May 22, 2003 -- Soon after Acting New Jersey Gov. Donald DiFrancesco left office early last year, he joined the board of directors of a bank that got his help while he was still in office.
In one of his last acts in office, DiFrancesco signed legislation giving the Burlington County Bridge Commission, which operates two Delaware River toll bridges, the power to issue bonds for other government entities.
Yes, he is..And McSleazy isn't much better.
http://www.nj.com/statehouse/ledger/index.ssf?/base/news-1/1053498641296240.xml Governor's ally netted big fee in bond deal
Bear Stearns paid Arseneault $250,000
Wednesday, May 21, 2003
BY DUNSTAN McNICHOL
Star-Ledger Staff
Attorney Jack Arseneault, a close political ally of Gov. James E. McGreevey, received a $250,000 payment in February from a New York banking firm for helping it land the lead role in managing a $1.6 billion state bond deal, federal records show.
Investment firms seeking work handling major financial deals for state government often hire lobbyists or consultants to help them win those contracts and the big fees they bring in.
But even in the high-stakes realm of government bond work, the size of the fee paid to Arseneault by Bear Stearns, the firm chosen as senior manager for New Jersey's tobacco bond sale last year, stands out. It came on top of $10,000 a month Arseneault received from Bear Stearns for the past 12 months, according to the company's quarterly report to the Municipal Securities Rulemaking Board.
Bear Stearns is collecting $6.4 million in fees for managing the sale of bonds backed by money New Jersey stands to collect from the national settlement of a lawsuit against tobacco manufacturers.
Of the five firms that won secondary roles in managing the tobacco bond deal, three had Trenton lobbyists working for them for monthly fees of $4,000 to $6,000.
In total, 46 investment firms collected $13.2 million in fees on the deal, with Bear Stearns earning almost half of that figure, according to the state Treasurer's office.
Arseneault declined to comment yesterday, and repeated calls to Bear Stearns offices in New York seeking comment were not returned.
But Arseneault said earlier this year that he helped Bear Stearns by serving as a familiar face to introduce the company's representatives around Trenton.
"I am a known entity to this administration, and my integrity is known," Arseneault said when asked in January about his work for Bear Stearns on the tobacco transaction. "It's different when people know you coming in the door."
Arseneault is known as one of the state's premiere criminal defense lawyers, whose prominent clients included one of the two state troopers involved in the 1998 Turnpike shooting that brought the debate over racial profiling in New Jersey to a head.
Once considered the front runner to be McGreevey's first attorney general, Arseneault is a close personal friend of former state Sen. John Lynch (D-Middlesex), one of McGreevey's political mentors, and of acting Attorney General Peter Harvey.
The McGreevey administration came under criticism last year after Arseneault's Chatham law firm was hired to work on a state probe into the management of a $1 billion contract to build a 34-mile light rail line linking Camden and Trenton. Harvey canceled the contract in February, and Arseneault has yet to submit his bill for that work.
Sen. Leonard Lance (R-Hunterdon) said Arseneault's windfall from Bear Stearns is nothing more than old fashioned political patronage.
"It's not illegal and I'm not suggesting it is, but this is the type of matter that should be analyzed," said Lance, who last year unsuccessfully proposed legislation that would have prohibited political contributions by any firm involved in the tobacco bond deal.
Tom Vincz, a spokesman for state Treasurer John McCormac, said there was nothing improper with the bond deal.
"The choice (of Bear Stearns) was based solely on their experience as a national leader in the underwriting field for tobacco securitization and their responses to a competitive request for proposals process," he said.
Vincz would not comment on Arseneault's role.
Bear Stearns is among the most experienced firms in handling tobacco bonds, which are backed by the future payments states are scheduled to receive from a nationwide settlement of lawsuits against tobacco firms. Last year Bear Stearns handled $2.89 billion in tobacco bond sales nationwide -- accounting for 52 percent of the bonds sold, the company's annual report says.
Bear Stearns was a major political contributor under Gov. Tom Kean in the 1980s, and has had a steady stream of business in the state. But since 1988, it had never served as lead underwriter on more than $706 million in bond work in one year, and averaged $241 million during that period, according to Thomson Financial. The lead underwriter's post is coveted because it generates the biggest fees.
The five investment firms hired as second-tier managers for New Jersey's tobacco bond deal earned a total of $2.9 million, some of which they shared with New Jersey lobbyists.
UBS PaineWebber, which earned $469,309 in fees, pays the Trenton-based Stewart Agency $4,000 a month. Morgan Stanley, which earned $449,650 in the tobacco deal, pays State Street Partners of Trenton $5,000 a month, and First Albany Corporation, which received $353,850 in tobacco bond fees, pays Capital Public Affairs of Princeton $6,000 a month.
Another manager, Commerce Capital Markets, is a branch of Commerce Bank, the politically wired Cherry Hill bank whose officers include Democratic powerbroker George Norcross. Commerce earned $1.1 million in fees -- more than any firm except Bear Stearns.
Salomon Smith Barney earned $494,067 in fees, and did not retain any consultants. Dunstan McNichol covers state government issues. He can be reached at
dmcnichol@starledger.com or (609) 989-0341.
Donnie D's a dirtbag. What a shock!
Darn. I still haven't moved banks since moving.
I like Commerce Bank's 7 day a week hours and free coin counting. And it's right up the street from me! But the board and some of the execs stink!
Ugh. I'm just going to have to go to Somerset Savings Bank.
Too bad McSleazy won't find himself in a jail cell -- he might enjoy the "lifestyle." ;-) As for Donnie D -- one might assume he is well "connected," and thus will wind up in Miami or out of the country eventually living like a sheik...
If the GOP captures a 1-seat majority this year, McGreevey won't be able to resign because the Governorship will go to the GOP Senate President.
I wish Bret was keeping his profile up. When McSleazy lost his last election, he essentially campained right up until he finally won and beat Bret. I think Bret can and should do the same thing.
DiFrancesco is a scumbag who derailed Schundler's campaign before it left the station. I hope he dies in prison.