Acrisure, a multi-billion dollar national brokerage firm, may have secured government contracts worth millions of dollars by exploiting a loophole in New Jersey’s pay-to-play rules through the acquisition of branch offices once owned by well-connected political insiders that remain on the payroll. 

Those insiders, and its company employees, subsequently pumped more than $100,000 worth of campaign donations to lawmakers dating back to 2015 and sometimes days before those lawmakers voted on awarding lucrative contracts to Acrisure. 

Gothamist/WNYC found more than $3 million worth of Acrisure contracts with those county and municipal governments going back 2015, and that only includes about half of the contracts where their value has been publicly disclosed. 

New Jersey has one of the strongest pay-to-play laws in the country aimed at limiting campaign contributions by people who profit from government contracts. But the regulations vary from one municipal government to another in the state, and there are loopholes.

For instance, under the state’s pay-to-play laws employees in any company are permitted to make campaign contributions as long as they own less than 10% of their company. 

Listen to WNYC's Nancy Solomon break down the practice by political insiders here:

This practice occurred by at least two independent insurance firms owned by political donors  that were acquired by Acrisure. The owners  became salaried employees by Acrisure, and owned less than 10% of the firm, allowing them to make political contributions. Following their acquisition, many employees of those newly acquired companies—including those political insiders—made significant campaign contributions to elected officials who went on to approve Acrisure contracts. 

A source close to Acrisure told Gothamist/WNYC that the company’s New Jersey employees who made campaign contributions can do so under that below 10% exemption. This is the legal advice that Acrisure relied on, according to a person familiar with the company. 

Employee donations present a difficult piece of the puzzle of pay-to-play laws, but there are restrictions that include padding an employee's salary just so they can use the extra money to make campaign contributions. One of the political operatives who owned an Acrisure-acquired brokerage firm is Gary Taffet. A seasoned political operative, Taffet ran into legal troubles that included a billboard scandal that forced him to resign as chief of staff to New Jersey Governor Jim McGreevey in 2003. A year later, Taffet was accused of insider trading in a case that eventually led to a court settlement. 

Taffet broke into the insurance business in 2005 with help from Charles Kushner, the notorious political insider whose son Jared Kushner served as White House advisor to his father-in-law, former President Donald Trump, according to press reports.

Taffet sold his firm, Reliance Insurance Group, to Acrisure in 2013, according to records from the New Jersey Department of Treasury. Soon after the acquisition, Reliance and the other firms bought by Acrisure stopped filing disclosure forms about their government contracts, according to New Jersey’s Election Law Enforcement Commission records. Instead, Acrisure discloses its government contracts, while Taffet and other New Jersey employees working at several of Acrisure’s newly-purchased firms disclose their campaign donations to ELEC.  By separating the two sides of the equation, the company isn’t triggering pay-to-play restrictions. 

Since then, Taffet and his wife gave $36,750 to elected officials in Middlesex, Bergen, and Union counties, as well as lawmakers in Edison, Morris Township, Paramus, and Plainfield, according to state election filings. All of those municipalities subsequently approved contracts with Acrisure. Most of the donations were made in the year before the contract vote, sometimes just days before the vote.

It’s unclear whether Taffet and other employees of Acrisure benefit from making campaign donations. 

Middlesex County is where Taffet draws his political power. Its democratic committee is the same group McGreevey and Craig Coughlin, the Speaker of the Assembly and power broker, got their start in politics. It’s also where Acrisure scored a lucrative deal. 

On September 13th, 2016 Taffet made contributions to three Middlesex County commissioners: $800 to Charles Kenny; $1,600 to Kenneth Armwood; and $800 to Blanquita Valenti. He also contributed $800 to County Sheriff Mildred Scott. Two days later, the county commissioners voted to approve its health insurance provider, which ultimately resulted in a two-year contract for Acrisure worth $132,000, according to county documents. 

Taffet makes his donations transparent by giving directly to candidates and reporting those donations to ELEC, unlike some insurers with the largest share of government contracts that use political action committees to hide their donations. 

The state’s largest recipient of contributions tied to contractors is the General Majority PAC, which is connected to insurance executive and political powerbroker George Norcross. It received $234,800 in donations from New Jersey government contractors, far more than any other PAC or campaign, according to ELEC reports.

The news of Taffet’s involvement with Acrisure adds another chapter to some of his questionable dealings over the years and just a fraction of how he mixes politics and business. Yet, Taffet has been able to survive and still continues to wield power across political circles. He was recently appointed to New Jersey’s redistricting commission charged with moving voters in or out of the district, which can make or break a state legislator’s path to victory.

The appointment was defended by Governor Phil Murphy's chief of staff on Twitter:

Other campaign donors that sold their firms to Acrisure while remaining an employee include John McManus, who previously owned North American Insurance Management Co. before selling it to Acrisure. He and his wife have donated $59,800 to elected officials in those very same counties and towns, according to election filings.

Records show other employees of both Taffet’s and McManus’ companies also made significant contributions to those officials, as did employees at several other New Jersey brokerage firms owned by Acrisure. For instance, two employees of Taffet contributed $22,250 to candidates in those same towns. 

Taffet and McManus declined to comment for this story. 

“The pay-to-play law is not designed to allow major corporations to evade the law simply by setting up false faces for their company,” said Craig Holman, a lobbyist for Public Citizen, a non-profit that tracks corporate influence in politics. Holman was hired as a consultant to write New Jersey’s pay-to-play laws in 2004, which were signed by McGreevey. 

“The law that I had written would definitely capture these subsidiaries, as well as the parent company, all as being one company, and subject to the same pay-to-play restrictions,” Holman, referring “subsidiaries” to the acquired Acrisure firms, said.

Courts have ruled that employees have a right to make any political donation they choose, leaving the donations by Acrisure employees at the nexus of First Amendment rights and the efforts by good government groups to put the brakes on corporate influence in politics.

“It could be a clever loophole,” said Holman of Public Citizen of Acrisure’s alleged violation. “We knew there would be efforts by especially major corporations to try coming up with creative ways of sidestepping the pay-to-play law.”

That’s why Holman also added the sweeping anti-circumvention provision that prohibits any workaround to the spirit of the pay-to-play law. 

“And it's up to ELEC to make sure that government contractors are not just allowed to try coming up with clever ways to circumvent the law,” Holman said. 

Some of those work-arounds can be inflating an employee’s salary. 

“They can't say, ‘I'm going to raise your pay by X dollars so that you can then make all these contributions to all these places.’ That would be a violation,” said Stuart Lederman, an attorney with Riker Danzig who  specializes in government and campaign finance law. 

Even though it would be difficult for a law enforcement agency to prove that a salary was raised to cover the campaign donations, Lederman said he routinely checks the ELEC files to determine how many employees of a company have made a campaign contribution when advising a company about government contracting. That helps avoid even an appearance of a pay-to-play violation. 

Despite laws in the books, ELEC has rarely prosecuted a company using the state’s anti-circumvention provision. 

”It is a complicated, convoluted law, which makes it difficult to understand and enforce,” Jeff Brindle, director of ELEC, said. “The thicket of laws and executive orders related to pay-to-play by public contractors was intended to discourage corruption. Instead, it allows contractors to circumvent the law, thereby making it harder to deter official corruption.”

The largest prosecution of a pay-to-play case in New Jersey bankrupted the engineering firm, Birdsall Services Group, and sent its owner to prison. Employees of the company had donated to political campaigns and were then reimbursed by the company. An analysis from the Star-Ledger found that the employees were behind about 1,000 secret donations worth over $1 million between 2008 and 2012—and during the same period, Birdsall won $84 million in public contracts.

The Record reported last fall that state Attorney General Gurbir Grewal had served subpoenas to Bergen County and the city of Plainfield seeking information about their insurance contracts with Acrisure.

A spokesperson for Grewal said he cannot confirm nor deny the investigation and declined to speak generally about enforcement of the pay-to-play law. 

In a statement, Acrisure said the company has done nothing wrong. 

“Acrisure takes compliance obligations seriously in all jurisdictions in which we operate,” said Elliott Bundy, a spokesperson for Acrisure at its flagship Michigan headquarters. “In New Jersey, we follow all requirements as written and applied.”

The article has been updated to reflect Acrisure is a brokerage firm not an insurance firm. Since Taffet faced civil charges he faced no possibility of jail time.