that they never approved the payments for "specialized legal services." The bills were instead passed along to Brown. Hughes said Brown would sign off, then the bill would go to Fiscal  and a check would be cut. From there, the money went to public works. They would call Hughes, and he would pick up the check and deposit it into a GPA account. From there, a check would be drawn to Lushis. This whole process certainly appears to have been designed to keep the County Council in the dark and the Controller out of the loop."That's circumventing our authority and the Home Rule Charter," observed Kraft. "They used you as a conduit to get something that they wanted done without our approval."

8) Are the Specialized Legal Services a Misappropriation of County Funds? - "This is a misappropriation of county funds," declared Kraft.. "This is spending something we never approved." He and Cusick both observed that the money was drawn from a $500,000 fund set up in the corrections budget and that was supposed to have been used to update a jail study. "What we approved was an update to a decade or so old jail study that was done under the John Stoffa administration," said Cusick. "At no point was it ever brought to Council that this would be done as part of a P3 project."

9) Is the GPA Marketing P3? - Langen denied that GPA is pursuing any P3 projects outside of Northampton County, although Lushis said earlier this week he was contacted by another municipality. He also admitted to hiring Sahl Communication at the request of John Brown. It is also known that Brown and Lushis tried to pitch P3 for the Hotel Bethlehem with a lender.

Bob Werner said he supported the bridge bundling project in 2013. He proposed and pushed this long before P3. But he is leery of what is going on with P3, and who is benefiting. He told Langen that Lushis went to Columbus Ohio to pitch the mechanism  "This thing has been abducted and kidnapped by a couple of people for profit," he asserted.

10) Was Langen Condescending? - Pretty much. "You keep making references to maybe we don't understand what multimillion dollar projects are," noted Lori Vargo Heffner, so she asked him to explain what he does. Landen refused. "I'll answer questions as they relate to the finance of this project," he replied.. "I have about 12 more minutes before I have dinner for 10 people. You gave me less than a week's notice during working hours"

Heckman then reminded Langen that he got plenty of notice but said he wanted a formal letter. "You were aware that we wanted to have this, so please, let's stick with the facts," he admonished him.

Updated 2:05 pm, Ferraro Resigns From GPA:  Below is her resignation:
Please accept my resignation as the Northampton County Council representative on the Northampton County General Purpose Authority.   I have been honored to serve and see the benefits to many worthwhile projects.  When the Authority agreed to be the conduit for the P3 project the responsibility changed and I feel that it is time for me to allow someone else to serve.
Peg Ferraro 

Updated 3:30 pm. Dowd Resigns From GPA, Too! - J Michael Dowd has joined Peg Ferraro in resigning from the GPA. Both Dowd and Ferraro have worked hard over the years to develop reputsations as fair-minded people. Their continued involvement in the GPA is something neither needed. Both Ferraro and Dowd are former Presidents of Northampton County Council.

The by-laws of the GPA provide that one member must be a member of Council, so McClure will have to fill Ferraro's vacancy with another member of Council. Dowd should be replaced by McClure himself. Historically, the County Exec has chaired the GPA.
Blogger's Note: This story originally published at 2:48 am.


Anonymous said...

It seems like there is a lot of dirt at Norris McLaughlin. Perhaps more than one barrister should be forced to vacate their current living accommodations and move to one provided by the Commonwealth. They have no problem billing at NYC rates, yet at least one partner refuses to work past 3:00. Outstanding work Bernie.
—-Mother Jones

Anonymous said...

Hey Bernie..lets talk about Krafts latest bullshit to ensure his union cronies who put him in couinty seat he has pushed to make it so only unions can get work from the county,,,,,,,or are u afraid of ur buddy Kenny???

Anonymous said...

5:26 am, your funny, Kraft did not draft or sponsor that new ordinance, but good try

Anonymous said...

They know if they go down, Peg goes down. They're confident that's not going to happen. This issue is over. Peg may have stabbed Angle in the back, but she's pretty sure she won't get the same treatment. This is our greasy county government. No wonder people hate government.

Anonymous said...

Looks like the GPA should be listed in the Guiness Book of Records under "Rogue Authority".

Anonymous said...

Where was the county controller in items 7 & 8 of the post?

No check should go out without the controller first reviewing the underlying documentation for proper authorization. That's Controller 101.

That this apparently wasn't done is either an appalling dereliction of duty or a stunning ignorance of one of the most basic functions of that office.

Anonymous said...

Unfortunately, the county has very little control over the authorities they create. That is the nature of any authority.

The three main points of leverage the county has are:

1) Appointing/Re-Appointing members (change in culture will be S-L-O-W);

2) Not extending the authority's charter (which in some cases makes the entity more responsive to county government);

3) Disbanding the Authority

I would say that the Northampton GPA has operated in such a manner that the third option should be pursued. If yesterday's meeting was a precursor to that action, it was time well spent. If not, it WAS simply a dog and pony show.

Time will tell.

Anonymous said...

@8:29 am, Sadly the Director of Fiscal Affairs approves payments in the County and the Controller only has audit authority under the Home Rule Charter. The Controller was all over the Brown administration and their out of control spending, but funneling this money to the GPA for them to write the check (which is what was done) was to avoid the scrutiny of Council, the Controller and the public.

Anonymous said...

8:29 You got it 100% right and the FBI should be called

Anonymous said...

9:13 -

If that's the case, the Controller should have been publicly calling attention to the procedure since he's been in office.

It's inexcusable.

I don't know of any Controller in any entity who would accept that arrangement. I doubt that Lehigh County has a similar process.

Bernie O'Hare said...

"Hey Bernie..lets talk about Krafts latest bullshit to ensure his union cronies who put him in couinty seat he has pushed to make it so only unions can get work from the county,,,,,,,or are u afraid of ur buddy Kenny???

First, your comment is off topic. Second, I support the apprentice ordinance, and think the lawsuit by nonuion builders is flawed. i will have a story by early next week after I read the cases cited in the complaint and review how courts have handled similar complaints elsewhere. Third, I have never been hesitant to tell Ken he is full of shit when I think he is.

Bernie O'Hare said...

"They know if they go down, Peg goes down. They're confident that's not going to happen"

You seem o have an unhealthy obsession with Ferraro. Do you have anything intelligent to say, or is it just the mindless nonsense I get from Trump's minions?

Bernie O'Hare said...

"No check should go out without the controller first reviewing the underlying documentation for proper authorization. That's Controller 101.

That this apparently wasn't done is either an appalling dereliction of duty or a stunning ignorance of one of the most basic functions of that office."

Tou apparently know nothing about Northampton County government 101. The way it is set up, the Controller can conduct audits but has no control over the billing process. Unlike many governments, where the check is written by the controller, that finction is left to county officials. The controller's role is limited to audits, and he does not typically audit outside agencies like the GPA, which are independent. I believe the way these payments were processed was done precisely to avoid he scrutiny of the controller, who was allover brown on other matters.

Anonymous said...

From the Northampton County Home Rule Charter:

Section 401: Titles and status

The Controller shall be the official of the county responsible for the internal control of the fiscal transactions of the County.

It's the first thing listed!

Matching checks to their proper authorization is a basic internal control for any entity - government or private business. It's what a controller does!

That it isn't being done is appalling. What else is being missed?

sezary said...

I appreciate Mr. Langen's presence at last nights' meeting and his willingness to answer questions. It is a positive step. I hope that it is looked at as such. Kudos to Mr. Heckman for having such a discussion.

Hopefully, the examination into the relationship between the county and the GPA, and what has transpired, will, at least, result in the necessary adjustments that will lessen the likelihood of this situation happening again. Of course, when individuals put their own interests above that of the county and the people, they can come up with countless unique, creative and nefarious ways to get around the system of checks and balances which do exist. This is exactly why checks and balances are needed and exist. You will never prevent every and all breaches of the public trust. You can only lessen the risk, the likelihood. There is a difference between serving the public through the private sector and serving the public through government. Governance and service both require a philosophical component and a practical component. Theory alone is not enough.

Anonymous said...

Bring John Brown back. I never saw the court house more screwed up. Thanks McClure...

Anonymous said...

Since it isn't the Controller, shouldn't Council ask the Disbursements Accounting Manager and/or the Director of Fiscal Affairs into the conversation to understand who approved the questionable invoices for payment?

Mr Allen said...

This is what investigative journalism looks like.

Nice job Bernie. Even though we often don't agree, this taxpayer says thank you.

Anonymous said...

I thought the meeting was productive and illuminating. We learned some tings that I never knew. It would appear John Brown controlled the last county council and they just stamped everything he gave them. It is true these guys want to market themselves and that some of the money spent is in question.

Bernie, I think the meeting worked well given the time and subject constraints.

Anonymous said...

It is a good thing that Ferraro resigned.

Anonymous said...

Rumor has it that the meeting was out of control and the GPA was treated terribly. If true that is shameful.

Anonymous said...

2:29. Who said Peg resigned.

Bernie O'Hare said...

"Since it isn't the Controller, shouldn't Council ask the Disbursements Accounting Manager and/or the Director of Fiscal Affairs into the conversation to understand who approved the questionable invoices for payment?"

It would be the Director of Fiscal Affairs, a cabinet official who reported directly to Brown. He would never vote to disapprove a payment that Brown had authorized.

Perhaps this is a weakness in our Home Rule form of government that merits some consideration. Perhaps the Controller should be given exclusive authority to cut checks.

Bernie O'Hare said...

"2:29. Who said Peg resigned"

I did. Both she and Dowd have stepped down. I have reported this in story updates.

Anonymous said...

How could they have gone “around council” when a council member was voting to approve payments? There was an unprecedented level of transparency available. Am I missing something?

Anonymous said...

The offenders appear to be investigating themselves. It’s time for an independent investigation. Was this gross mismanagement and lack of oversight or was something illegal done here? It’s time for answers.

Bernie O'Hare said...

"How could they have gone “around council” when a council member was voting to approve payments? There was an unprecedented level of transparency available. Am I missing something?"

That's the thing. She wasn't. These "special legal services" were never reviewed by the GPA, but were just passed along. That's what Langen said yesterday. He told me that in January, but then I saw then approving invoices. they were apparently approving only the strictly GPA invoices. She had noidea that Brown had already started the process.

Anonymous said...

This is rich. Too late to resign.

Anonymous said...

Wow, this really blew up since the Wednesday meeting.

Anonymous said...

@9:09 am Shouldn't Peg's daughter have brought this payments to someone's attention? Is that part of her job? Is that way Peg left the GPA?

sezary said...

Anonymous @ June 21, 2018 at 3:09 PM

"Rumor has it that the meeting was out of control and the GPA was treated terribly. If true that is shameful."

I was at the meeting. The rumor is not true. The meeting was not out of control. What has been uncovered is that the GPA, especially the cabal of Langen, Lushis and Brown, was out of control.

Anonymous said...

The two- Mcdude and Pocketbook Peg sat while our money was blowing like an old buick tossin oil and NOW we are suppose to be oh they resigned... they forgot their resignations from council these two squirrel's need to further submit. Total incompetent that they sat and all this went on.

Anonymous said...

Who is surprised that John Brown is a crooked phony? Seriously, the guy and his cronies should be hauled into court. Bernie, what is his goofy webpage, I have to see it.

sezary said...

Posted with the article is a snapshot of one of the bills submitted and paid to Norris, McLaughlin and Marcus by Northampton County. From that snapshot:

On 2/20/17 “JFL”, I assume John Lushis, billed NorCo 2.7 hours totaling 796.50 ($295/hr) “…transmit to J. Brown and working group; draft and transmit memorandum regarding next steps to J. Brown and working group…transmit correspondence;”

According to that bill there would (or should) exist somewhere a record of what was transmitted to “J. Brown and working group”. What was the “working group”? What were the “next steps”? Where are those “transmissions”? The county paid for them, the county, and the people, should know. The $295/hr. figure is also curious.