WASHINGTON — The Port Authority of New York and New Jersey has publicly disclosed that it is under investigation by the Securities and Exchange Commission and other federal and state authorities for diverting $1.8 billion to pay for New Jersey road repair projects.
The authority disclosed the investigations in a preliminary official statement released Thursday for an upcoming $400 million bond offering. A spokesman for the authority confirmed the SEC and other probes but declined to comment further.
The SEC also declined to comment and other lawyers and legislators involved in the matter could not be reached for comment. The POS disclosure of the investigations was first reported by The Bergen Record.
The probes began after the George Washington Bridge lane closure scandal erupted earlier this year.
The authority said in its POS that the SEC has also launched a parallel investigation into "one of the matters under review" by the U.S. Attorney's Office in New Jersey and the Manhattan district attorney.
The Bergen Record, citing unnamed individuals familiar with the situation, reported that the SEC investigation centers around whether the authority was justified in spending money it raised for projects that were not within its jurisdiction. Gov. Chris Christie reportedly pressured the authority to find a way to spend money on New Jersey roads and other projects despite state laws against it. The money was allegedly raised in bond sales with offering documents that stated the funds would be used for authority facilities.
The authority's commissioners eventually approved the spending, claiming for example that the Pulaski Skyway bridge, on which it spent roughly $1 billion, provided access to the authority's Lincoln Tunnel, though the two do not connect.
State Sen. Ray Lesniak, a founding partner of the law firm Weiner Lesniak who chairs the New Jersey legislature's Economic Growth Committee and is vice chair of the Commerce Committee, reportedly sent a letter to the SEC and to the Internal Revenue Service in April requesting that they look into whether the authority's spending violated federal securities or tax laws.
The authority said in the POS that it has received and is responding to subpoenas from the New Jersey Legislative Select Committee on Investigation. The POS reveals that "port authority-related" individuals have received subpoenas for records or testimony by the various agencies involved.
Meanwhile, Fitch Ratings assigned the $400 million offering an AA- rating on Friday. The bonds are to be used to repay $50 million of commercial paper and for additional capital spending.
