MARTIN BARNES v. BOARD OF TRUSTEES, PUBLIC EMPLOYEES

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4686-12T3

MARTIN BARNES,

Petitioner-Appellant,

v.

BOARD OF TRUSTEES, PUBLIC

EMPLOYEES' RETIREMENT SYSTEM,

Respondent-Respondent.

__________________________________

May 9, 2014

Argued April 29, 2014 Decided

Before Judges Reisner and Alvarez.

On appeal from the Board of Trustees of the Public Employees' Retirement System, Department of Treasury, PERS #794866.

Robert A. Paster argued the cause for appellant (Vivino & Vivino, attorneys; Mr. Paster, on the brief).

Chris M. Tattory, Deputy Attorney General, argued the cause for respondent (John J. Hoffman, Acting Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Mr. Tattory, on the brief).

PER CURIAM

Petitioner Martin Barnes (Barnes or petitioner) appeals from an April 18, 2013 final decision of the Board of Trustees of the Public Employees' Retirement System (Board), ordering the total forfeiture of his pension. For the reasons that follow, we affirm.

I

The forfeiture stemmed from Barnes's federal criminal conviction for corrupt activities in which he engaged while Mayor of the City of Paterson. Prior to his election as Mayor, Barnes had been employed by the Paterson Housing Authority from 1975 to 1977. He also served as a Paterson City Council member from July 1976 to June 1980, July 1990 to June 1994, and July 1996 to January 1997. He served as Mayor from January 1997 to July 2002.1

In October 2001, Barnes was indicted for fraudulently obtaining and misusing federal funds while serving as Mayor. A forty-count superseding indictment was issued in 2002, charging Barnes with crimes he allegedly committed between 1997 and 2000. The charges included "routinely" seeking and accepting bribes in exchange for steering public contracts to certain companies, committing mail fraud, and failing to report his illegal income on his federal tax returns. The bribes allegedly were in the form of cash payments, trips for Barnes and his wife, clothing, furniture, and installation of a pool, waterfall and other improvements to his home.

On July 1, 2002, Barnes admitted under oath at a plea hearing that between 1997 and 1999, he accepted bribes from vendors who were either doing business or seeking to do business with the City, and failed to report or pay taxes on his illegal earnings. At the hearing, the Assistant United States Attorney summarized the government's case as including evidence that Barnes received between $200,000 and $350,000 in bribes, an assertion the defense did not deny. In sentencing Barnes to thirty-seven months in prison, United States District Court Judge William G. Bassler described his conduct as "systematic and pervasive corruption that tends to cause the loss of public confidence in the most important office of municipal government, the office of mayor." Judge Bassler also considered Barnes's lack of genuine remorse and his attempt to downplay the seriousness of his offenses.

In 2010, Barnes applied to the Division of Pensions and Benefits for a retirement allowance from the Public Employees' Retirement System (PERS) based on his public service. The PERS Board denied his application pursuant to N.J.S.A. 43:1-3 and N.J.A.C. 17:1-6.1(c), finding that Barnes's corrupt activities as Mayor warranted a complete forfeiture of his pension. Barnes appealed the decision, and received an administrative hearing before the Office of Administrative Law.

Barnes was the only witness at the hearing. He described his history of public service as an employee of the City Housing Authority and the Paterson Board of Education, City Council member, appointee to the Hackensack Meadowlands Development Commission, and Mayor. Barnes reviewed the successes he achieved as Mayor, including a decrease in the crime rate, avoiding tax increases, and starting programs for City youth and ex-offenders.

In his testimony, Barnes neither admitted his wrongdoing nor expressed remorse. In fact, on cross-examination, Barnes testified that count one of the indictment, to which he pled guilty, was "absolutely untrue." He also denied the specific acts to which he had admitted under oath at the plea hearing, including taking bribes from public contractors, and filing false income tax returns. He further denied the specific acts of wrongdoing that his attorney admitted on his behalf in a pre-sentence letter to Judge Bassler entitled "Acceptance of Responsibility."

Instead of taking responsibility for his actions, Barnes testified that the federal criminal charges against him were politically motivated. He testified that he did not take the charges seriously until he lost his bid for re-election. He then felt pressured to enter into a plea agreement when his criminal defense attorney withdrew from the case, and the prosecutors "were going after [his] entire family and friends." According to Barnes, he only pled guilty "to stop the bleeding and protect my family." He also testified that his wife had health problems, and his family was living on a very limited income.

Barnes died before the case was decided, but his family pursued his pension claim. On March 4, 2013, the Administrative Law Judge issued an initial decision evaluating the eleven factors set forth in Uricoli v. Board of Trustees, Police and Firemen's Retirement System, 91 N.J. 62, 77-78 (1982), and codified in N.J.S.A. 43:1-3:

(1) the member's length of service;

(2) the basis for retirement;

(3) the extent to which the member's pension has vested;

(4) the duties of the particular member;

(5) the member's public employment history and record covered under the retirement system;

(6) any other public employment or service;

(7) the nature of the misconduct or crime, including the gravity or substantiality of the offense, whether it was a single or multiple offense and whether it was continuing or isolated;

(8) the relationship between the misconduct and the member's public duties;

(9) the quality of moral turpitude or the degree of guilt or culpability, including the member's motives and reasons, personal gain and similar considerations;

(10) the availability and adequacy of other penal sanctions; and

(11) other personal circumstances relating to the member which bear upon the justness of forfeiture.

[N.J.S.A. 43:1-3(c)(1) to -(c)(11).]

The ALJ reasoned that total forfeiture was an unusual and extreme sanction reserved for the most egregious cases. He found that Barnes's "criminal culpability and resulting public disgrace, together with the severity of his conduct" were "mitigated" by his imprisonment and the monetary penalties imposed on him. The ALJ also considered that since Barnes was deceased, the pension would go to his wife and other surviving beneficiaries, and there was no proof that his family was involved with Barnes's criminal conduct. The ALJ further reasoned that his criminal conduct was "for a specific three-year period" whereas "his personnel record prior to that period is unblemished" and his record as Mayor after the period of his conviction was also "unblemished." Therefore, the ALJ concluded that Barnes's pension should only be forfeited for the three-year period during which he engaged in corrupt activities as Mayor.

The Board reached a different conclusion, after considering the scope of Barnes's corrupt activities. The Board also noted Barnes's refusal, at the OAL hearing, to acknowledge responsibility for his actions. The Board reasoned that, in considering the eleven-factor test, it could appropriately give greater weight to factors seven, eight and nine: the nature of the crimes, their gravity, and whether there were multiple, continuing offenses or one isolated offense; the relationship between the crimes and the employee's public duties; and the "quality of moral turpitude or the degree of guilt and culpability, including the employee's motives and reasons, personal gain and the like" (quoting Uricoli, supra, 91 N.J. at 78).

The Board found that the ALJ gave too little weight to the "pervasive and chronic" nature of Barnes's misconduct. The Board stated:

This was no simple lapse of judgment: Mr. Barnes' criminal scheme spanned the course of three years of unremitting political and social corruption wherein he received valuable illegal gifts from contractors who sought to do business with the City and ultimately received $6,000,000 worth of contracts.

The Board also found that unlike the petitioner in Uricoli, "Mr. Barnes had only seven years of allegedly honorable service." The Board considered that Barnes's misconduct "was motivated by personal gain." The Board reasoned that his "venality" in committing the crimes and seeking to "hide evidence and impede the investigation" by urging a witness to lie, "so lacks basic truthfulness that his misconduct taints all of his actions." Thus, the Board rejected the ALJ's reasoning that Barnes's final years in office, from 1999 to 2002, should be deemed "clear" of corruption, because during that time he was impeding the federal investigation.

The Board found that requiring Barnes to repay back taxes was not a sanction that somehow mitigated against the loss of his pension. Instead it was "the same legal obligation that every other citizen bears, and therefore should not have been considered by the ALJ." The Board found that his family's culpability for the corruption was irrelevant to the pension determination, but noted that they benefitted "through the gifts he received and the money he saved through their receipt." Therefore, the Board determined that a complete forfeiture was warranted.

II

On this appeal, our review of the Board's decision is limited. We will not disturb the agency's determination so long as it is supported by substantial credible evidence and if, in light of the facts as found by the agency, its decision is consistent with applicable law. See Mazza v. Bd. of Trs., Police and Firemen's Ret. Sys., 143 N.J. 22, 25 (1995). Although we are not bound by an agency's legal interpretations, we defer to the agency's expertise in administering the statutory scheme under which it operates. See Smith v. Dir., Div. of Taxation, 108 N.J. 19, 25 (1987); Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973). We owe less deference when an agency rejects an ALJ's factual findings. See H.K. v. State, 184 N.J. 367, 384 (2005). However, in this case, the Board relied on the same evidence as the ALJ, although it drew different conclusions from those facts.

On this appeal, petitioner argues that the Board's decision should be reversed because it was "not supported by substantial credible evidence" and was "arbitrary, capricious, and unreasonable." We cannot agree. Having considered the entire record, we find no basis to second-guess the Board's application of the pension statute and regulations it is tasked with administering. We affirm substantially for the reasons stated in the agency's April 18, 2013 final decision. We add the following comments.

The receipt of a public pension is "conditioned upon the rendering of honorable service," N.J.S.A. 43:1-3(a), and the Board may "order the forfeiture of all or part of" a pension "for misconduct occurring during the member's public service which renders the member's service or part thereof dishonorable." N.J.S.A. 43:1-3(b). We agree with the Board that this case involved repeated acts of corruption by a high-ranking public official an egregious abuse of petitioner's office, committed for personal gain, and of a type likely to undermine the public's faith in municipal government. See N.J.S.A. 43:1-3(c)(7), (8), and (9). While complete forfeiture of a pension is a drastic sanction, it was justified here. See Corvelli v. Bd. of Trs., 130 N.J. 539, 552-53 (1992). Petitioner's arguments, concerning the appropriate method to calculate a partial forfeiture, are beside the point. See N.J.A.C. 17:1-6.1(b).

Petitioner's reliance on Uricoli is likewise misplaced. That case involved a police officer with twenty-three years of honorable service who illegally disposed of a traffic ticket for the son of a close friend, "a single infraction" from which he derived no monetary benefit. Uricoli, supra, 91 N.J. at 78. This case is more closely analogous to Corvelli, where a police chief was deprived of his entire pension, based on a course of misconduct in office spanning a period of two-and-one-half years. Corvelli, supra, 130 N.J. at 553. Further, as in Corvelli, petitioner's family had not begun receiving pension benefits and therefore was not deprived of income on which they had previously been relying for their support. Id. at 549 (distinguishing Eyers v. State, Bd. of Trs., 91 N.J. 51, 57 (1982)).

Affirmed.

1 Although Barnes served in various public offices for about fifteen years, the Division of Pensions concluded that not all of that service was creditable in the pension system, either because he was not making contributions or because his early membership expired due to a long break in service. In total, Barnes had approximately twelve years of creditable service in the pension system.