Montclair ends relationship with financial analyst who was sanctioned by SEC in June

Soon after the release of a long-awaited financial analysis of Montclair's Lackawanna Plaza Redevelopment Plan, word spread that the study's author had been charged by the Securities and Exchange Commission earlier this year and remains barred from serving as a "municipal adviser," according to the commission's cease and desist order against the consultant.

For months, residents jeered local officials for not yet revealing the study, penned by Bob Benecke, who was retained by Montclair in March to serve as financial consultant on all budgetary matters, says a copy of the agreement.

But the morning after interim Township Manager Michael LaPolla first circulated Benecke's study, concerned residents and at least one council member discovered the federal sanctions against the consultant and questioned why he was still under contract.

"Once again, bad communication is at the root of most of our problems in this government," said Councilor at-Large Robert Russo, who asked why no one from the township had alerted him and others on the council sooner.

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Furthermore, the agreement with Benecke was not the first time Montclair procured his services. In fact, work Benecke did for the township between 2019 and 2021 was, in part, the focus of the SEC's charges, LaPolla said. The commission's probe involved two other towns not named in its order against the consultant.

Reached by phone on Thursday, Benecke declined to comment.

SEC charges

The order, filed against Benecke and his firm, Benecke Economics, of which he is the sole proprietor, alleges he violated multiple federal laws by operating as a municipal adviser despite knowing he was no longer registered with the commission or the Municipal Securities Rulemaking Board under that role.

After the SEC canceled his registration in April 2019 due to the understanding he was no longer providing those services, Benecke continued to aid three municipalities in New Jersey on timing, structure, credit rating and debt service related to nearly $18 million worth of municipal bond offerings between May 2019 and May 2022, the order states.

As a result of the charges, Benecke settled with the SEC in June "without admitting or denying" the probe's findings, resulting in the order, in which he received a $60,000 fine and terms barring him from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or nationally recognized statistical rating organization, or acting in a litany of roles related to investment organizations or their principals or advisory boards.

"The town hired him as a financial consultant to deal with all budgetary matters, which involves finance, but did not hire him specifically as a registered" municipal adviser, LaPolla said during an interview Thursday, referring to the nature of the March 2023 agreement with Benecke, which was signed by then-acting Manager Brian Scantlebury.

The township was not a subject of the investigation into Benecke's alleged violations, but it was subpoenaed as part of the probe last year, LaPolla said, adding that the SEC never contacted the township about its findings.

Although he did not specify why he was moved to look into Benecke's past, a statement from LaPolla says the sanctions came to his attention "several weeks ago" when he Googled the consultant's firm.

After LaPolla confirmed that the township's chief financial officer had been aware of the federal probe, he contacted the SEC on Friday, and the commission verified that Montclair was among the three unnamed towns Benecke had knowingly advised on bond offerings without proper registration.

"It was mutually decided that the relationship should end," LaPolla said, and the township's agreement with Benecke was immediately terminated as of Thursday.

A copy of the hiring document inked in March shows that Benecke was retained for "financial/redevelopment" services until the end of the year and lists his credentials as a licensed certified municipal financial officer, as does a "request for qualifications" he submitted to Montclair in November 2021.

Under federal law, a municipal adviser ― the role Benecke is barred from undertaking ― is defined as a person not employed by a municipality who "provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities," such as "municipal derivatives, guaranteed investment contracts, and investment strategies."

The SEC declined to comment on the matter when reached Thursday.

Long history in NJ

Over the past 40 years, Benecke has made a name for himself in New Jersey, building a resume that reads like a list of turnpike exits. Decades ago, he served as Englewood's chief financial officer and later its city manager. Since founding Benecke Economics in 2004, he has been a consultant to governing bodies and developers in Rutherford, Bogota, Jersey City and Pompton Lakes and worked on plans to redevelop the former Roche Pharmaceutical site, in Nutley and Clifton, to name only a few.

The bonds at the heart of the SEC's investigation were also not the first time Montclair retained Benecke's services, having sought his consultation on the township's budget in 2016.

The March agreement said the township would pay Benecke a fixed rate of $3,200 per month, or $130 per hour, with the total not to exceed $49,000. As of Thursday, when the contract was nixed, Benecke had received about $28,800, LaPolla said, as the agreement was effective beginning Jan. 1, though it was signed three months later.

When interviewed, LaPolla said he had not not yet consulted with the mayor and members of the Township Council as to the future of Benecke's work on the Lackawanna Redevelopment Plan, but said he would recommend hiring another agency to undertake a new financial study of the project.

However, he was clear that Benecke's analysis could not be officially scrapped, as it's already a matter of public record and not subject to SEC regulation.

"If people want to look at it and use it in their arguments [for or against the project], I can't stop them," LaPolla said.

This article originally appeared on NorthJersey.com: Montclair financial analyst was sanctioned by SEC in June