The Philadelphia Inquirer

December 21, 2005

By Jeffrey Gold - Associated Press

TRENTON

A company hired by the state to collect back taxes padded its bills by more than $1 million between 2000 and 2004 but was not punished by the Treasury Department, where about 20 officials improperly accepted thousands of dollars of gifts from the firm, a watchdog agency said in a report released yesterday.

The independent State Commission of Investigation has referred the findings of its yea-long probe to the state Attorney General's Office and the U.S. Attorney's Office, which are investigating, said Lee Seglem, the commission's assistant director.

Senior and midlevel managers in the Treasury Department's Taxation and Revenue Divisions took more than $65,000 in gifts, meals, alcohol and entertainment from OSI Collection Services Inc. from February 1999 to March 2005, the commission said.

"The gifting and entertaining were not isolated events aimed at a few individuals but spawned a culture that swept through two major divisions," the report said. "Treasury Officials violated the public trust, flouted Treasury's Code of Ethics, and ignored their responsibilities to ensure the accuracy of the billings."

The commission said OSI, based in Chesterfield, Mo., had overbilled New Jersey by charging for employees whose work should have been considered administrative overhead.

Messages left for OSI's chief executive and spokeswoman were not immediately returned yesterday. The company is the main out- sourcing vendor for the Taxation Division, the State Commission of Investigation said.

The report does not identify any of the Treasury officials because the probe triggered a criminal investigation, Segiem said.
Spokesman Tom Vincz said the Treasury Department would seek to identify the officials, "review the circumstances, and take appropriate action."

OSI's billing and contract compliance will be audited, he said. "Treasury is troubled by the findings in this report," Vincz said.

Asked about the report, acting Gov. Richard J. Codey said, "If, in fact, that's true, I want to know who they are, and I'd like to suspend them immediately and take action against the company that gave them gifts."

A company that OSI later bought won the first collection contract' in 1993 as the state began privatizing some government functions. OSI now has four contracts it won through bidding and several other agreements awarded by the Treasury Department, the report said.

The State Commission of Investigation recommended that the state temporarily bar OSI from performing work for it and try to recover money.

The commission also urged that the state begin using an in. dependent fiscal overseer. Gov.-elect Jon S. Corzine renewed his call yesterday for an elected state comptroller.