In life, Michael Lari and Joseph Lynch shared headlines as two of the main players in the biggest political scandal to ever rock Secaucus. Last week, the men were again linked, this time by death.
Lari, the outspoken former 1st Ward Town Councilman and Secaucus Municipal Utilities Authority (SMUA) commissioner, passed away on July 5 at age 68. Four days later, Lynch, the town’s former engineer, died of an infection. He would have been 86 on July 12.
The two men were central to what has become known throughout Hudson County as the “SMUA scandal,” the mere mention of which elicits a range of emotions from residents, elected officials, and others who lived through the debacle.
“Oh, Lord, where do you want me to start,” one elected leader said, laughing, when asked to discuss the case.
“I wouldn’t even know where to begin,” said another.
Many remember the scandal – marked by five-hour SMUA meetings, lawsuits, allegations, and millions wasted in taxpayer money – as if it were a riddle wrapped inside a mystery wrapped inside an enigma. In reality, the essence of the fiasco was quite simple.
At its heart was a bid-rigging scheme in which the cost of a sewage plant upgrade was inflated so that a handful of people associated with the plot could get $130,000 in kickbacks.
After the rigged bid was uncovered, the town spent 10 years and $2 to $3 million in legal fees chasing various subcontractors involved in the project in an effort to reclaim money that was spent on the project – but never recovered dime.
The SMUA handles the town’s sewage operations.
Cost millions to resolve
“It was incredible,” said Mayor Dennis Elwell, whose father, Howie Elwell, was a commissioner on the SMUA board and who raised concerns about the project early on. “There were some months when the town’s legal bills ran as high as $30,000 or $40,000.”
In 1990 Virginia Maione, the SMUA’s former executive director, pleaded guilty to taking $50,000 in bribes from contractors the James P. Horan Company in exchange for rigging an upgrade bid. Former SMUA chairman Joseph Pini pleaded guilty to similar charges, in addition to tax evasion. His son, Joseph Pini Jr., who worked for Horan as chief inspector on the upgrade, pleaded guilty to accepting $5,000 in bribes.
That same year, a federal jury convicted Dorothy Horan and her daughter Patricia Horan, who ran the company together, of eight counts of bribery, extortion, racketeering, and money laundering in the scheme.
Origin of the scandal
The roots of the case date back to the mid-1980s when the state mandated that Secaucus upgrade its sewage treatment facility on Koelle Blvd. Even then, the town was experiencing rapid growth – Hartz Mountain Industries had recently completed the Harmon Meadow Mall – and the state expected Secaucus to see major increases in its population.
The sewage facility was operating at near full capacity and the state told the SMUA it could not issue new certificates of occupancy until the Koelle Blvd. plant was expanded.
The SMUA received a number of bids from contractors that were interested in doing the work.
But it was the bid from the James P. Horan Company that set off the controversy.
The company submitted a “blank” bid that did not include a proposed dollar figure for the work to be done. Chairman Pini and Executive Director Maione later filled in a dollar amount that was $1 less than the lowest bid.
The Horan Company won the $15 million contract but there were problems early on.
Cost overruns
“There were a lot of change orders where the Horans were asking to get paid a lot more money for specific work than what was originally budgeted for,” said activist and community watchdog Tom Troyer, who attended SMUA meetings at the time and who also raised questions early on about the project.
Cost overruns on the project eventually reached into the millions. Soon, upgrades to the Koelle plant were running over budget and behind schedule.
“Whenever I hear the words ‘change order’ I think something’s up,” Troyer said, adding that he started asking questions during the public comment portion of SMUA meetings.
At the time only two SMUA commissioners, Michael Lari and Howie Elwell, took Troyer’s questions seriously, Troyer said.
Lari and Elwell knew Troyer wasn’t the only one with questions about the project. John Lynch, who had a long history with Secaucus as the town’s engineer, had already sounded the alarm about problems with Horan.
“The Horans made a number of demands that [Lynch] had never seen on any other project before.” – Seamus Cunningham“
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Lynch began questioning such payments, in addition to what he considered to be deficiencies in Horan’s work once the project got underway and he eventually recommended that the SMUA’s contract with Horan be terminated.
When he made this recommendation, he was fired.
“There were a handful of people who began asking questions about the project,” the mayor said. “As commissioners, Mr. Lari and my father felt it was their duty to raise those concerns and try to get answers. But they couldn’t get any information, which only concerned them more.”
When Lari and Elwell began asking questions about the performance bond that guaranteed Horan’s work, they, too, were removed from the SMUA.
It later came to light that Horan’s bonding document was fraudulent.
“That’s when we finally understood why the contract couldn’t be terminated,” Cunningham noted. “Because if you terminated the contract you would automatically invoke, or call in, the bond. So we were fighting an impossible fight. The people who knew about the fraudulent bond weren’t going to let the contract be terminated. It would have meant an implosion of the entire situation.”
Heavy toll on whistleblower
With Horan’s three critics gone from the SMUA, the authority hired another engineer to criticize Lynch’s own work on the upgrade.
Even when the bid-rigging plot between the Horans, Pini, and Maione was exposed, Lynch still wasn’t vindicated; U.S. Attorney Eric Tunis accused Lynch of being in on the scheme and pocketing $60,000 in illegal money. Lynch’s professional reputation as an engineer was ruined in Hudson County, and his firm, Mayo Lynch, was forced to file bankruptcy.
In 1999 the town finally settled several lawsuits that stemmed from the scandal, including a suit brought by Lynch.
“They settled the case with him and he was paid,” said Cunningham, who was also Lynch’s son-in-law. “But what he got didn’t begin to make up for the loss of business, income, reputation all those years. He was never made whole.”
E-mail E. Assata Wright at awright@hudsonreporter.com.