Inquiry Focuses on Former Aide to Menendez

An investigation of Senator Robert Menendez was revealed last summer during during a heated election campaign.

By DAVID KOCIENIEWSKI
Published: August 28, 2007

A federal investigation of Senator Robert Menendez over potential conflicts of interests with recipients of government financing has shifted focus to the lobbying work of his former chief of staff and confidante, according to lawyers and others familiar with the case.

Kay LiCausi worked for Mr. Menendez from 1998 to 2002.

A grand jury in Newark has subpoenaed hundreds of pages of financial documents from Jersey City Medical Center, which received a variety of public financing when Kay LiCausi, who was an aide to Mr. Menendez while he was in the House of Representatives, lobbied for the hospital. Last week, the grand jury heard testimony from Jonathan Metsch, a former Menendez fund-raiser who was president and chief executive of the hospital when it hired Ms. LiCausi, The Star-Ledger of Newark reported on Sunday.

Neither Mr. Menendez nor Ms. LiCausi would comment on the matter. But Marc E. Elias, a lawyer who represents Mr. Menendez, said that he expected the United States attorney leading the investigation to find that Mr. Menendez had acted appropriately.

?We are completely confident, as we have been all along, that the U.S. attorney will come to the same conclusion that we have: that Senator Menendez has scrupulously abided by all laws and rules,? Mr. Elias said.

The investigation became public last summer, when The Star-Ledger reported that Mr. Menendez had collected hundreds of thousands of dollars in rent for a building he owned from the North Hudson Community Action Corporation, an antipoverty group. Mr. Menendez had helped the group, which was run by a political ally and campaign contributor, win millions of dollars in federal funding. When federal agents seized records from North Hudson last September, Mr. Menendez, a Democrat, was locked in a heated campaign against State Senator Thomas H. Kean Jr., a Republican.

Mr. Menendez and other Democrats accused the United States attorney, Christopher J. Christie, of improperly leaking information to help a fellow Republican. Mr. Christie has declined to speak about the case, but his aides have insisted that the office investigated Republicans and Democrats alike and merely followed the evidence.

Larry Lustberg, a lawyer for North Hudson, said investigators had not been in contact with anyone from the group in months. In recent weeks, investigators have been examining Ms. LiCausi?s work as a lobbyist, trying to determine whether her influence with Mr. Menendez might have improperly helped her win contracts or helped her clients win public funding.

Mr. Menendez?s relationship with Ms. LiCausi, who worked in his Congressional office from 1998 to 2002, has been the subject of sustained criticism. Neither has commented on reports that they were romantically involved.

Mr. Menendez has acknowledged, however, that he helped Ms. LiCausi build a substantial client base after she left his office in 2002 by steering hundreds of thousands of dollars in lobbying business to her from allies at the Democratic Congressional Campaign Committee and other businesses and organizations.

Among the clients Ms. LiCausi had by 2003 was Liberty Health Care System, which runs Jersey City Medical Center, and was then headed by Mr. Metsch, said Tom O?Neil, a spokesman for the hospital. Mr. Metsch did not return calls requesting comment, and his lawyer, Gerry Krovatin, declined to discuss the case.

But people familiar with the inquiry said that investigators were trying to determine whether Mr. Menendez had helped Ms. LiCausi win the contract to represent Liberty, and if her position was linked to the hospital?s successful efforts to win government-backed bonds.

Although Ms. LiCausi?s filings with the New Jersey Election Law Enforcement Commission do not list Liberty Health Care as a client until 2005, hospital representatives said she was paid $280,000 for work between January 2003 and February 2007.

Ms. LiCausi?s client list includes an array of other organizations that sought public financing or government permit approvals for major projects. She represents the Mills Corporation, which is developing the Xanadu shopping and entertainment complex in the Meadowlands.

In 2004, several months after she was hired by Royal Caribbean Cruise Lines, Mr. Menendez announced the first of two appropriations totaling $9.5 million to repair the shoreline and extend a berth for the company?s ships.

Michael Sheehan, a spokesman for Royal Caribbean, said yesterday that neither the company nor its officers had received any subpoenas from the United States attorney?s office.

When questioned last fall about his dealings with Ms. LiCausi and her clients, Mr. Menendez said that his relationship with her did not affect his actions, and that he did not consider it a conflict of interest to obtain tax dollars for companies who hired his fund-raisers as lobbyists.

In an interview shortly before the election, Mr. Menendez said that most of the businesses and constituents he has helped obtain public financing have never contributed to him or hired any of his supporters.

?If these people, these companies have success, that?s their own initiative,? he said.

http://www.nytimes.com/2007/08/28/washington/28menendez.html