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Linda Watkins-Brashear, left, was accused today of overseeing widespread mismanagement and illegal activity at the Newark Watershed. She is pictured here with former-Mayor Cory Booker.

(Tim Farrell/The Star-Ledger)

NEWARK — While Newark was laying off police officers and begging for state bailouts, one of its most important contractors was siphoning off millions of city dollars in illegal payments, sweetheart deals, and risky stock ventures right under the noses of city leaders, according to a report released today by the state comptroller's office.

Until a judge appointed trustees to dissolve the agency last year, the Newark Watershed Conservation Development Corporation managed the city's 35,000 acres of reservoirs and treated water for more than 500,000 customers in northern New Jersey.

Between 2008 and 2011, the state comptroller alleges that agency leaders and insiders absconded with millions of public dollars.

"This report documents an egregious and yet preventable abuse of public funds that was allowed to continue unfettered for years because of poor oversight,” said comptroller chief of staff Melissa Liebermann in a statement issued today with the 45-page report.

Acting State Comptroller Marc Larkins was recused from the matter. Much of the inquiry was headed by his predecessor, Matthew Boxer.

Linda Watkins-Brashear, the agency's director and a political ally of former Newark mayor, now Sen. Cory Booker, wrote unreported checks to herself to the tune of $200,000, was awarded $700,000 in two severance packages, gave more than $1 million in contracts to her friends and ex-husband, and lost $500,000 in dubious stock ventures, the report states.

When asked about the transactions by the state comptroller, Watkins-Brashear invoked her Fifth Amendment right to not incriminate herself, the report said.

Through her attorneys, Watkins-Brashear said the report wrongly laid blame at her feet and said she acted at all times with the knowledge and approval of then Mayor Cory Booker's administration.

"The report provides the public with an inaccurate depiction of how the NWCDC operated, the propriety of the transactions at issue, and how some of the perceived problems came to pass," attorney Michael Baldassare said in a statement. "Ms. Watkins-Brashear acted as she was directed, believed at all times that her actions were appropriate and duly authorized, and faithfully discharged her obligations for over 32 years."

Since the 1970's, the NWCDC was a steward of the city's watershed land in Passaic, Morris and Sussex counties. By the 1990's, the city was also contracting the agency to run Newark's purification plant in Pequannock.

Shortly after Booker took over, every aspect of the city's water infrastructure was managed by the NWCDC through contracts and consultants.

Despite investigations by the Newark Water Group, a watchdog collective of resident activists, as well as a series of financial misdeeds reported in The Star-Ledger, the Booker administration continued to fund no-bid contracts to the agency at the rate of roughly $10 million a year. The city was the agency's only customer, meaning all of its funding came from public dollars.

Last year, after the comptroller revealed some of its findings to city officials, the Booker administration decided to dissolve the agency and asked Newark Superior Court Judge Dennis Carey III to appoint a new board of trustees.

Armed with subpoena power, Boxer's office scoured years of records and receipts between 2008 and 2011. They compelled testimony from agency lawyers, accountants and city officials. Their exhaustive report recounts a level of mismanagement and corruption unimagined even by agency critics.

In 2010, the same year Newark laid off more than 160 police officers and about 800 other employees, Watkins-Brashear treated herself and 20 guests to a $1,400 feast in Atlantic City during the annual League of Municipalities conference, the report states.

Watkins-Brashear and her guests dined that night on lobster, king crab and filet mignon, washed down with martinis, cognac and wine, according to the comptroller's findings.



For years, city council members led by Augusto Amador, Ras Baraka, Anibal Ramos and Ron Rice called for investigations into the watershed and de-funded its operation after agency officials refused to provide information and testimony to the council.

"As the Chairman of the Council Committee on the Watershed, I now feel vindicated in calling for a State investigation after we sensed that something was wrong," Amador said in a statement. "The findings confirm my initial claim that there was wrong activity going on at the Watershed and I applaud the work done by former Comptroller Boxer to uncover and bring to justice those who abused public confidence while managing that public agency."

Baraka said he was not surprised by the comptroller's findings.

"The Council was suspicious of many things including no bid contracts, operating without a quorum and growing costs," Baraka said. "And to make matters worse they went court to sue the city for additional funding. This organization grew beyond the city's control years ago. It needed to be dismantled then. I feel that we were vindicated in this as Councilman Rice and myself were named in lawsuit against them."

Ramos applauded the comptroller's investigation, adding "This serves as wake up call for the city to look at the spending practices of other quasi governmental organizations that the city currently deals with. "

The report chides Booker and his administration for failing to monitor the agency's dealings, saying he did not attend any board meetings despite being the ex-officio chairman.

"He stated that with respect to the NWCDC, he relied on the city's business administrator to attend board meetings on his behalf," the report states. "However, that individual resigned form the city's employment and the board in May 2010 and the mayor never designated a replacement."

Brashear donated more than $5,000 to Booker and his political allies in Newark between 2008 and 2010, according to reports filed with the New Jersey Election Law Enforcement Commission, and shows up as a volunteer on several of Booker's filings. She donated $1,000 to Booker's Senate campaign last year, according to FEC filings.

"The malfeasance alleged in the comptroller’s report is infuriating, and any wrongdoing should be punished to the fullest extent of the law," Booker said in a statement. “For years, I led a public battle to reform Newark’s water system and improve oversight and accountability, but those efforts were repeatedly blocked. When serious concerns regarding wrongdoing at the Watershed were raised early last year, I took immediate action to dissolve it and bring its operations under the direct control of the city.”

Booker was elected last year to fill out the remainder of Sen. Frank Lautenberg's term after Lautenberg died in office.

Booker's long-time friend and political ally, Elnardo Webster, was the NWCDC general counsel. He was partners with Booker at the law firm Trenk DiPasquale which held the watershed contracts for years. When Webster was hired at Genova, Burns, Giantomasssi and Webster, the watershed contract traveled with him. Webster too fell under the comptroller's scrutiny.

"As general counsel, Webster had an obligation to ensure that the board was operating according to its articles of incorporation," the report states, adding, "He failed to meet that obligation..."

Webster billed the agency a total of $1.08 million between 2007 and 2011. Today he said through a spokeswoman that he was unaware of any of the alleged misdeeds.

“To be extremely clear, the Watershed investigation by the state is based on charges that the Watershed illegally diverted public funds. These funds were spent without Elnardo Webster’s knowledge or involvement,” said Sakina Cole, a spokeswoman for Webster.

“As a member of the legal team for the Newark Watershed, Webster was not a part of the day-to-day operations or the management of the accounting books. Webster was tasked with creating the structure for the proposed Municipal Utility Authority (MUA) and to review the legal matters as presented by the management team and the board, which included U.S. Senator Cory Booker (D-NJ) and U.S. House of Representative Donald Payne, Jr. (D-NJ) as well as the former City of Newark’s business administrator at the time in question," Cole said.

Genova is still representing the watershed as it dissolves, although Webster himself is not personally involved.

The 45-page report concludes with the comptroller recommending investigations by various law enforcement agencies including the state's Division of Criminal Justice and the Internal Revenue Service.

Editor's note: A previous version of this story mistakenly reported that Watkins-Brashear wrote $900,000 in secret checks to herself. The unauthorized checks only amounted to $200,000. Watkins-Brashear was also awarded roughly $700,000 in two severance packages.

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