Charles Cuccia v. Local Finance Board ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2462-22
CHARLES CUCCIA,
Petitioner-Appellant,
v.
LOCAL FINANCE BOARD,
Respondent-Respondent.
_________________________
Submitted October 2, 2024 – Decided October 15, 2024
Before Judges Mayer and Puglisi.
On appeal from the New Jersey Department of
Community Affairs, Local Finance Board.
Dorsey & Semrau, LLC, attorneys for appellant (Fred
C. Semrau, of counsel; Edward R. Pasternak, on the
briefs).
Matthew J. Platkin, Attorney General, attorney for
respondent (Donna Arons, Assistant Attorney General,
of counsel; Steven M. Gleeson, Deputy Attorney
General, on the brief).
PER CURIAM
Petitioner Charles Cuccia appeals from a March 29, 2023 final agency
decision issued by respondent Local Finance Board (Board), adopting the initial
decision of an Administrative Law Judge (ALJ), finding Cuccia violated the
Local Government Ethics Law (LGEL), N.J.S.A. 40A:9-22.1 to -22.25.
Specifically, the ALJ and Board found Cuccia violated N.J.S.A. 40A:9-22.5(a),
(c), (d), (e), (g), and (h), and assessed a $200 fine for each violation for a total
penalty of $1,200. We affirm.
The Board found Cuccia violated the foregoing subsections of the LGEL
by simultaneously holding the positions of Chief Financial Officer (CFO) for
the Borough of Lodi (Borough) and owner of Treasury Services, a financial
consulting business. While Cuccia served as the Borough's CFO, the Borough
contracted with Treasury Services to update and improve its financial audit
system and for other financial services.
The Board issued a November 7, 2018 notice of violation, alleging Cuccia
violated the LGEL. Upon receiving the violation notice, Cuccia requested a
hearing before the Office of Administrative Law. The matter was assigned to
an ALJ for a hearing as a contested case. Prior to the hearing date, the Board
filed a motion for summary decision under N.J.A.C. 1:1-12.5, which Cuccia
opposed.
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We presume the parties are familiar with the facts set forth in the ALJ's
comprehensive December 13, 2022 initial decision. We provide a summary to
give context to our opinion.
Cuccia owned and operated Treasury Services, a company providing
financial services to local governments. Cuccia's wife worked for Treasury
Services. In 2012, Cuccia, on behalf of Treasury Services, entered into contracts
with the Borough to support the Borough's Finance Department, including
implementing an upgraded uniform system for the management of the Borough's
accounts and accounting procedures. None of the contracts between Treasury
Services and the Borough were publicly bid. Cuccia claimed the contracts were
excluded from the public bid requirement because they were for professional
services.
The Borough also contracted with Treasury Services to "outsource the
municipal finance office operations" when the full-time CFO retired. Cuccia
became the Borough's part-time CFO in October 2012. The Borough renewed
Cuccia's contract for the CFO position every year from 2012 to 2018. During
his tenure as the Borough's CFO, Cuccia continued to contract with the Borough
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on behalf of Treasury Services. 1 Additionally, while Cuccia served as the
Borough's CFO, Treasury Services employed Cuccia's wife.
In his written decision, the ALJ granted the Board's motion for summary
decision. He determined the parties had no genuine disputes with respect to the
following facts: "Cuccia served simultaneously as CFO of Lodi, while also
serving as Finance Officer for Treasury Services, a company contracted to
provide financial services for Lodi" and "while serving as CFO, Cuccia
continued to acquire contracts from Lodi, without a competitive procurement
process, using information not generally available to the public ."
The ALJ first addressed Cuccia's violations of 40A:9-22.5(a), (d), (e), and
(h) to determine whether there was a disqualifying conflict of interest between
Cuccia simultaneously serving as the Borough's CFO and owner of Treasury
Services when the Borough contracted with Treasury Services. The ALJ noted
these subsections of the LGEL did not require intent to determine if an official
had a disqualifying conflict of interest. Relying on Grabowsky v. Twp. of
Montclair, 221 N.J. 536, 554 (2015), the ALJ stated that once a disqualifying
interest is found, "an inquiry into an official's motive is unnecessary."
1
The ALJ found the value of the contracts between the Borough and Treasury
Services after Cuccia became the Borough's CFO totaled $601,958.32.
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The ALJ specifically found Cuccia had:
[A] multitude of impermissible interests . . . [,]
including direct pecuniary interest, an indirect
pecuniary interest, and possibly even a direct personal
interest. A direct pecuniary interest [arose] due to
Cuccia's ownership of Treasury Services, and an
indirect pecuniary interest [arose] due to Cuccia's
wife's ownership of the same company. A direct
personal interest also [arose] due to Treasury Service's
employment of [the Borough Manager]'s daughter
during all relevant times herein that Cuccia was both
CFO of Lodi and owner and operator of Treasury
Services.
The ALJ determined "[i]t [was] undisputed that Cuccia was involved in
contract proposals with Treasury Services, as he submitted the same to the
Borough for approval between 2012 and 2018. This conduct alone is enough to
determine that Cuccia was representing Treasury Services in matters brought
before Lodi officials." Thus, the ALJ granted summary decision in favor of the
Board as to subsections (a), (d), (e), and (h).
The ALJ then considered Cuccia's violation of N.J.S.A. 40A:9-22.5(c) and
(g), noting those subsections "deal[t] with intentional acts by officials to seek
'unwarranted privileges or advantages' or 'financial gain.'" The ALJ found it
"undisputed" that Cuccia used information not available to the public to acquire
contracts from Lodi while serving as its CFO. The ALJ further found Cuccia,
while serving as the Borough's CFO and owner of Treasury Services, "proposed
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contracts for financial services to the Borough" and "did not seek bids, quotes[,]
or any form of competition before accepting these contracts." The ALJ also
found Cuccia benefitted from information he obtained in his capacity as the
Borough's CFO to secure contracts between the Borough and Treasury Services.
He concluded Cuccia's conduct presented a perceived conflict between Cuccia's
private interests as the owner of Treasury Services and his public duties as the
Borough's CFO. Thus, the ALJ granted summary decision to the Board under
subsections (c) and (g).
In considering the appropriate penalty, the ALJ imposed the sum of $200
for each of Cuccia's violations of the LGEL. Because the ALJ found Cuccia
violated six different provisions of the LGEL, he assessed a total penalty of
$1,200.
On appeal, Cuccia argues the Board's decision is unsupported by sufficient
credible evidence in the record. Cuccia asserts the facts, as determined by the
ALJ, did not support a finding that he violated the six specific subsections of the
LGEL. We disagree.
We begin with our standard of review. The ALJ's consideration of a
motion for summary decision under N.J.A.C. 1:1-12.5 is "substantially the
same" as a trial court's consideration of a motion for summary judgment under
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Rule 4:46-2. Contini v. Bd. of Educ. of Newark, 286 N.J. Super. 106, 121 (App.
Div. 1995).
However, our review of an agency's summary decision differs from our de
novo review of a court's grant of summary judgment. See Henry v. N.J. Dep't
of Hum. Servs., 204 N.J. 320, 330 (2010). While we review de novo an agency's
determination that there were no genuine issues of material fact, we "strive to
'give substantial deference to the interpretation [the] agency gives to a statute
that the agency is charged with enforcing.'" In re Application of Virtua-West
Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 423 (2008)
(citing Saint Peter's Univ. Hosp. v. Lacy, 185 N.J. 1, 15 (2005)). Generally, we
will affirm an agency's quasi-judicial decision unless it is "arbitrary, capricious,
or unreasonable." Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J.
14, 27 (2011). We are "in no way bound by the agency's interpretation of a
statute or its determination of a strictly legal issue." Mayflower Sec. Co. v.
Bureau of Sec., 64 N.J. 85, 93 (1973).
When reviewing agency actions, we defer "to the special competence and
expertise of an administrative agency, such as the Local Finance Board, with
regard to technical matters with which that agency is concerned." Abraham v.
Twp. of Teaneck Ethics Bd., 349 N.J. Super. 374, 379 (App. Div. 2002) (citing
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N.J. Bell Tel. Co. v. N.J. Dep't of Pub. Utils., 162 N.J. Super. 60, 77 (App. Div.
1978)). We recognize "[t]he special expertise that the Board possesses in
matters involving local government affairs." Ibid. (citing Morris Cnty. v.
Skokowski, 86 N.J. 419, 424 (1981); Schinck v. Bd. of Educ., 60 N.J. Super.
448, 465 (App. Div. 1960)). "Indeed, the Legislature recognized this by vesting
the Board with the overall responsibility of interpreting and enforcing the
[LGEL]." Ibid.The purpose of the LGEL is:
to provide a method of assuring that standards of ethical
conduct and financial disclosure requirements for local
government officers and employees shall be clear,
consistent, uniform in their application, and
enforceable on a Statewide basis, and to provide local
officers or employees with advice and information
concerning possible conflicts of interest which might
arise in the conduct of their public duties.
[N.J.S.A. 40A:9-22.2(e).]
N.J.S.A. 40A:9-22.5 establishes a code of ethics for local government
officers or employees under the jurisdiction of the local finance board. Here,
Cuccia was charged with violation of subsections (a), (c), (d), (e), (g), and (h)
of the statute which state:
a. No local government officer or employee or member
of his immediate family shall have an interest in a
business organization or engage in any business,
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transaction, or professional activity, which is in
substantial conflict with the proper discharge of his
duties in the public interest; . . .
c. No local government officer or employee shall use
or attempt to use his official position to secure
unwarranted privileges or advantages for himself or
others;
d. No local government officer or employee shall act
in his official capacity in any manner where he, a
member of his immediate family, or a business
organization in which he has an interest, has a direct or
indirect financial or personal involvement that might
reasonably be expected to impair his objectivity or
independence of judgment;
e. No local government officer or employee shall
undertake any employment or service, whether
compensated or not, which might reasonably be
expected to prejudice his independence of judgment in
the exercise of his official duties; . . .
g. No local government officer or employee shall use,
or allow to be used, his public office or employment, or
any information, not generally available to the members
of the public, which he receives or acquires in the
course of and by reason of his office or employment,
for the purpose of securing financial gain for himself,
any member of his immediate family, or any business
organization with which he is associated; [and]
h. No local government officer or employee or business
organization in which he has an interest shall represent
any person or party other than the local government in
connection with any cause, proceeding, application or
other matter pending before any agency in the local
government in which he serves. . . .
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Having reviewed the record, particularly the undisputed facts identified
by the ALJ and the Board, we reject Cuccia's argument that the ALJ improperly
applied those facts in concluding he violated the LGEL.
Subsections (a), (d), (e), and (h) of N.J.S.A. 40A:9-22.5 do not require
Cuccia have a specific intent to violate the LGEL. Nor do these subsections of
the statute require an actual conflict of interest. Instead, these subsections are
applicable where there is "a potential for conflict." Wyzykowski v. Rizas, 132
N.J. 509, 524 (1993).
Our Supreme Court identified four settings where an interest is
disqualifying in violation of the LGEL:
(1) "Direct pecuniary interests," when an official votes
on a matter benefitting the official's own property
or affording a direct financial gain;
(2) "Indirect pecuniary interests," where an official
votes on a matter that financially benefits one
closely tied to the official, such as an employer, or
family member;
(3) "Direct personal interest," when an official votes on
a matter that benefits a blood relative or close friend
in a non-financial way, but in a matter of great
importance, as in the case of a councilman's mother
being in the nursing home subject to the zoning
issue; and
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(4) "Indirect [p]ersonal [i]nterest," when an official
votes on a matter in which an individual's judgment
may be affected because of membership in some
organization and a desire to help that organization
further its policies.
[Grabowsky, 221 N.J. at 553 (quoting Wyzykowski,
132 N.J. at 525-26).]
Cuccia does not dispute he simultaneously served as the Borough's CFO
and owner of Treasury Services. Nor does Cuccia deny Treasury Services
entered into contracts with the Borough to provide various financial services for
the Borough between 2012 to 2018 while he was the Borough's CFO. Further,
Cuccia agrees those contracts were not publicly bid.
Here, the undisputed facts demonstrated Cuccia had direct and indirect
interests in the financial service contracts between Treasury Services and the
Borough by virtue of his ownership of Treasury Services and simultaneous role
as the Borough's CFO. Cuccia's interests as the Borough's CFO also overlapped
with the financial interests of his wife as an employee of Treasury Services.
We are satisfied Cuccia's dual role as the Borough's CFO and owner of
Treasury Services presented a classic conflict of interest. On the one hand,
Cuccia sought to earn money for his private consulting business, Treasury
Services. On the other hand, Cuccia had a duty to provide the best available
financial services for the Borough that placed the least financial burden on the
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Borough's taxpayers. These competing interests supported the ALJ's finding
that Cuccia violated subsections (a), (d), (e), and (h) of N.J.S.A. 40A:9-22.5.
Unlike subsections (a), (d), (e), and (h), a government officer's violations
of subsections (c) and (g) require a finding of specific intent. Intent can be
proven through circumstantial evidence. See Bergen Com. Bank v. Sisler, 157
N.J. 188, 209-10 (1999). Additionally, intent can be "inferred from all that [a
party] did and said, and from all the surrounding circumstances of the situation
under investigation." Mayflower Indus. v. Thor Corp., 15 N.J. Super. 139, 162
(Ch. Div. 1951), aff'd, 9 N.J. 605 (1952).
Under subsection (c), a government officer may not "secure unwarranted
privileges or advantages for himself or others." Cuccia "secured unwarranted
privileges or advantages for himself," as well as his wife, by proposing the
Borough contract with Treasury Services while he served as the Borough's CFO.
Cuccia does not deny Treasury Services received a financial gain of $601,958.32
as a result of the contracts between his company and the Borough while he was
the Borough's CFO.
Regarding subsection (g), a government officer may not use information,
"not generally available to the members of the public, which he receives or
acquires in the course of and by reason of his office or employment, for the
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purpose of securing financial gain for himself, any member of his immediate
family, or any business organization with which he is associated."
Here, as the Borough's CFO, Cuccia used information not generally
available to the public for the purpose of securing financial gain in the form of
financial service contracts between the Borough and Treasury Services. Cuccia
used knowledge of the Borough's financial service needs he acquired through
his position as the Borough's CFO to propose contractual arrangements wherein
Treasury Services would supply services the Borough required.
Cuccia never inquired whether other financial service companies could
address the Borough's financial needs at a lower cost. Nor did Cuccia suggest
Treasury Services should not be considered for service contracts with the
Borough due to Cuccia's dual position as the Borough's CFO and owner of
Treasury Services. These actions or inactions evidenced Cuccia's intent to
procure privileges or advantages and to secure financial gain for himself and
others in violation of subsections (c) and (g) of the LGEL.
Regarding the public's perception of the conflict in Cuccia's dual roles and
the potential lack of independent judgment in the exercise of his dual roles, the
ALJ correctly concluded a reasonable member of the public could question
whether Cuccia, as the Borough's CFO, would fail to thoroughly review the
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financial services provided by his own company, Treasury Services, for its work
on behalf of the Borough. The public could also perceive Cuccia's judgment as
the Borough's CFO would be compromised by his ownership of Treasury
Services. On these facts, the public could believe Cuccia's dual roles impaired
his objectivity and independence of judgment in violation of the LGEL.
We reject Cuccia's argument that he did not violate the LGEL because the
Borough Council made the decision to award the no-bid contracts to Treasury
Services. The conflict of interest finding was not based on the awarding of the
contracts. Rather, the LGEL violations were based on Cuccia's simultaneous
representation of the Borough and Treasury Services at the time the contracts
were awarded.
Although Cuccia challenged the finding that he violated the LGEL, on
appeal he does not challenge the reasonableness of the penalty imposed. Thus,
we need not address the amount of the sanction imposed.
To the extent we have not addressed any arguments raised by Cuccia, the
arguments lack sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed.
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