News Clip: Wall Superintendent’s Luxury SUV Lease Was Illegal

By Louis C. Hochman

Originally published in The Coast Star · April 14, 2005

Note: Louis C. Hochman’s inquiries lead to the discovery that a luxury vehicle had been leased improperly by the Wall Township school superintendent. Because the Coast Start printed on a weekly schedule, by the time its next edition was out, the school board had already taken action, as described below.

WALL TOWNSHIP — Superintendent of Schools Dr. James Habel’s roughly $30,000 lease of a GMC Denali luxury SUV violated the Local Public Contract Law, according to attorneys familiar with the purchase.
 
The Wall Township Board of Education came out of an executive session meeting late Tuesday night to direct its attorney to explore options for dealing with the issue, just a few days after The Coast Star began contacting school officials to question the lease.
 
“The board counsel was asked to review it, and I made a determination that it should have been the subject of a formal bid,” said Douglas Kovats, the board’s attorney, of the lease.
 
Under Dr. Habel’s contract with the district, the school system must provide him with a vehicle, said board member John Lane, who read the resolution directing the attorney Tuesday night. The contract does not specify how expensive the car may be, or what other criteria it must meet.
 
When Dr. Habel took the position, he was given an older car already owned by the district. In February, Dr. Habel — who is also the board’s interim business administrator — made the decision to lease the Denali, without going out to bid on the matter, Mr. Lane said.
 
Mr. Lane said he has been told the superintendent — who did not return calls by press time yesterday — believed at the time the purchase was not required to be put out for a public bid. Since the district’s expenditure in a given year on the lease/purchase plan would be less than a $17,500 bid threshold, the superintendent apparently believed the lease was legal, Mr. Lane said.
 
But Mr. Kovats said he was asked to review the matter, and has since told the board the threshold applies to the entire financial commitment — not just a single year’s payments. Mr. Kovats said Dr. Habel’s lease arrangement obligated the board to a roughly $6,000 down payment around February, and a 47-month $490 lease payment — a total of about $30,000. That price does not include any balloon payment that would need to be made at the end of the lease in order to keep the vehicle.
 
According to several GMC dealers, various versions of the Denali may cost anywhere between $40,000 and $60,000, in full. Mr. Kovats did not immediately know the exact model Dr. Habel leased.
 
The board has asked the attorney to research options to correct the inappropriate purchase. It has also asked the Monmouth County Superintendent of Schools to review the matter, and the board’s auditor was asked to draft a plan for avoiding similar purchases in the future.
 
Township Attorney Roger McLaughlin said Wall Township Police have requested records on the purchase, and are investigating the matter in connection with other law enforcement agencies. The Monmouth County Prosecutors Office was unable to confirm by press time if it had been made aware of the matter.
 
Tom Cafferty, an attorney with the New Jersey Press Association, said violations of the contracts law are not, in and of themselves, subject to criminal penalties.
 
Mr. Cafferty said, however, incidents of public malfeasance could be of interest to a county prosecutor’s office, but he stressed he could not know if that would be at issue in regard to the Wall school district purchase.
 
“The response could range from the public entity refusing to be bound by the contract, to possible inquiries by the prosecutor within the prosecutor’s jurisdiction,” Mr. Cafferty said.
 
Mr. Kovats confirmed the Wall Township Board of Education has made payments on the vehicle, and will continue to do so until the matter is resolved. He said he could not comment as to whether board members explicitly approved the purchase itself. Mr. Lane also said he was unsure as to whether there had been a board vote on the purchase.
 
Issues of procedure aside, Mr. Lane said he was concerned by how the public might perceive the superintendent’s choice to use district funds for a luxury vehicle while trying to trim the school system budget.
 
“You’re asking taxpayers for money, and you’ve got a superintendent driving around in what is an expensive car,” Mr. Lane said.
 
Mayor Edward H. Thomson — who has often been an outspoken critic of the superintendent — said despite this latest information he still supports this year’s proposed district budget, heading to voters Tuesday. And while he said addressing the improper purchase falls to the board of education, as a taxpayer, he has some concerns that it happened.
 
“But if they say it was an honest mistake, I’ll take them at their word,” the mayor said.