Feds, NYC-area Port Authority talking potential resolution

AP News
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Posted: Apr 28, 2016 5:28 PM
Feds, NYC-area Port Authority talking potential resolution

NEW YORK (AP) — The U.S. Securities and Exchange Commission and the Port Authority of New York and New Jersey are discussing a "potential resolution" of the regulator's investigation into the agency, bond documents published Thursday show.

The disclosure did not elaborate on the how the probe might possibly be resolved and spokesmen for both sides declined to comment further on the talks. SEC investigations can result in a range of outcomes, including the payment of fines or the issuing of statements about past or future actions.

Central to the probe into the Port Authority — which controls the New York City area's airports, seaports and bridge and tunnel crossings — is a 2011 expenditure of $1.8 billion in agency funds to repair New Jersey state roads such as the Pulaski Skyway, an elevated road that connects Newark and Jersey City.

That was an issue because by law the Port Authority is supposed to spend its funds on projects it controls. To justify spending its money to repair the Skyway, port attorneys dubbed it an access road to the authority-owned Lincoln Tunnel, some eight miles away.

That decision was outlined by an authority lawyer in a 2011 memo, after Republican Gov. Chris Christie's appointees at the Port Authority pushed for repairing the Skyway and other state-owned roads.

Since then, the expenditure has been challenged by United Airlines and the motorist group AAA and has resulted in probes by the Federal Aviation Administration, the Manhattan district attorney and the SEC, which wants to know whether bondholders were deceived when the funds went to state-owned repairs.

At a January court hearing over AAA's challenge to the Skyway funding, a Port Authority lawyer argued the authority has broad discretion on how it spends money on various projects and that the Skyway had a "functional relationship" to the Lincoln Tunnel.

The Port Authority faces other investigations, the bond filing shows.

Among them is an ongoing inquiry by the U.S. Attorney in New Jersey, who has charged Christie's former deputy chief of staff, Bridget Kelly, and a former Port Authority executive, Bill Baroni, with creating traffic jams for political retribution near the George Washington Bridge in 2013.

They've both pleaded not guilty and their attorneys were in federal court in Newark Thursday arguing to have the charges thrown out. Baroni's attorney, Michael Baldassare, said new evidence he has received and additional evidence he is seeking will show that the pair shouldn't have been charged in the case. He told reporters that he will pursue emails, documents and even Christie's cellphone.

Christie said Thursday that he has fully cooperated with the government and the judge will resolve it "as she sees fit."

U.S. District Judge Susan Wigenton gave attorneys time to submit additional filings before deciding whether to let the trial scheduled to begin in September proceed.

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Associated Press writer Michael Catalini, in Lawrenceville, New Jersey, contributed to this story.