Last spring, we reported that the New Jersey Attorney General charged seven executives and shareholders of Birdsall Services Group, an engineering firm, with participating in a massive pay-to-play scheme.  The scheme allegedly involved a multi-year attempt by company executives and major shareholders to evade state level pay-to-play restrictions by making and then reimbursing political contributions that fell under the state’s $300 reporting threshold.  At the time, we noted that the case was “one of the more serious pay-to-play cases to have come down the pike.”

True to that prediction, last Friday, a New Jersey state judge ordered Birdsall to pay $1 million in criminal penalties.  But that development is just one of many more recent developments in the Birdsall matter that highlight the potentially devastating consequences of significant pay-to-play violations:

  • Two former Birdsall marketing employees have pled guilty to charges arising out of the pay-to-play scheme but have not yet been sentenced.
  • Cases against individual Birdsall defendants continue with some facing as much as 20 years in prison and individual penalties of up to $1 million.
  • In addition to last week’s criminal penalties, Birdsall previously agreed to forfeit $2.6 million in civil fines and attorneys’ fees.

The end result of all this is that Birdsall—which in 2012 was ranked as one of the top 200 environmental firms in the country—was driven to file for bankruptcy.  Although the case is different from the ordinary pay-to-play case in that it pairs pay-to-play allegations with campaign finance reimbursement allegations, it nonetheless provides a vivid example of the importance of taking pay-to-play laws—including state and local laws—seriously.