DRPA probe widens with subpoenas

POSTED: December 19, 2013

Federal prosecutors served subpoenas this week on several officials and employees of the Delaware River Port Authority, including at least three board members – Camden County Freeholder Jeffrey L. Nash, South Jersey labor leader Richard Sweeney, and Philadelphia lawyer William Sasso, The Inquirer has learned.

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Jeffrey L. Nash, Richard Sweeney, and William Sasso (pictured left to right)

Since April, the U.S. Attorney’s Office has been investigating millions of dollars of politically connected “economic-development” spending by the DRPA.

Subpoenas issued Monday to several board members and other DRPA employees demanded materials and testimony related to that spending.

Sasso, who was appointed to the DRPA board by Gov. Corbett in 2011, said he apparently received the subpoena because he is chairman of a DRPA board committee that has been critical of several sweetheart loans granted by the agency.

He said he has been asked to provide information about those loans to investigators and would cooperate.

One of the loans was for the redevelopment of a former Radio Corp. of America building in Camden into the Victor Lofts.

In 2003, the DRPA lent the developer Carl Dranoff $3 million interest-free until 2009 to help convert the historic “Nipper Building” into 341 apartments overlooking the Delaware River and the Philadelphia skyline.

Dranoff was to start repaying the loan in 2009, with monthly installments of $23,259 until the end of 2014, at which time the $2.5 million loan balance would be paid in a lump sum, according to the loan agreement. But the agreement also states that Dranoff’s obligation to make payments is limited to Victor’s “available cash flow.” So far, no payments have been made.

The other loan, in 2001, was for $1 million to redevelop the landmark boxing venue the Blue Horizon on North Broad Street. The Blue Horizon is now closed, the loan is in default, and the DRPA has written off collecting any of the accrued interest in the hope of recovering its $1 million principal.

Nash, the vice chairman of the DRPA board, declined to comment.

Sweeney, an official with the ironworkers’ union and brother of New Jersey Senate President Stephen Sweeney (D., Gloucester), could not be reached for comment.

A spokeswoman for U.S. Attorney Zane David Memeger declined to comment, as did DRPA spokesman Tim Ireland.

The DRPA, which operates four toll bridges and the PATCO commuter rail line between Philadelphia and South Jersey, spent nearly $500 million over 15 years to underwrite museums, stadiums, a concert hall, a cancer center, the Army-Navy football game, and other non-transportation projects.

Much of the money went to politically influential recipients, as the Pennsylvania and New Jersey delegations on the DRPA board got equal amounts to spend. Fourteen of the 16 board members are appointed by the governors of New Jersey and Pennsylvania. Two Pennsylvania members – the state treasurer and auditor general – are on the board by virtue of their elected offices.

Last year, New Jersey state Comptroller Matthew Boxer issued a report critical of cronyism and mismanagement at the DRPA, saying that “in nearly every area we looked at, we found people who treated the DRPA like a personal ATM, from DRPA commissioners to private vendors to community organizations.”

One of the subpoenas issued Monday demanded records going back at least five years, casting a broad net related to economic-development spending.

Economic-development spending by the DRPA has long been controversial, as it contributed to a $1.6 billion debt that now consumes about half of the agency’s spending. Motorists and some board members complained that the DRPA should not spend money on non-transportation projects, while borrowing hundreds of millions to maintain its bridges and rail line.

pnussbaum@phillynews.com 215-854-4587


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