POLITICS & GOVERNMENT

Whistleblower testifies company lied to EDA in order to get tax breaks

BY Brenda Flanagan, Senior Correspondent |

In damning testimony before a special task force, a whistleblower Thursday said her former employer, identified as Jackson Hewitt, lied about plans to move out of New Jersey in order to qualify for a $2.7 million corporate tax break from the Economic Development Authority. Gulsen Kama, who worked as a financial officer for Jackson Hewitt from 2015 to 2016, claimed the company actually had no plans to move its headquarters to Florida and New York.

“This company lied in its application and supporting certification that jobs were at risk of leaving New Jersey because the company was not contemplating, was actually not contemplating leaving New Jersey?” asked Milton Williams, the task force counsel.

“Correct,” replied Kama.

EDA records from May 2015 confirm the application, and Kama testified Jackson Hewitt got its desired tax break based on a bogus cost benefit analysis she was ordered to prepare about the Florida move at the advice of a Princeton consulting firm.

“We were, at the time, advised by the consulting firm that we needed to have credible, out-of-state alternatives included in the application,” Kama said.

“Why?” Williams asked.

“Because that was one of the, well, actually the key requirement Grow NJ incentive,” Kama responded.

“The CEO certification stated that the company would move out of New Jersey unless it got the tax incentive award from the Grow NJ program?” Williams asked.

“Correct,” said Kama.

Kama, who was subpoenaed to testify Thursday, told the task force that Jackson Hewitt also did not comply with job requirements for another separate EDA tax break. She said the company fired her after she complained to bosses they were not in compliance in December 2015.

Jackson Hewitt said in a statement that it ” … believes it provided an accurate and comprehensive application to the EDA and is in compliance with all applicable provisions of the Grow NJ and Economic Redevelopment and Growth programs.”

The EDA said, “We take the allegations raised today seriously and we will work with the Task Force to address these matters swiftly. If a company did commit fraud and willfully provided inaccurate information to receive an approval, the EDA is committed to pursuing all legal options, and referring potential criminal action to the Office of the Attorney General.”

Gov. Phil Murphy appointed the task force by executive order to investigate New Jersey’s tax incentive programs as administered by the EDA. It’s granted $11 billion-worth of tax breaks to create jobs and keep them from leaving New Jersey.

A state comptroller sample audit ordered by Murphy showed the EDA failed to collect and monitor enough data, and estimated perhaps 3,000 jobs companies listed with the EDA might only exist on paper. The task force figured those jobs alone could be worth $11 million-worth of tax credits. But the comptroller said he had not recommended that the EDA take any corrective action to recoup possible losses for New Jersey taxpayers.

“Our recommendations are more forward-looking, you know, designed to correct, correct the problems we’ve identified going forward,” said State Comptroller Philip Degnan.

The Legislature must renew tax incentive programs, and Murphy wants them to be smaller, and capped and subject to stringent oversight. The task force is diving deeply into current records.

The task force has reached out to companies with EDA grants and offered them an opportunity to voluntarily recertify their information. It said one company has already admitted it’s not in compliance and has repaid the state $1.5 million.