It has been nearly two years since the Hoboken Housing Authority (HHA) fired their former paid executive director – who was also a politically savvy assemblyman – and the reasons for the termination are being debated in two different lawsuits.
A new lawsuit filed last month by the HHA against former Director Carmelo Garcia alleges that he made procedural mistakes, or worse, when awarding contracts to vendors who gave him campaign donations for Assembly.
The HHA is the agency that oversees the city’s 1,353 units of federally funded low-income and senior citizen housing. The public housing is funded by the federal government, but its day-to-day operations are managed by a paid director and staff, who are overseen by a volunteer Board of Commissioners. Currently, the Board of Commissioners consists largely of allies of Mayor Dawn Zimmer, who has been politically at odds with Garcia over the years.
Hoboken resident Garcia originally filed a lawsuit alleging job discrimination by the Zimmer administration back in August 2013, when he was at odds with members of the board. The suit was dismissed in December of 2014 and then refiled in January of 2015. It was again dismissed by a judge on Jan. 15, 2016 without prejudice via a “tolling” agreement, meaning Garcia could file it again slightly modified, according to Louis Zayas, Garcia’s attorney. The dismissal was done in effort to seek a settlement, but to no avail, said Zayas.
This past May 6, after the HHA filed suit against Garcia, Garcia refiled an amended version of his suit.
“We would be very happy if we could get out of this litigation, but the reality is, we have to defend the agency.” – Dana Wefer
The Zimmer administration has faced more than five wrongful termination lawsuits over the years, some of which were settled for small amounts and one of which was settled for more than $700,000. However, in this case, the HHA commissioners have said that Garcia awarded contracts improperly.
The HHA suit against Garcia was filed April 29 in the Hudson County Superior Court, alleging that Garcia violated U.S Department of Housing and Urban Development (HUD) regulations and broke “good faith and faith dealing” by approving or rejecting procurement contracts without the board’s consent.
HHA claims breach of contract
The lawsuit against Garcia contends that he and his staff “have universally failed to follow almost all major guidelines and regulation, resulting in substantial damage to the authority… [and] intentionally deceived the Board which resulted in expenditures of millions of dollars to contractors who were chosen by the defendant.”
In addition, the suit refers to a June 26, 2014 independent audit by Fallon and Larsen LLP for the year ending Sept. 30, 2013, with the following findings: none of the submissions for payments had a certification attached, a contractor was paid $753,315 (above the contracted authorized price), and that five vendors identified were paid $17,500 over the $100,000 bid threshold.
“Out of the $795,922 paid to such vendors, a total $573,054 was questioned in the audit,” the suit says on page 7. (Garcia ran the HHA from 2010 to 2014.)
The lawsuit quotes an August 2014 Newark Field Office of HUD procurement and assessment audit as finding “systematic deficiencies” during [Garcia’s] tenure.
Among the suit’s alleged insufficiencies are failure to maintain a comprehensive procurement/contract log, incomplete procurement history records, unorganized record-keeping with several file locations, failure to maintain an adequate computer system, fully comprehend and understand the maintenance operation of a housing authority of its size, failure to have controls to implement a corrective action plan, maintain required Section 8 HCV resident files and “overall lack of staff knowledge and training concerning procurement regulations, processes and record keeping.”
HUD’s report, points out the lawsuit, also identifies eight contracts that demonstrated procurement shortcomings like failure to include required information in a board resolution and maintain proper documentation.
The eight contracts were to Haddad Electric, LLC, Hauser Brothers Mechanical, Inc., Alamo Insurance, Millennium Leasing Consultants, River West Plumbing Supplies, Central Wholesalers, EW Berger & Brothers and Appliance Brokers.
Significantly, the HUD reports are not quoted in the suit as saying Garcia awarded the contracts improperly or without proper bids, as the commissioners alleged when he was terminated.
Page 19 of the suit alleges that Garcia gained Assembly campaign contributions from four of the eight vendors/contracts in May 2014. According to the suit, these include Hauser Bros Inc. ($2,600), Haddad Electric LLC ($1,000), All Risk Inc. ($2,600), and Alamo Insurance Group ($500).
The HHA seeks liquidated and compensatory damages, attorney fees, and anything the court deems equitable on three counts: breach of employment contract, breach of covenant of good faith and fair dealing, and breach of fiduciary duty.
“To me, it looks like Hoboken is using federal taxpayer money to file lawsuit in retaliation against a whistleblower,” Zayas says in response to the HHA’s accusations against his client. “I find the lawsuit to be frivolous and motivated by an attempt to punish and retaliate against Mr. Garcia. It’s the vehicle by which Mayor Zimmer and her political cronies can legally defame Mr. Garcia without any consequence.”
Garcia’s lawsuit (refiled May 6), which Zayas provided the Reporter, says since she moved to Hoboken, Zimmer and political allies “sought to transform Hoboken in to a white community to reflect their own political class and ethnic backgrounds.”
Page seven of the lawsuit pointed to the Alicea situation, in which Alicea alleged discrimination. After a court hearing, the city was initially ordered to award Alicea $1.2 million but appealed and ultimately settled for approximately $700,000.
The suit also alleges that when Garcia resisted Zimmer’s policies, the mayor and her supporters would “resort to a pattern of threats, harassment, intimidation, and extortion to force his resignation or, in the alternative, replace him with a political supporter.”
In fact, Garcia has produced various emails in which the mayor’s husband, Stan Grossbard, who is not an elected official, gave suggestions to HHA commissioners about how the HHA should handle an array of issues, including terminating Garcia’s contract with the agency.
The emails also show that Jake Stuiver, who was the volunteer chair of the board, asked Grossbard how he should handle press inquiries about the HHA.
Garcia’s suit also alleges, “The real purpose of the hiring [two specific housing attorneys] was to trump up false and misleading allegations against Director Garcia as a means to fire him for cause,” the lawsuit claims.
In all, Garcia is suing on two counts of violation of civil rights, three counts of discrimination, breach of contract, and two counts under the Racketeer Influenced and Corrupt Organizations (RICO) Act (one for conspiracy).
Garcia seeks compensatory, punitive and treble damages, attorney fees and costs of suit, and any relief the court considers equitable.
City spokesperson Juan Melli said last week that Zimmer hasn’t been served with the new suit.
Zimmer responded last week, “This is the third iteration of Mr. Garcia’s lawsuit which began with an assertion that my husband and I moved to Hoboken in 2002 for the purpose of engaging in a campaign of ethnic cleansing. Mr. Garcia’s latest filing represents a desperate attempt to continue litigating in hopes of extracting an undeserved payoff from the taxpayers of Hoboken and the residents of the Hoboken Housing Authority. His claims are as meritless today as they were three years ago.”
Garcia received roughly $17,000 from the HHA in severance pay upon his termination in August in 2014.
Of filing the suit, current HHA Chair Dana Wefer said, “Unfortunately it is necessary. We would be very happy if we could get out of this litigation but the reality is, we have to defend the agency.”
She added, “The facts speak for themselves and are detailed in the complaint. We’ll see what the judge says.”
Troubled agency for many years
The HHA’s management problems go back decades. In the 1990s, one HHA official was taken out of an HHA meeting in handcuffs by the Hudson County Prosecutor’s office for alleged official mismanagement. Before Garcia got there, it was designated as a troubled authority by HUD.
Executive Director Marc Recko took over the HHA last October. In a recent Reporter article, Recko outlined the HHA’s still extant issues with funding, security, and safety.
Recko would not say much about the lawsuit last week, but said that the issues were “before his time” and he “supports the board’s actions.”