Report Says 12 NJ Companies In $100 Million Tax Credit Scheme

NEW JERSEY – Gov. Phil Murphy said a report revealing that 12 companies were involved in a $100 million tax scheme "invited potential fraud and malfeasance," and his administration promised further investigation.

Murphy was referring to a report published by The New York Times that said 12 companies threatened to leave New Jersey and move to the same office development in Pearl River, N.Y. unless the state provided millions of dollars in tax credits.

Indeed, the headline of the story is: "How One Address Led to a $100 Million Tax Credit Scheme"

Murphy said The New York Times story "is yet another illustration of what I have been saying for nearly three years – the tax incentive programs created by the Economic Opportunity Act were severely flawed and not only did not create promised jobs, but invited potential fraud and malfeasance."

“It is time to put this broken system – a system that has become a national embarrassment - behind us and create a new, targeted, and transparent suite of incentives that focuses on nurturing innovation and bringing new business and new jobs to New Jersey," he said. "We can no longer commit taxpayer money to dubious job-retention programs that have proven ineffective at best."

The Office of Attorney General also says it has opened an investigation into the program that has become a target of the Murphy administration this year – and it's also at the center of a power struggle between Murphy and political boss George Norcross, as well as Norcross's close ally, Senate President Steve Sweeney.

The report identifies several examples, including Jaguar Land Rover North America, which has offices in Mahwah, allegedly once telling New Jersey that it wanted to stay in the state. The state subsequently offered $26 million in tax credits, so Jaguar stayed, according to the report.

Five months later, FC USA, a travel company which has offices in Bergen County, also told New Jersey that it was looking to relocate to the very same office development in New York. In total, 12 companies threatened to leave New Jersey over five years and move to Blue Hill Plaza in Pearl River, N.Y. unless the state provided tens of millions of dollars in tax credits, according to The New York Times. None followed through.

In June, a Murphy administration task force said the economic incentive program didn't have proper vetting procedures since it was created under Gov. Chris Christie.

Indeed, during the summer, Murphy said the task force suggested that the program was "rigged" to possibly benefit businesses such as those connected to Norcross. Sweeney also has promoted and supported the program. Read more: Report Says Program Provided Big Benefits To NJ Political Boss

"This is a rigged system. This was designed by special interests to benefit special interests. It allowed hundreds of millions of dollars to flow to insiders based on misleading, false, ommited or fabricated information," Murphy said.

Sources have said that the dispute over the program has deepened the rift between Murphy and Sweeney and has prevented progress on legislation such as marijuana legalization.

The New York Times identified other companies that may have been involved in the scheme, such as Unique Designs and Creative Management Services, which were awarded a combined $10.3 million in tax credits to stay in New Jersey and have offices in Essex and Morris counties, respectively.