2013-11-14 / Front Page

Former Birdsall execs mount legal defense

Staff Writer

Oral arguments in the state’s case against seven former executives at Birdsall Services Group (BSG) are expected to begin in February, nearly two years after investigators raided the firm’s offices in Eatontown and Wall on suspicion of campaign finance violations.

Attorneys representing the defendants plan to file numerous motions challenging the state’s evidence and long-ranging investigation in the coming weeks.

In the meantime, attorneys for BSG’s federally appointed bankruptcy trustee are trying to block a motion by the defendants to use insurance proceeds to fund their defense.

Daniel Stoltz, an attorney working with bankruptcy trustee Edwin Stier, said BSG’s insurance policy provides for a total of $6 million in claims and defense costs. Stoltz and Stier opposed a motion by the BSG defendants to use those funds for their ongoing legal defense, but a bankruptcy court judge granted them limited relief, allowing them to use $1 million.

“That is all being disputed,” Stoltz said on Oct. 31. He said opposing counsel and representatives from BSG’s insurance provider are attempting to resolve the issues through mediation, and are scheduled to meet on Nov. 18.

The insurance policy includes a provision that would require the defendants to repay any defense funds if they are ultimately found guilty, according to Stoltz.

Pretrial oral arguments in the criminal case are scheduled to begin on Feb. 25, with the potential for additional hearings on Feb. 26 and March 25 and 26. All defense motions must be filed by Nov. 22, with state replies due by Jan. 10.

Following a pretrial status conference in state Superior Court in Ocean County on Oct. 28, defense attorney Henry Klingeman said the various defendants will file motions relating to the state’s charges of money laundering and corporate misconduct, as well as the state’s use of tax return information during a grand jury investigation.

Other motions will question the sufficiency of the evidence used against certain defendants, said Klingeman, who represents former BSG Executive Vice President Thomas Rospos.

John McDonald, the attorney representing retired BSG CEO Howard Birdsall, said the case would play out over a number of months.

“Those motions will be argued in February or March,” he said following the brief hearing before Judge Wendel Daniels. “Most of the discovery has been received and reviewed. It’s voluminous. There are hundreds of boxes of it. … In some cases, you have five pieces of paper. So, here, it’s very complicated.”

New Jersey Deputy Attorney General Anthony Picione said the state may seek to try Rospos first because statements that he reportedly made to investigators may be used during the trial. When the seven defendants entered pleas of not guilty in court on May 20, Rospos was credited for his cooperation with the Attorney General’s Office and agreed to a lesser bail amount of $75,000.

Howard Birdsall and former BSG executives William Birdsall, Alan Hilla Sr., James Johnston and Robert Gerard accepted bail amounts of $90,000 with no 10 percent cash option.

Former BSG Chief Administrative Officer Scott MacFadden also agreed to a $75,000 bail. Prosecutors said he was involved in the “scheme” for a shorter amount of time than other defendants.

All of the defendants rejected plea deals that would have carried between three- and five-year sentences.

In March, BSG and the seven executives were indicted for allegedly funneling hundreds of thousands of dollars to political campaigns and organizations in exchange for public contracts. The state charges that BSG authorized top employees to write personal checks for up to $300 — amounts that would not have to be reported under state campaign finance laws. Those contributions were allegedly reimbursed in the form of bonuses.

The seven defendants have been charged with making illegally reimbursed political contributions ranging from $45,797 to $241,000.

Two other former employees pleaded guilty in deals with the Attorney General’s Office before the indictments were handed down.

BSG filed for bankruptcy after the state seized $41.6 million in company assets in March. The state alleged that the funds were the proceeds of criminal activity. In June, the U.S. Bankruptcy Court approved the sale of BSG’s name, trademarks and other assets to California-based Partner Engineering and Science Inc. for $5.6 million.

In 2011, the firm was valued at nearly $42 million.

In August, Stier filed a lawsuit against 21 former company officials, contending that they contributed to the downfall of the firm and the loss of nearly $36 million in total value.

Stier also filed suit against a number of New Jersey law firms, which he said accepted more than $526,000 in company funds to represent former employees charged with violating state pay-to-play laws. In the suit, filed with the U.S. Bankruptcy Court in Trenton on Aug. 12, Stier asked the court to manage the distribution of any future legal expenses in relation to the firm.

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