STATE OF NEW JERSEY STATE ETHICS COMMISSION v. SEEMA SINGH, ESQ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

STATE OF NEW JERSEY,

STATE ETHICS COMMISSION,

Petitioner-Respondent,

v.

SEEMA SINGH, ESQ., FORMER

RATEPAYER ADVOCATE,

Respondent-Appellant.

June 24, 2016

 

Argued December 2, 2015 Decided

 
Before Judges Alvarez, Haas, and Manahan.

On appeal from the State Ethics Commission, Docket No. 16-07.

Herbert I. Waldman argued the cause for appellant (Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, P.C., attorneys; Mr. Waldman, of counsel and on the briefs).

Anna M. Lascurain, Deputy Attorney General, argued the cause for respondent (John J. Hoffman, Acting Attorney General, attorney; Melissa Dutton Schaffer, Assistant Attorney General, of counsel; Ms. Lascurain, on the brief).

PER CURIAM

Seema Singh appeals from the July 22, 2014 final decision of the State Ethics Commission (Commission) finding she violated the New Jersey Conflicts of Interest Law, N.J.S.A. 52:13D12 to 28, and the New Jersey Ratepayer Advocate Code of Ethics (RPACOE). Singh was assessed a penalty of $11,000.1 We affirm the Commission's decision, although we differ on some bases for the holdings, and affirm the penalties.

I.

A.

By way of historical context, the Division of the Ratepayer Advocate (DRA) was an office within the Department of the Treasury, thus meeting the Constitutional requirement that all executive branch offices fall within the purview of a cabinet agency. Division of Rate Counsel, About the New Jersey Division of Rate Counsel, www.nj.gov/rpa/about/ (last visited March 24, 2016). During the years at issue, the head of the office, the Ratepayer Advocate (RPA), represented the public interest in the public utility field. We refer to Singh in that capacity as "RPA." Singh's duties were not defined by statute.

Today, the DRA has been replaced by the Division of Rate Counsel. Ibid. In its current iteration, the Division of Rate Counsel is responsible for "represent[ing] the interests of consumers of electric, natural gas, water/sewer, telecommunications, cable TV services, and insurance[.]" Ibid.

The Office of the Public Advocate has at times been abolished and re-established by New Jersey's governors. In part, the Office of the Public Advocate was intended to play a role substantially similar to that of the current Division of Rate Counsel.

In January 2002, then-Governor Jim McGreevey appointed Singh as "Public Advocate Designate," anticipating the passage of legislation re-establishing the Office of the Public Advocate. The proposed legislation was delayed, however, and in February 2002, Governor McGreevey temporarily appointed Singh as RPA. Singh continued to act as RPA until the Office of the Public Advocate was eventually re-established in 2006.2

The Public Advocate Restoration Act of 2002 which ultimately failed to be ratified describes the anticipated duties of the RPA. Assemb. Bill No. 345, 210th Leg. Sess. (May 9, 2002). The RPA would represent and protect the public interest in proceedings pertaining to the "regulation or control of any business, industry, or utility regarding a requirement that the business, industry or utility provide a service or regarding the fixing of a rate, toll, fare or charge for a product or service." Ibid. For the purposes of this opinion it suffices to note that Singh, as the RPA, was responsible for advocating on behalf of the public for fair rates from utility providers. It is undisputed that in her role as RPA Singh was treated as a member of the cabinet.

In December 2006, acting on a letter from a former DRA employee expressing ethical concerns regarding the agency's operation, the Commission opened an investigation into Singh's dual roles as RPA and Asian Indian Chamber of Commerce (AICC) president. It was not until September 27, 2011, nearly five years later, however, that the Commission filed its twenty-eight-page, sixcount complaint.

The matter was referred to the Office of Administrative Law for hearing. Many witnesses, including Singh, testified over the course of nineteen days. The Administrative Law Judge's (ALJ) initial decision was rendered on April 14, 2014, three years after the complaint was filed. He found Singh committed the ethical violations charged in counts one, two, and four, and imposed a $500 fine on count one, a $10,000 fine on count two, and a $500 fine on count four. The ALJ dismissed counts three, five, and six.

On July 22, 2014, the Commission issued a final decision adopting the ALJ's conclusions as to all counts except count three. The Commission reinstated that count, finding Singh committed the violation, although no additional penalties were warranted. Singh appeals only the Commission's decision on counts one, two, and three.

B.

In 2001, before her appointment as RPA, Singh had joined the Asian Indian Chamber of Commerce (AICC). She became the group's president in 2003.3

Singh testified during her administrative law hearing that she accepted the position of AICC President in order to further Governor McGreevey's minority outreach agenda. She also said the Governor's office was aware of her position as AICC President and that the Governor's office vetted all AICC-related material.

After the Office of the Public Advocate was re-established in 2006, the DRA's duties were absorbed into that office, and the agency became the Division of Rate Counsel. On November 17, 2006, Singh informed the Office of the Public Advocate of a forthcoming trip to India, in her capacity as AICC President, as part of a trade delegation. In response, the Office of Public Advocate's Ethics Liaison Officer (ELO) Nicole Sharpe wrote a memo stating that Singh's position as AICC President conflicted with her position as RPA. Singh then consulted with Rita Strmensky, then-Commission chair, who advised her that no conflict existed as to the trip so long as she travelled on her own time, paid her own way, and did not use her State title during the trip. Nonetheless, Chen and Sharpe directed Singh to step down as AICC President. On April 3, 2007, Singh resigned from her position as the director of the reformulated Division of Rate Counsel.

II.

Because of the substantial record in this case, we first summarize each count and detail the relevant evidence before considering the issues raised on appeal. It is clear that the many years between the Commission's receipt of a letter about the DRA and the hearing made disposition difficult due to the passage of time.

A.

The Commission alleged in count one of the complaint that Singh improperly used her official position, in violation of N.J.S.A. 52:13D-23(e)(3), (7), and the RPACOE, to obtain contracts for friends and associates by encouraging DRA staff to solicit bids from certain AICC members: Computer Systems and Methods (CSM), SoftSource, Coloredge, Logistic Solutions, Touchdown Media, and Eastern Broadcasting Corporation (EBC). The Commission also alleged that Singh encouraged minority vendors to submit bids. Singh denied any wrongdoing since she was not directly involved with the procurement process.

During the hearing, Donna Carney, a former DRA paralegal and office manager, testified that although Singh sometimes attended meetings to discuss bids, she was not well-versed in the process. Instead, Singh "relied upon and trusted" Leora Mosston regarding bidding procedures. Mosston, an attorney, had retired from her position as Chief of Staff to the DRA and then returned on a contract basis.

CSM and SoftSource

The Commission alleged that Rahul Mahna, the owner of CSM and SoftSource, was improperly awarded several contracts. The grounds for this claim included a romantic message Mahna sent Singh on her State email account, which Singh later forwarded to her personal account. Mahna also e-mailed her at her personal account, from which she responded.

Singh denied having a romantic relationship with Mahna, insisting the messages were simply jokes. She claimed to have been unaware of any relationship between Mahna and CSM.

Jose Selaya, a DRA employee during the relevant time frame, recalled Singh asking if CSM was "giving [the RPA] the best price and that sort of thing." He characterized CSM's involvement with AICC as "common knowledge": several CSM employees attended the 2003 AICC Business Exposition, and Singh travelled with Mahna to India in January 2004 on an AICC trade mission.

Coloredge

The Commission also alleged that during Singh's tenure, the DRA awarded several contracts to a vendor, Coloredge, that had sponsored a booth at the 2003 AICC business expo. Coloredge's Chief Financial Officer, Rajiv Garg, was involved with AICC, but the company itself did not become an AICC corporate member until after being awarded DRA contracts. Singh acknowledged first encountering Coloredge at an AICC business expo but denied attending one-on-one meetings with Coloredge representatives or having any outside relationship with its employees.

Carney recalled that either Singh or Thomas Rosenthal the DRA's public information officer from June 2001 to April 2002, and then again from May 2003 to October 2004 brought Coloredge in to provide services for the DRA. Carney also testified that some Coloredge employees were AICC members known to Singh from her AICC work. Rosenthal thought Singh might have directed him to Coloredge, but considered it more likely to have been Mosston.

On October 16, 2003, Singh contacted Coloredge regarding the printing of several DRA handbooks; eventually the DRA awarded Coloredge several handbook contracts. In the initial order, Coloredge agreed to print 15,000 copies, sell only 5000 to the DRA, and hold the remaining 10,000 in reserve. Singh said that Coloredge was the only vendor willing to agree to this arrangement.

For the handbook's next print run, the DRA obtained bids from five vendors, including Coloredge. Despite being the highest bidder, Coloredge was awarded the contract. According to Carney, "[i]t was just stated that we were going to use Coloredge and I don't think there was any question about that. They did the original publication for us and . . . it was just easier to go with Coloredge, we had an established relationship with them." Carney's justification memo to Florence Faraone, the DRA's Chief Accountant from 2001 to her retirement in 2006, explained that Coloredge was awarded the contract because other bidders omitted important features in their proposals.

The DRA also contracted with Coloredge for an agency display booth to be used at events. Initially, Coloredge sent Mosston and Singh a quote for a ten-foot booth. After Singh emailed Rosenthal requesting a bid for a smaller tabletop display, the DRA received two lower quotes. According to Singh, Coloredge was awarded the contract, despite being the highest bidder, because its proposal had a number of features which suited the DRA's needs and saved money.

When Faraone discovered that another proposed contract with Coloredge exceeded the dollar amount requiring competitive bids, she sent a memo detailing the problem to Mosston. Mosston "told [her] not to go any further on it and to destroy [her] memo." Faraone believed she received this instruction because the DRA was "already doing business with [Coloredge]."

On December 9, 2004, Mosston e-mailed Carney regarding the printing of a publication titled "The Consumer Conversation Handbook," which required competitive bids. Mosston instructed that Carney "get two higher quotes in order to be in compliance with the Treasury rules in order to go with Coloredge." Carney received a similar request in connection with the tabletop display contract, i.e., Mosston asked her to obtain "two to three more bids" after the DRA had received Coloredge's bid.

Logistic Solutions

Singh recommended another vendor, Logistic Solutions, to Selaya "for any IT projects," saying the company "did good work and . . . would give [the DRA] services for a good price." Logistic Solutions' owner, Amit Limaye, had accompanied Singh on business trips to India "as part of the AICC," however, Singh denied a friendship with him beyond AICC business. A senior Logistic Solutions employee, Raghu Tandra, was also a member of the AICC.

Singh asked Selaya to solicit a bid from Logistic Solutions when the agency sought requests for proposals for the production of a DRA informational CD. The lowest bidder, Data Industries, was initially awarded the contract. Technical issues, however, prevented the completion of the project. After discussing the matter with Tandra and with the DRA's then-Chief of Staff, Selaya decided to terminate Data Industries and awarded the contract instead to Logistic Solutions.

Logistic Solutions began work on samples for the CD project, but Selaya then told the company to stop until the CD project was re-bid in compliance with State-mandated purchasing procedures. Following Faraone's instruction, Selaya solicited three more bids, and Logistic Solutions submitted the lowest. Technical issues again delayed the completion of the project, which was ultimately suspended once the Office of Public Advocate was reestablished. The company was paid a total of "about $12,000" for work performed although the project was never completed.

Touchdown Media

The DRA also contracted with Touchdown Media, another vendor Singh recommended. Carney believed Singh knew Touchdown Media from her association with the AICC; Touchdown Media's owner, Rahul Walia, had performed publicity work for the AICC and served on its board. Singh denied any outside friendship with Walia.

The DRA printed its newsletter in-house, but Singh wanted a "more professional" publication "printed on a glossy selfmailer." In March 2004, Walia emailed Singh a price quote for the newsletter's design, production, and printing. Singh contended Touchdown Media won the contract because it was the lowest bidder. The Commission's investigator, however, was unable to locate evidence of any competitive bidding process. Ultimately, the DRA decided to produce the newsletter in-house, contracting out only the printing. Singh then e-mailed Walia terminating the contract due to DRA's "budget crunch."

EBC

The Commission also alleged that Singh granted EBC, New Jersey's only Indian-community radio station, an advantage because it was awarded a contract without engaging in any competitive bidding. EBC cohosted a tsunami fundraiser with the AICC. EBC's owners were AICC "life members."

B.

In count two, the Commission alleged that Singh violated the Conflicts of Interest Law and the RPACOE because she "did not recuse herself from discussions and decisions that directly involved individuals and entities that she had associated with as the President of the AICC." Specifically, that Singh participated in DRA matters with regulated utilities with which she had contact as AICC President.

On January 2, 2003, Singh drafted a recusal memorandum to the AICC's Vice President, in which she outlined limits on her involvement in the AICC's 2003 business expo to avoid an actual or apparent conflict of interest. She wrote that she would "recuse [her]self from participating in any direct involvement in the development of AICC programs including identification of speakers, fundraising, or any other matters which will require contacts with corporate, financial, utility, and other business leaders with whom [she] may have contacts." Singh did not send the recusal memorandum to anyone other than Mosston.

Regardless, Singh participated in AICC events in which utilities also participated. For example, on September 12, 2003, Singh was sent a list of booth registrations and payment amounts for the AICC's 2003 business expo. The list included several utilities: New Jersey Resources, New Jersey American Water, PSE&G, and Verizon.

Singh testified that although she did not forward the recusal memo, and although she did not direct DRA staff to keep her from involvement with any particular vendors or utilities due to conflicts of interest, Mosston nonetheless screened conflicts on her behalf. Additionally, Singh maintained that she did not solicit anyone in connection with AICC events.

Alfred Koeppe, a senior executive with Public Service Electric and Gas (PSE&G), knew Singh from her work in the Governor's cabinet. At her invitation, he participated in a panel on diversity at the AICC's September 2003 business expo at which PSE&G sponsored a booth. Koeppe testified that he did not know of Singh's AICC position when he decided to participate.

AT&T made contributions to several of the AICC galas, job expositions, and networking events. Althea Yancy, a member of AT&T's public affairs team, testified that the contributions were motivated by the desire to generate business with AICC members and to promote AT&T's image as a good corporate citizen. Yancy knew that Singh was both AICC President and RPA when she arranged the sponsorships. On April 11, 2002, Yancy e-mailed Singh an AT&T advertisement of its sponsorship of the AICC's anniversary celebration. On August 1, 2006, Esther Anta, Singh's secretary at the Division of Rate Counsel, forwarded Singh an e-mail exchange between Yancy and the AICC discussing AT&T's $5000 sponsorship of the AICC's annual dinner gala and business expo. Singh testified, however, that she had no knowledge of AT&T's contributions to the AICC.

New Jersey Resources paid $500 to the AICC for yearlong corporate memberships in 2003 and 2005. The utility also sent several checks to the AICC for ads and event sponsorships in 2004 and 2005.

C.

In count three, the Commission alleged that Singh used State time and resources for her personal gain in advancing AICC interests, a violation of N.J.S.A. 52:13D-23(e)(3), (7), and the RPACOE. The underlying conduct included mailings from Singh's State e-mail account regarding AICC events, discussions with DRA employees regarding media support for an AICC business expo, and Singh's e-mailing a sponsor list for an AICC event from her State account to her personal account.

The Commission recovered a speech for the AICC's tsunami fundraiser from one of Singh's State computers, drafted on AICC letterhead, written by a DRA employee. In January 2005, a DRA employee e-mailed Singh regarding a press release for the AICC's tsunami fundraiser. The employee had drafted the press release.

Singh's secretary, Anta, testified that she typed documents and reports for Singh unrelated to DRA work, although she drafted correspondence for the AICC only "very rarely," perhaps once or twice. On one occasion, at the DRA's expense, Anta sent AICC's membership list to Singh by overnight mail.

Singh testified that she would vet all event invitations with her Chief of Staff, and then notify the ELO and the speech team. She directed the AICC to forward anything that would be issued under her name to the DRA for vetting. The AICC did the first draft of any flyers or letters, but the DRA would revise the documents as part of its vetting process.

III.

A.

As noted in the ALJ's 107-page initial decision, the Commission conceded Singh's status as an unofficial cabinet member, and Governor McGreevey's "particular interest" in encouraging "minority businesses to participate in the process by which vendors are selected to provide necessary [S]tate services and materials." The ALJ acknowledged Singh's dual roles as both RPA and a cabinet member who held "a sort of shadow role as a sort of unofficial public advocate."

The ALJ found that the Commission had not proven count one by a preponderance of the evidence, "beyond the general problem of [Singh] holding . . . two incompatible positions." He therefore dismissed count one because the Commission failed to prove that Singh outright manipulated contract awards "beyond her occasional mention of the companies as possible sources and her general inquiries about what was happening[.]"

The ALJ concluded that the RPA conducted a bona fide bidding process for the booth display contract ultimately awarded to Coloredge. He opined that the Commission failed to prove Singh knew of Coloredge before the AICC's 2003 business expo, or prove that she attended any meeting with Coloredge representatives. He saw no impropriety in Singh bringing Coloredge to the attention of her staff, given Governor McGreevey's agenda to increase minority vendor participation. The Commission had no proof that Singh was aware of Faraone's concerns about the booth bidding process or had even seen her memo on the subject.

The ALJ also determined that "no evidence [] reasonably supports the allegation that . . . Singh acted to improperly seek any unwarranted advantage for Logistic[] or its owner[.]" Nor was there "evidence that she tried to influence the bids or their evaluation."

Insofar as CSM, the ALJ noted that although Singh asked Selaya about the status of the contracts, she was not involved in the actual bid process. Selaya denied asking CSM to submit the lowest bids until directed to do so by Mosston or Faraone, not by Singh. Therefore the evidence did not establish that Singh influenced the process to CSM's benefit.

However, Singh's lack of sensitivity to the public perception that "she was aiding a 'boyfriend'" by virtue of the contracts was demonstrated by the romantic e-mail exchanges between Singh and Mahna on State computers. Thus he found the communications constituted a violation of N.J.S.A. 52:13D23(e)(7). The ALJ imposed a $500 civil penalty for the exchange of romantic messages by Singh and Mahna, the minimum under the current version of N.J.S.A. 52:13D-21(i).

The ALJ also found a valid basis for sidestepping the bidding process as to EBC because it operated the only radio station in the State targeting the Indian community. The DRA's use of EBC to reach one community did not necessarily undermine its mission to reach all classes of consumers within it. As a result, Singh did not provide any unwarranted advantage to EBC in connection with its contract for radio services.

There was conflicting testimony as to whether the DRA obtained competitive bids for the newsletter contract with Touchdown Media. Nonetheless, the ALJ ultimately credited Singh's testimony that bids were obtained.

With regard to count two, the claim of perceived conflict of interest, the ALJ assessed the issue from the perspective of an informed citizen. Since the RPA's official job description required Singh to "represent[] all classes of utility consumers in rate proceedings," the ALJ found it to be irrelevant whether the AICC represented one or many classes of utility consumers. No matter its constituency, the AICC was ultimately focused on business interests

[T]he bottom line is that this is a business group, presumably existing to in some manner advance the perceived interests of business. In fact it is hard to conceive otherwise. And the head of this business-related group is at the same time the head of a governmental agency with a mandate to consider and, where appropriate, advocate on behalf of a consumer group or groups, who in some cases may have interests in these issues that are not in accord with the interests of members, in whatever numbers, of the business organization of which the head of the government agency is simultaneously the designated leader.

The ALJ was thus "persuaded" that this was "a situation that a reasonably informed citizen would at least find troubling." The two simultaneously held positions saddled Singh with incompatible duties, hence "[t]his situation . . . involved a clear conflict of interest, at the very least at the level of perception."

Quoting N.J.A.C. 19:61-7.4(e)'s definition of "incompatible interest," the ALJ rejected Singh's argument that the AICC is not a "trade organization," finding instead it was a group of businesses organized to promote their business interests. He reasoned that "[t]he perception of conflict might still exist" even if Singh were to recuse herself from "the more obvious situations of specific AICC member involvement with specific elements of the [RPA]'s work."

The ALJ held that Singh's simultaneous roles as RPA while AICC President therefore created an apparent conflict of interest, in violation of N.J.S.A. 52:13D-23(e)(7). Recusal, under N.J.A.C. 19:61-7.4(d), would not have been sufficient to cure the perceived conflict.

As for the conflict inherent in Singh's dual positions, the ALJ observed: "[t]he nature of this violation is such that even if it had not been asserted that . . . Singh ever improperly conducted herself in any other manner than simply holding both positions, she would be subject to sanction." He considered it a "continuing . . . single offense," and "in light of [the offense's] extended duration" imposed a $10,000 civil penalty, the maximum under N.J.S.A. 52:13D-21(i).

The ALJ rejected the Commission's claims, however, that Singh's interactions with regulated utilities as related to AICC was improper. In his view, the Commission failed to prove any specific violations beyond the overarching perception problem caused by the simultaneously held offices.

The ALJ also rejected the Commission's position that Singh misused State resources by using staff for speech writing. He found the Commission did not show that the speeches were for her personal gain, or that their creation by staff breached the public's trust. Nor did the ALJ find that evidence of tsunami fundraiser-related materials on State computers violated ethical standards or that Singh's AICC presidency affected tsunami fundraiser donations by regulated utilities while Singh served as RPA.

IV.

The Commission's July 22, 2014 final order affirmed the ALJ's initial decision in part but found additional violations under count one based on Singh's influence upon the bidding process during her tenure. With regard to Coloredge, the Commission found that Singh's "direction to [DRA] staff to reach out . . . for a bid provided Color[e]dge with an unwarranted advantage over other potential vendors."

Furthermore, Singh's direction to her staff to solicit a bid from Logistic Solutions, and later direction that they provide the vendor with the opportunity to re-bid the CD project, "not only created the impression that she violated the public trust, but . . . provided an unwarranted benefit to Logistic." The Commission relied upon Selaya's memo in which he stated that he recommended awarding the CD project to another vendor, but ultimately awarded it to Logistic Solutions based on Singh's suggestion. It concluded that even if Singh was not directly involved in the selection of bids, she influenced the process by directing staff to initiate contact, thus providing Logistic Solutions a benefit no other vendor enjoyed.

Because Singh forwarded Touchdown Media's bid to DRA staff, the Commission reasoned that she "became directly involved in awarding this contract . . . , which not only created an appearance of impropriety, but provided . . . an unwarranted benefit." Therefore, the Commission held that Singh's interactions with Coloredge, Logistic Solutions, and Touchdown Media violated 52:13D-23(e)(3) and RPACOE section IV.

The Commission also rejected the ALJ's conclusion that recusal was an inadequate mechanism for Singh to deal with her conflicting dual positions, as it had alleged in count two. Hence it viewed her failure to recuse from matters involving utilities who contributed to the AICC as a violation of the recusal regulation, N.J.A.C. 19:617.4(d).

The Commission stated: "[t]he receipt of AICC e[-]mails from utilities on State time and through State e[-]mail demonstrates not just an overlap, but a complete eradication of the line separating Singh's State duties and her outside interests with the AICC." Singh's relationships with utilities "resulted in an inappropriate overlap between her professional service to the State and her personal interests through the trade organization."

As to count three, the Commission found "[d]ocuments relating to [the] AICC['s tsunami fundraiser] were not only accessed, but created and edited by Singh and the [DRA] staff through their State computers." The Commission therefore found Singh guilty as alleged in count three. An October 19, 2004 speech, for example, given on behalf of the AICC "was found on [a DRA] computer, printed on [DRA] letterhead, and prepared by a member of Singh's staff." These instances were misuses of State time and resources that resulted in unwarranted benefits to Singh and the AICC, in violation of N.J.S.A. 52:13D-23(e)(3), (7), and of RPACOE sections II, III, and IV. Thus the Commission found Singh guilty of misuse of State resources.

Despite finding additional violations, no additional penalties were imposed. Since the additional violations arose from conflicts created by the dual positions, the Commission considered the ALJ's maximum penalty to suffice.

On appeal, Singh raises the following points:4

I. SEEMA SINGH DID NOT EXTEND ANY UNWARRANTED PRIVILEGES OR ADVANTAGES IN CONNECTION WITH THE AWARD OF [DRA] CONTRACTS (COUNT ONE)

A. The Ethical Standards Involved

B. The Allegations

C. The Final Order

1. The [V]endors

a. Coloredge

b. Logistics Outsourcing

("Logistics")

c. Touchdown Media

("Touchdown")

D. The Standard of Review

E. Application of the Legal Standard

F. The Violation Found by the Initial

Decision

1. Ms. Singh did not have any

opportunity to address the

issue which formed the basis

of the ALJ's finding

2. The facts did not support a

finding of a knowing

violation

II. NO ETHICS VIOLATION OCCURRED BY SEEMA SINGH'S FAILURE TO RECUSE FROM MATTERS INVOLVING UTILITIES (COUNT TWO)

A. The [A]llegations

B. The Final Order

C. The ALJ Was Not Free to Reframe

the Charge Contained in Count Two

D. The Precedents Relied Upon by the

ALJ Do Not Support a Finding of an

Ethics Violation

E. The Commission was Estopped from

Adopting the Findings on this

Charge as Reframed by the ALJ

III. SEEMA SINGH COMMITTED NO ETHICS VIOLATION WITH REGARD TO THE USE OF STATE TIME AND RESOURCES (COUNT THREE)

V.

An agency's decision will be sustained unless it is arbitrary, capricious, or unreasonable; unsupported by substantial credible evidence in the record; or contrary to express or implied legislative policies. Saccone v. Bd. of Trs. of Police and Firemen's Ret. Sys., 219 N.J. 369, 380 (2014); Lavezzi v. State, 219 N.J. 163, 171 (2014). When reviewing an agency's factual findings, this court gives "due regard to the opportunity of the one who heard the witnesses to judge of their credibility." Jackson v. Concord Co., 54 N.J. 113, 117-18 (1969). At the same time, the court owes no deference to an agency's conclusions of law. Lavezzi, supra, 219 N.J. at 172.

"Generally, an appellate court should give considerable weight to a state agency's interpretation of a statutory scheme that the legislature has entrusted to the agency to administer." In re Op. 01-2008, 201 N.J. 254, 262 (2010); GE Solid State, Inc. v. Dir., Div. of Taxation, 132 N.J. 298, 306 (1993). The Commission is responsible for enforcing the Conflicts of Interest Law and all the codes of ethics promulgated thereunder. N.J.S.A. 52:13D-21(h), -23(d).

"Mere disagreement with an agency's conclusion . . . does not permit a reviewing court to reject that conclusion." Bd. ofEduc. v. Kraft, 139 N.J. 597, 604 (1995). "When an agency's decision is manifestly mistaken, however, the interests of justice authorize a reviewing court to shed its traditional deference to agency decisions." P.F. v. N.J. Div. ofDevelopmental Disabilities, 139 N.J. 522, 530 (1995).

Just as we defer to an agency's decision, the agency itself must defer to the ALJ's findings of fact. The agency may reverse only those findings that are arbitrary, capricious, or unreasonable; or are unsupported by substantial credible evidence. N.J.S.A. 52:14B-10(c); In re Hruska, 375 N.J. Super. 202, 207 (App. Div. 2005).

When an agency departs from the ALJ's findings of fact or conclusions of law, it must clearly state its reasons for doing so. N.J.S.A. 52:14B-10(c); ZRB, LLC v. N.J. Dep't of Envtl. Prot., 403 N.J. Super. 531, 561 (App. Div. 2008). Where an agency's findings of fact are contrary to those of the ALJ, "there is a particularly strong need for careful appellate review." In re Lalama, 343 N.J. Super. 560, 565 (App. Div. 2001). Thus, the Commission's decisions require particularly careful review here. See Exec. Comm'n on Ethical Stds. v. Salmon, 295 N.J. Super. 86, 97 (App. Div. 1996); Lalama, supra, 343 N.J. Super. at 565. Moreover, if the agency acts as "prosecutor, investigator, . . . witness, and judge," as the Commission did in this case, we review the agency's decision with "heighten[ed] sensitivity." Salmon, supra, 295 N.J. Super. at 97.

VI.

A.

N.J.S.A. 52:13D-23(e)(7) provides

No State officer or employee or special State officer or employee should knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of his acts that he may be engaged in conduct violative of his trust as a State officer or employee or special State officer or employee.

The statute "is a post-Watergate enactment designed to maintain public confidence in government by placing restrictions on selfdealing between public officials and government agencies. It is addressed not only to situations of actual conflict of interest and divided loyalty, but also to their appearance." In re Op. 621, 128 N.J. 577, 585 (1992).

The Conflicts of Interest Law also states

In our representative form of government, it is essential that the conduct of public officials and employees shall hold the respect and confidence of the people. Public officials must, therefore, avoid conduct which is in violation of their public trust or which creates a justifiable impression among the public that such trust is being violated.

[N.J.S.A. 52:13D-12(a).]

When the Conflicts of Interest Law was enacted, "[t]he Legislature was as concerned with eliminating the mere appearance of impropriety by members of State Government as it was with regulating instances of actual conflict of interest or undue influence." Wood v. Dep't of Cmty. Affairs, Bureau of Regulatory Affairs, 243 N.J. Super. 187, 193 (App. Div. 1990).

In applying the Conflicts of Interest Law, "the 'appearance' of impropriety must be something more than a fanciful possibility. It must have some reasonable basis." In re Bator, 395 N.J. Super. 120, 126 (App. Div.) (quoting Higgins v. Advisory Comm. on Prof'l Ethics, 73 N.J. 123, 129 (1977)), certif. denied, 193 N.J. 222 (2007). This reasonable basis must be from "the perspective of an informed citizen." Id. at 127 (quoting In re Op. 653, 132 N.J. 124, 132 (1993)).

Additionally RPACOE section II.G states

Pursuant to N.J.S.A. 52:13D-23(e)(7) no State officers or employees of the [RPA] shall knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of their acts that they may be engaged in conduct violative of their trust as State officers or employees.

B.

The Commission found the romantic messages between Singh and CSM's owner created the perception of impropriety because Singh directed her staff to use the company's services, and the DRA awarded several contracts to it. The ALJ's decision, however, was limited to the impropriety of the messages themselves, exclusive of the contracts. Since the messages were introduced by the Commission to establish preferential treatment, Singh now claims in her first point of error that the Commission's finding that the messages created a perceived conflict of interest under N.J.S.A. 52:13D-23(e)(7) violated due process. We do not agree. The messages created a perception of conflict of interest and that the Commission so found did not violate Singh's due process rights.

"At a minimum, due process requires that a party in a judicial hearing receive 'notice defining the issues and an adequate opportunity to prepare and respond.'" H.E.S. v. J.C.S., 175 N.J. 309, 321 (2003) (quoting McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 559 (1993)). The notice must allege sufficient facts to give rise to a cause of action. See Glass v. Suburban Restoration Co., 317 N.J. Super. 574, 582 (App. Div. 1998) ("pleadings reciting mere conclusions without facts . . . do not justify a lawsuit").

"Adequate notice and an opportunity to prepare remains the key to proper administrative proceedings. There can be no adequate preparation where the notice does not reasonably apprise the party of the charges, or where the issues litigated at the hearing differ substantially from those outlined in the notice." Nicoletta v. N. Jersey Dist. Water Supply Comm'n, 77 N.J. 145, 162 (1978) (quoting Dep't of Law & Pub. Safety v. Miller, 115 N.J. Super. 122, 126 (App. Div. 1971)); see also Teilhaber v. Greene, 320 N.J. Super. 453, 464 (App. Div. 1999). Adequate notice is a question of fairness, and determining "whether principles of basic fairness have been afforded in contested administrative cases requires an examination of the facts in each case, giving great weight to the effect of the decision on the agency's public policy." In re Kallen, 92 N.J. 14, 26 (1983).

The Commission laid out all the rules Singh was charged with violating in the beginning of its complaint, then incorporated them by reference into each count that followed. The complaint made extensive, detailed factual allegations. Clearly, Singh had ample notice of the charges she was facing.

At trial, witnesses for both parties testified as to the messages Mahna and Singh exchanged. Singh had the opportunity to characterize them as merely a "joke" resulting from Mahna's "very flirtatious" personality. Thus we are satisfied that Singh had fair notice that the messages might form the basis for a violation of any of the charged provisions and an opportunity to defend. She took full advantage of the opportunity to explain the messages' meaning and her conduct vis- -vis CSM contracts.

Singh's due process rights were not violated as to the charges involving CSM by the Commission's modification of the ALJ's ruling. The core of both decisions was the nature of the messages, although only the Commission opined that they showed preferential treatment of the vendor. Singh's due process rights were not violated because of the charge, which resulted in no additional penalty.

C.

The Commission also concluded, as alleged in count one, that Singh violated N.J.S.A. 52:13D-23(e)(3) and RPACOE section IV by furnishing unwarranted privileges and advantages to several AICC associated vendors. Those sections provide

No State officer or employee or special State officer or employee should use or attempt to use his official position to secure unwarranted privileges or advantages for himself or others.

[N.J.S.A. 52:13D-23(e)(3).]

Officers and Employees shall not use an official position to secure unwarranted privileges, benefits, or advantages for themselves or others.

[RPACOE section IV.A.]

We do not agree with the Commission regarding this decision. The questionable maneuvers were engaged in by others rather than Singh. In at least one instance, no contract was ultimately awarded at all. Rosenthal testified that it was more likely Mosston, not Singh, who directed him to contact Coloredge. Additionally, the Commission was unable to disprove that the work the company did for the DRA required special concessions by the vendor the other bidders were unwilling to make. Whether hampered by the passage of time, or for some other reason, the Commission presented no evidence to refute that position.

The Commission also found that Singh twice directed her staff to solicit a bid from Logistic Solutions, relying upon a memo written by Selaya indicating that she had suggested that he award the CD contract to the company. While acknowledging that Singh was not involved in the bidding process, the Commission nonetheless concluded that Logistic Solutions thereby obtained a benefit no other vendor received by Singh's direction to her staff to solicit bids from the company.

Yet ultimately, Logistic Solutions participated in a competitive process and submitted the lowest bid. Therefore, the Commission did not clearly establish the benefit Logistic Solutions gained from the mere suggestion that it participate in the bid process. Selaya's solicitation of bids does not constitute an unwarranted and improper advantage. The improprieties regarding subsequent events cannot be foisted on Singh because they were committed by others.

The Commission also concluded that Singh provided Touchdown Media with an unwarranted benefit by forwarding its bid to her staff. Standing alone, that does not suffice given Singh's testimony that a competitive bid process was followed. The Commission was only able to demonstrate that after the passing of many years, it could not find documents supporting Singh's claim that a bidding process was conducted. The record is insufficient to support the Commission's determination that Singh violated either the statute or the RPACOE with regard to the Touchdown Media contracts. Ultimately, no contract was awarded to any vendor for the publication of a DRA informational booklet.

Thus we do not agree that count one was supported by Singh's interactions with the bidding process, because the proofs were not conclusive except for the appearance of impropriety created by her messaging with Mahna. Although we differ with the Commission as to the bases for the violation, we conclude that Singh engaged in improper conduct by her messaging to warrant the finding of a violation as to count one.

VII.

The Commission found that Singh's failure to recuse from interactions with AICC-associated regulated utilities violated N.J.A.C. 19:61-7.4(d), which provides

A State official must recuse himself or herself from an official matter if he or she has

Any financial interest, direct or indirect, that is incompatible with the discharge of the State official's public duties; or

Any personal interest, direct or indirect, that is incompatible with the discharge of the State official's public duties.

The Commission opined that the duty to recuse required Singh to avoid any activities involving utilities "that were members of or had dealings with the AICC during her presidency." Because AT&T, Verizon, PSE&G, New Jersey Resources, and New Jersey American Water contributed to AICC, the Commission concluded Singh should have recused herself from all matters in which those entities were participants. This is Singh's second point of error: that no ethics violation occurred because Singh did not recuse herself.

The Commission did not specify which official matters Singh faced which required her recusal. It simply cited as an example of conduct which violated the regulation, Singh's communication about AT&T's $5000 sponsorship of the group's annual dinner gala and business expo, and advertising support of the AICC's anniversary celebration.

The recusal regulation does not define "official matter," see N.J.A.C. 19:61-7.3, but the term can be reasonably construed to encompass a State official's communications from her official email account, as occurred here. At a minimum, AT&T's exchanges with a public official on her State e-mail constitute a communication that falls within the definition of "official matter." We therefore agree with the Commission on this point. It was improper for Singh to have failed to recuse herself from communications with utilities, from her State email, that were actively supporting the business organization of which she had become president. But recusal would in any event not have cured the inherent conflict created by her two incompatible positions.

VIII.

The Commission adopted the ALJ's legal conclusion that Singh's dual roles as RPA and AICC president created an apparent conflict in violation of N.J.S.A. 50:13D-23(e)(7) and RPACOE section II. This, Singh argues, was an improper reframing of the issue by the ALJ that the Commission should not have adopted. We do not agree with the contention.

The relevant sections provide

No State officer or employee or special State officer or employee should knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of his acts that he may be engaged in conduct violative of his trust as a State officer or employee or special State officer or employee.

[N.J.S.A. 52:13D-23(e)(7).]

Pursuant to N.J.S.A. 52:13D-23(e)(7) no State officers or employees of the [RPA] shall knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of their acts thatthey may

be engaged in conduct violative of their trust as State officers or employees.

[RPACOE section II.G.]

The ALJ observed that the RPA's duty was to "represent[] all classes of utility consumers in rate proceedings," while the AICC President's duty was to further AICC members' business interests. Finding that these positions were incompatible, he concluded that "[t]his situation . . . involved a clear conflict of interest, at the very least at the level of perception."

On appeal, Singh raises a number of due-process arguments relevant to the claimed "reframing" of the issues. She contends that the complaint did not charge an inherent conflict between her two positions, and that count two pled only a violation of the recusal regulation, N.J.A.C. 19:61-7.4, rather than the Conflicts of Interest Law, N.J.S.A. 52:13D-23(e)(7). She alleges that, had count two pled an inherent conflict in violation of the statute, she would have adjusted her trial strategy to address in depth the question of a per se conflict. For these reasons, Singh characterizes the ALJ's finding of an inherent conflict as "based upon a legal theory which was not charged in the [c]omplaint, under a statute not cited in that count, and on a theory which the Commission did not advocate during trial."

In effect, Singh argues that the Commission's decision is an attempt to create a new ethics rule about per se conflicts during the course of an administrative adjudication. Contending that the line between proper and improper conduct was "hazy" in relation to her dual positions, Singh argues that the Commission should instead have issued an ethics opinion and directed her to comply.

These arguments challenge the fundamental fairness of the Commission's adjudicative process. Again, such fairness demands adequate notice and "an adequate opportunity to prepare and respond." H.E.S., supra, 175 N.J. at 321 (quoting McKeown-Brand, supra, 132 N.J. at 559); see also Nicoletta, supra, 77 N.J. at 162. The Commission's complaint set forth all of the relevant statutory sections, including N.J.S.A. 52:13D-23(e)(7), and incorporated them by reference into count two.

A substantial portion of the hearing focused on Singh's roles as a State employee, both official and unofficial. Singh testified at length regarding her relationship with and responsibilities to the AICC. For these reasons, the adjudication was fundamentally fair to Singh: it provided her with adequate notice and an opportunity to address her dual roles and the conflicts it created. See H.E.S., supra, 175 N.J. at 321.

Singh also denies that her positions posed an inherent conflict. She contends that, since the AICC also furthers the interests of member businesses, whose interests are adverse to those of the regulated utilities, her duties as AICC President and as RPA could not conflict. She cites evidence adduced at trial that Governor McGreevey, his staff, the relevant ELOs, and the Commission itself were all aware of her AICC position. Reiterating Strmensky's opinion, after reviewing Sharpe's memo, that her positions did not present a conflict, Singh argues that her justifiable reliance on Strmensky's advice should estop the Commission from now asserting an inherent conflict between the roles.

The argument that AICC members' interests are consistent with the RPA's duties is factually unfounded, however. Several regulated utilities, including New Jersey Resources, were AICC members. Therefore, the AICC's collective interests included the interests of regulated utilities. Although Singh's role was not statutorily defined, it indisputably included the responsibility to protect the public's interest against public utilities.

Additionally, AICC did not represent the interests of all classes of utility consumers, only business interests. And the RPA's duty was to represent all classes of consumers, not providers.

Singh's dual roles created a patent conflict. Singh's arguments against its existence factually and legally lack merit. The Commission established a basis for a violation under count two as these were incompatible roles for which recusal or similar measures would have simply been inadequate.

IX.

Finally, the Commission concluded as to count three that Singh misused State time and resources to support AICC programs, in violation of N.J.S.A. 52:13D-23(e)(3), (7), and RPACOE sections II, III, and IV. These sections provide

No State officer or employee or special State officer or employee should use or attempt to use his official position to secure unwarranted privileges or advantages for himself or others.

[N.J.S.A. 52:13D-23(e)(3).]

No State officer or employee or special State officer or employee should knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of his acts that he may be engaged in conduct violative of his trust as a State officer or employee or special State officer or employee.

[N.J.S.A. 52:13D-23(e)(7).]

Pursuant to N.J.S.A. 52:13D-23(e)(7) no State officers or employees of the [RPA] shall knowingly act in any way that might reasonably be expected to create an impression or suspicion among the public having knowledge of their acts that they may be engaged in conduct violative of their trust as State officers or employees.

[RPACOE section II.G.]

Officers and Employees shall hold in public trust any property owned or leased by the State, or any other property or funds entrusted to them in the course of their duties and shall exercise reasonable care to protect such property from waste, destruction, or improper use.

[RPACOE section III.D.]

Officers and Employees shall not use an official position to secure unwarranted privileges, benefits, or advantages for themselves or others.

[RPACOE section IV.A.]

The Commission's decision was based on various AICC tsunami fundraiser documents, speeches, and other proofs. Singh argues, however, that the Conflicts of Interest Law does not include any alleged misuse of State resources. The Commission's final order, however, did not find a violation based on the misuse itself, but rather on the benefit to Singh and AICC in derogation of her official trust.

Singh also argues that the documents were on the State computers because they needed to undergo the DRA's vetting process. Because of her unrefuted testimony regarding Governor McGreevey's focus on minority concerns, there is some support to her position. Singh's involvement in AICC arguably implemented the then-Governor's agenda, which among other things, required DRA review of her activities, which means AICC documents would from time to time be on the State computer. It is also true that Anta testified that she sent Singh an AICC membership list by overnight mail from the DRA office.

Singh's understanding, albeit an incorrect one, that she was in some fashion entitled to use government resources for the AICC activities to advance the then-Governor's agenda means that her acts were not knowing as defined in N.J.S.A. 52:13D-23(e)(7) and RPACOE section II.G. Thus, we do not agree with the Commission's findings based on that statute as Singh believed the activities fulfilled the express mandate of the Governor who appointed her, and that they were therefore lawful.

But the use of State time and resources to fulfill the responsibilities of an AICC president resulted in an "unwarranted privilege or advantage," albeit minimal, that fell within another section of the statute and the RPACOE. See N.J.S.A. 52:13D-23(e)(3); RPACOE section IV.A. Singh cannot dispute that at the taxpayer's expense, at least one speech she gave at an AICC fundraiser was drafted by a DRA employee, and that a DRA employee drafted an AICC press release. We therefore agree that those sections were violated by the activities.

After consideration of the voluminous record and in accord with applicable law, we affirm the Commission's finding of a violation of the Conflicts of Interest Law and RPACOE as to counts one, two, and three. The fines and penalties are also affirmed.

1 The sum includes a $500 penalty for a letter Singh wrote to the Superintendent of State Police regarding a moving violation. That finding and the penalty are not being appealed.

2 In 2006, legislation re-establishing the Office of the Public Advocate was ratified and then-Governor Jon Corzine appointed Ronald Chen Acting Public Advocate. Public Advocate Restoration Act of 2005, N.J.S.A. 52:27EE-1 to -12 (repealed 2010).

3 Singh also served on the State Ethics Commission from August 20, 2003 until November 29, 2005.

4 In her reply brief, Singh raises a new point, contending that the Commission's finding of a violation based upon facts and theories not contained in the complaint violated due process. Since this point was not raised in the initial brief, we will not consider it. See L.J. Zucca, Inc. v. Allen Bros. Wholesale Distribs. Inc., 434 N.J. Super. 60, 87 (App. Div.), certif. denied, 218 N.J. 273 (2014).