TRENTON – Attorney General Jeffrey S. Chiesa announced that the former Director of the New Jersey Division of Taxation and an Assistant Deputy Director were sentenced today for accepting lavish gifts from a collections company, OSI Collections Services Inc., while continuing to take action on the company’s contracts with the state to collect unpaid taxes.  The two men were found guilty of official misconduct in July following a bench trial.

Robert K. Thompson, 63, of Hamilton, former Director of the Division of Taxation, was sentenced by Superior Court Judge Andrew J. Smithson to one year of probation.  David M. Gavin, 60, of Titusville, former Assistant Deputy Director for Contract Compliance, was also sentenced by Judge Smithson to one year of probation.  The state had recommended a sentence of 364 days in the county jail for Thompson and a sentence of four years in state prison for Gavin, but Judge Smithson imposed probationary sentences for both men.  Both men were required to forfeit their jobs and are permanently barred from public employment in New Jersey. They had been suspended without pay since 2006, when they were initially charged.  Notices of conviction were sent to the Pension Board for any action deemed appropriate.  

On July 30, Thompson was found guilty by Judge Smithson of one count of third-degree official misconduct, and Gavin was found guilty of two counts of third-degree official misconduct and one count of third-degree pattern of official misconduct.  Thompson and Gavin were indicted on charges of second-degree official misconduct, but Judge Smithson ruled that it was not clear whether the gifts that were accepted by the defendants met the threshold for second-degree official misconduct. He therefore found them guilty of third-degree official misconduct.

Deputy Attorneys General Thomas Clark and Phillip Leahy tried the case for the Division of Criminal Justice Corruption Bureau. The state’s investigation revealed that the two men accepted dinners, entertainment and golf outings worth thousands of dollars from the collections company.

“There is no place in government for officials who break the law and abuse their positions of trust for personal gain,” said Attorney General Chiesa.  “We’ve made prosecuting public corruption a top priority in order to deter this type of conduct.”

“When government officials pursue self-serving relationships with the contractors they oversee, it undermines public confidence in government,” said Stephen J. Taylor, Director of the Division of Criminal Justice. “We’ll continue our strong efforts to prosecute officials who illegally take action to advance a contract while personally profiting from a relationship with the contractor.”

“The Commission commends the Division of Criminal Justice for obtaining convictions in this criminal prosecution, as it reinforces the message that New Jersey will not tolerate government officials who break the law and abuse the public trust,” said Philip James Degnan, Executive Director of the State Commission of Investigation.

The investigation by the Division of Criminal Justice followed a 2005 report by the State Commission of Investigation that revealed that managers in the Division of Taxation who were responsible for overseeing OSI’s contracts had accepted meals, alcohol, outings and other lavish gifts from OSI. The Commission also found that OSI inflated its billings to the state by hundreds of thousands of dollars per year. Because the Commission’s investigation revealed potential violations of the criminal as well as civil laws of the state, referrals were made to the Division of Criminal Justice. Under an agreement with the Attorney General's Office reached in 2007, OSI paid the State of New Jersey $2 million in restitution for overbilling and investigative costs.

Thompson and Gavin had direct responsibility for overseeing OSI’s performance under its contracts with the state to collect unpaid income and business taxes.  The state presented testimony and evidence that, despite that responsibility, they accepted numerous expensive gifts from OSI, which they failed to report to the department’s ethics officer as required. Those gifts included:

• A Sept. 21, 2004 trip to New York City for Robert Thompson and his wife, valued at about $2,357, including limo service to the city, tickets to the Broadway musical "Wicked," and meals and drinks at two restaurants.
• Two separate golf outings for Gavin in June 2001 and June 2002, collectively valued at more than $1,000.  He also received a certificate worth $200 at a golf club.
• In addition, Thompson and Gavin each received meals and/or drinks from OSI employees on various occasions, together or separately, at different restaurants in New Jersey, between 2000 and 2004.

Judge Smithson found by his verdicts that each man continued to take actions with respect to OSI’s contracts, despite the fact that he had received certain gifts from OSI and had an obligation to recuse himself or refrain from taking action on the contracts in light of the apparent conflict of interest.

In convicting Thompson of one count of official misconduct, Judge Smithson found that he participated, despite the apparent conflict of interest, in a decision in July and August of 2005 regarding the length of the extension of one of OSI’s contracts, recommending a six-month extension rather than the three-month extension initially proposed.

In convicting Gavin of official misconduct, Judge Smithson found that he participated, despite the apparent conflict of interest, in the appointment in May 2004 of four members of a committee responsible for evaluating vendors during the rebidding of one of OSI’s contracts.  The judge convicted him of the second count of official misconduct for participating in early 2004 in the formulation of a request for proposals for the rebidding of one of OSI’s contracts, despite the apparent conflict of interest.

The investigation by the Division of Criminal Justice was conducted and coordinated by Detective Benjamin Kukis, Deputy Attorney General Clark, and former Deputy Attorney General Steven J. Zweig of the Division of Criminal Justice Corruption Bureau.  Deputy Attorneys General Clark and Leahy were assisted at trial by Auditor Catherine Lodato and Analyst Nathalie Kurzawa.

On March 8, 2010, the former sales director of OSI, Sandra Bielanski, 45, of Hillsborough, pleaded guilty to charges that she offered an illegal gift to a state official and concealed the fact that OSI was overbilling the state.  She pleaded guilty to third-degree charges of offering an unlawful benefit to a public servant for official behavior and tampering with public records or information.  She is awaiting sentencing.  Bielanski admitted that she arranged the trip for Robert Thompson and his wife to see “Wicked” in New York at OSI’s expense.  She also admitted that she learned OSI was improperly billing the state, but took steps to conceal it from state officials.

Two other OSI employees, Enos “George” Blake, 65, of Kendall Park, and Carol Labbe, 45, of Jackson, were indicted in connection with the improper bills.  It is alleged that Blake, as the OSI vice president responsible for managing state projects, and Labbe, as his de facto second in command, purposely submitted improper bills between January 1999 and May 2005 that caused the state to overpay OSI by $1,184,662.  The charges against Blake and Labbe are pending.  They are merely accusations and the defendants are presumed innocent until proven guilty.

Attorney General Chiesa and Director Taylor noted that the Division of Criminal Justice has established a toll-free Corruption Tipline for the public to report corruption and other illegal activities: 1-866-TIPS-4CJ. Additionally, the public can log on to the Division Web site at www.njdcj.org to report suspected wrongdoing. All information received through the Tipline or Web page will remain confidential.