Montgomery Cerf

All five Republican members of the Judiciary Committee have resubmitted a request to interview three members of the State Investment Council who have ties to Lehman Brothers and are up for reappointment.

The request, first made by state Sen. Gerald Cardinale (R-Demarest), was turned down earlier this month by the committee's chairman, state Sen. Paul Sarlo (D-Wood-Ridge).  In a letter, Sarlo told Cardinale that, due to an "overwhelming agenda," adding another nominee to be interviewed by the committee beyond the set number of 67 "would require extraordinary circumstances - circumstances that frankly are not present in this instance."

The state is currently suing Lehman over the loss of $118 million in public pension funds when the company imploded last year.  Three members of the investment council - W. Montgomery Cerf, Erika Irish Brown and Jose Claxton - have a history with the firm.

In declining Cardinale's request to interview the three, Sarlo said that Cardinale misunderstood the Investment Council's role in how the pension fund chose stocks.  The members themselves, who work pro-bono, decide policy, but do not pick individual stocks.

Citing a lack of time, Senate Judiciary Committee Chairman Paul Sarlo (D-Wood-Ridge) has told Senators that he will not call the "Lehman Three" to appear at their Senate confirmation hearings.  Sarlo wants to avoid Republican Senators questioning the three former Lehman Brothers executives.

The State Investment Council has lost nearly $25 billion in 2008, with the state pension fund dropping from $82 billion last July to $57.7 billion as of last month.  Alleging fraud and misrepresentation, the Corzine administration filed a lawsuit against nine top executives of the now-bankrupt Lehman firm last month. The State Investment Council bought $182 million in Lehman securities last April for the state pension fund - a move that has caused State Sen. Joseph Pennacchio (R-Montville) to demand an investigation.

But despite the losses, Corzine renominated Jose Claxton, Erika Irish-Brown and Montgomery Cerf to the NJSIC for new terms. All three were executives at Lehman, although they are not parties to the state lawsuit. The three are awaiting Senate confirmation, and the Judiciary Committee has not yet scheduled hearings on their nominations.

The renomination of the "Lehman Three" to the New Jersey State Investment Council (NJSIC) is moving slowly, since just one of the three former Lehman Brothers executives reappointed by Gov. Jon Corzine has cleared Senate signoff yet.  NJSIC has lost nearly $25 billion in 2008, with the state pension fund dropping from $82 billion last July to $57.7 billion as of last month.

Alleging fraud and misrepresentation, the Corzine administration filed a lawsuit against nine top executives of the now-bankrupt Lehman firm last month.  The State Investment Council bought $182 million in Lehman securities last April for the state pension fund - a move that has caused State Sen. Joseph Pennacchio (R-Montville) to demand an investigation.

But despite the losses, Corzine renominated Jose Claxton, Erika Irish-Brown and Montgomery Cerf to the NJSIC for new terms.  All three were executives at Lehman, although they are not parties to the state lawsuit.  The three are awaiting Senate confirmation, and the Judiciary Committee has not yet scheduled hearings on their nominations. The Judiciary Committee could hold vote on the Claxton nomination separately, but since the Lehman Three remain in holdover status, the Senate is likely to wait - they are in no rush - and consider all three as a package.

Senator Joseph Pennacchio, R-Passaic and Morris, is requesting that the members of the Senate Judiciary Committee agree to thoroughly question three members of the State Investment Council, which sets policy for state pension investments, before signing off on their reappointments by Governor Corzine..

Three weeks after Governor Jon Corzine renominated three former Lehman Brothers executives to the State Investment Council, the state has filed a lawsuit against top officials of the now-bankrupt Lehman Brothers Holdings Inc., alleging that "misrepresentations by the company led the Division of Investment in the Department of Treasury to purchase $182 million in Lehman securities in April and June 2008 that resulted in an estimated $118 million in losses."

On February 23, Corzine renominated Jose Claxton, Montgomery Cerf, and Erika Irish Brown - all former Lehman executives -- to the New Jersey State Investment Council, which has lost an estimated $25 billion of state pension funds since July.

"With this suit we intend to hold Lehman executives and directors accountable for the fraud and misrepresentation that caused more than $100 million in losses to New Jersey's pension funds," Corzine said today.

Republican gubernatorial candidate Christopher Christie said today that Gov. Jon Corzine's reappointment of three members of the State Investment Council, which has presided over a multi-billion loss in state pension funds, is "another example of a failure of accountability in this state government."

Corzine this week reappointed Jose Claxton, Montgomery Cerf and Erika Irish Brown to the council, which has taken heat from Republican legislators for overseeing the loss of about $25 billion, including a $178 million investment in the failed Lehman Brothers investment firm.  The three members who Corzine reappointed took extra heat from state Sen. Joseph Pennacchio (R-Montville) for that investment because of their past ties to the firm.

"For seven years as U.S. attorney my job was to make sure people were held accountable to the law.. You have to hold people accountable to the task they're given, and I'd ask whether or not the performance of those folks was laudable, and by reappointing them he's holding them accountable," said Christie in response to a question from PolitickerNJ.com.  "I would say no. and the fact of the matter is there are a lot of questions that should be asked before any of these people are reappointed, and I think they should be asked under oath."

Gov. Jon Corzine, above, has reappointed three members of the New Jersey State Investment Council.

Gov. Jon Corzine has again nominated Jeanne Fox as President of the New Jersey Board of Public Utilities.  Fox had been reappointed last year, but the nomination stalled after then-Senate Judiciary Chairman John Adler (D-Cherry Hill) declined to post it for a committee vote.  Sources say that the new Judiciary Chairman, Paul Sarlo (D-Wood-Ridge) will back Fox for another term at the BPU.

Jose Claxton, Montgomery Cerf, and Erika Irish Brown have been reappointed by Corzine to the New Jersey State Investment Council, which has lost an estimated $25 billion of state pension funds since July.

Corzine has also resubmitted the nomination of Bergen County Executive Dennis McNerney to the Local Unit Alignment, Reorganization and Consolidation Commission.  State Sen. Gerald Cardinale (R-Demarest) has been blocking McNerney's appointment.

Rob Tornoe's cartoon from PolitickerNJ.com's Hold Me Accountable Week in September 2007

Today, as Governor Jon Corzine addressed the New Jersey League of Municipalities convention in Atlantic City and proposed allowing local and county governments to defer 50% of next April's required pension payments, there was word from the New Jersey State Investment Council that the pension fund has lost $25 billion since July, including $9 billion in October.  When he gets back to Trenton, he'll have to decide whether to hold his close friend, Orin Kramer, accountable for the massive losses.  

Kramer, a 63-year-old hedge fund millionaire and according to U.S. News and World Report, the #3 bundler for Barack Obama's presidential campaign, originally came up with the idea of Corzine running for an open U.S. Senate seat in 1999.  It won't be easy for Corzine to fire him.  And while Kramer isn't the only financial whiz to mess up during difficult economic times, Corzine's biggest problem is how easy it will be for Republicans to come up with a 30-second TV ad holding the former Wall Streeter accountable for massive losses in a fund that provides benefits for more than 700,000 current and future retirees.