Funny business:
contracts under Murphy

too strange to ignore

By Byron Marshall
First Posted on August 1, 2016

UPDATED: More-recent Inspection of Public Records Act (IPRA) requests resulted in new documents that deserve an update. I have updated this column based on the following developments:

  • Within 48 hours of the delivery of an Aug. 24, 2016, IPRA request to the City of Hobbs, Pennsylvania attorney and City of Hobbs contractor Alan Wohlstetter provided emails between him and Hobbs City Manager J.J. Murphy. 
  • The Hobbs City Commission posted notice that it would meet in executive session on Monday, Aug. 29, 2016, to discuss “limited personnel matters, specifically the City Manager’s Employment Contract.” The commission also met on Aug. 1 in executive session for the same reason.
  • Rumors are swirling around town that the Hobbs City Commission is discussing a separation with Murphy. Although Murphy already has a lavish severance package written into his contract, the worst of the rumors is that he is trying to get the City of Hobbs to agree to provide lifetime health insurance to him and his family, something I would never imagine as the reward for four years of bad behavior. Doling out anything above the severance benefits already in the contract is outright absurd!

Hobbs, N.M. -- It’s the summer of 2016 and a lot of things have changed in Hobbs over the past year! The economy has taken a nosedive, the weather is as hot as ever, and the Hobbs City Commission is FINALLY live-streaming video of its meetings for the public. However, it seems that for every positive step made by Hobbs residents, we get a two-step setback by those in city government who have no understanding of the role of "public service." They seem to confuse public service with personal gains, and this, my friends, must stop!

One year ago, Hobbs resident Jeanie Coates revealed the exorbitant salary and benefits of Hobbs City Manager John J. (J.J.) Murphy, particularly how their evolution within his first three years of a five-year contract are indicative of his sense of entitlement. She has since called for terminating his contract, which was updated to protect his severance in all cases save for a felony conviction - even if his contract isn't renewed!

At the end of 2015, I related my findings of an investigation into the Murphy-proposed policy of cashing out excess accumulated paid time off each January. The policy, passed and enacted in January 2013, has netted payments to Murphy of not less than $11,000 each of the last two years.

After Murphy's four years, it's no longer just Hobbs residents who feel compelled to question his management. Thanks to tips from city insiders, I'm able to present in this column examples of contracts during Murphy's tenure that appear to be less-than-arms-length dealings - "where the individual influencing the contract award or administratring the contract is either related to or has such a close association with one or more of the company's principals as to create reasonable doubt as to his/her ability to place fiduciary duty above personal bias," according to the state auditor's website.

Procurement 101

State agencies and many local governments are bound to the Procurement Code for their processes of entering into and administering contracts for services. The expressed objective of the state Procurement Code is “to provide for the fair and equal treatment of all persons involved in public procurement, to maximize the purchasing value of public funds and to provide safeguards for maintaining a procurement system of quality and integrity.”

Being a home-rule city, however, the City of Hobbs has in its municipal code its own procurement policy by ordinance, the objective of which “is to guide City of Hobbs employees in the legal steps required to purchase quality materials and services needed at competitive prices in accordance with regulations set forth by the Hobbs City Commission.”

Does anyone else see the difference between the state’s Procurement Code and Hobbs’ procurement policy? The state’s objective invokes “fair and equal treatment” and promotes a “system of quality and integrity,” while Hobbs’ is simply to provide “the legal steps required.” The difference begs the classic question, “It may be legal, but is it also ethical?”

Quite possibly creating a “fox guarding the henhouse” situation, as you’ll soon see, the Hobbs procurement policy states, “The City Manager and CPO (Central Purchasing Office) shall have the responsibility and authority to insure [sic] that all provisions of the law and this policy are followed and shall be authorized to issue any supplement consistent with this policy deemed necessary to administer, manage or clarify this policy.”

A closer look at just a few of Murphy's dealings in Hobbs and elsewhere is enough to raise eyebrows about whether he knowingly and intentionally skirts the spirit of ethically placing the public’s interest before his own. Judge for yourself.

The Medico Consulting Group:
Providing Garbage Consulting Services

At its June 2, 2014, regular meeting, the Hobbs City Commission approved a contract with The Medico Consulting Group, of Forty Fort, Pa., for “Waste and Recycling Consulting Services,” according to the meeting agenda packet. Included in the packet was a request for proposals (RFP) from “qualified consultants interested in furnishing” what would be defined as “mak[ing] recommendations to the City for improvements, cost savings, and implementation of an enhanced waste and recycling program,” including “recommendations on design, operation, and management of these programs and systems in an optimal and cost effective manner.”

The RFP, published on March 19, 2014, specified a deadline of April 1, meaning interested qualified consultants had fewer than 10 business days to submit proposals. City commissioners approved awarding the contract to The Medico Consulting Group at the June 2 meeting.

The problem? The Medico Consulting Group wasn’t even a registered business in the state of Pennsylvania until May 20, 2014, just 13 days before commissioners unanimously approved the contract and a month and a half after the proposal deadline. And the registered address of The Medico Consulting Group, apparently the home of Angelo Medico, is just a 10-minute drive from Wilkes-Barre City Hall, where Murphy previously worked as the city administrator from 2004 to 2010.

According to the contract included in the agenda packet, satisfying Phase 1 of the scope of work would require the consultant to “produce a waste and recycling program for the City and present such recommendations to the City,” following a “comprehensive assessment of the assets available to the City’s waste and recycling program” and interviews with “key personnel as required … at all levels, including recycling center personnel and City administrative personnel.”

Entered into June 2, the contract states The Medico Consulting Group had 60 days to complete Phase 1. For completing Phase 1, the consultant’s compensation was not to exceed $28,500, and the City of Hobbs held the prerogative to reduce compensation “based on a valuation of the uncompleted work outstanding at the date of termination.” Among documents obtained through multiple Inspection of Public Records Act (IPRA) requests was an invoice from The Medico Consulting Group, dated July 16, 2014, for the full $28,500. What was not included with the July 16 invoice were Phase 1 deliverables. Almost a month later, on Aug. 14, Medico sent an email to Murphy with his “final draft report,” a four-page document in which Medico concludes that the City of Hobbs should stick with its current and longtime waste-handling vendor, Waste Management, but “request a new and updated proposal to extend its services.”

Curiously, as seen on the invoice, payment was not given an “OK” by the responsible department head until months later, on Nov. 17. The resulting check request from the department, dated Nov. 18, says only “Recycling consultant per J.J.”

Angelo Medico did present information in person during a Jan. 20, 2015, work session of the Hobbs City Commission. According to meeting minutes, “Medico stated Waste Management already has unique recycling programs that would be beneficial to Hobbs.” Wait. Hobbs taxpayers funded a $28,500 consultant to say something that could have come from a phone call between the city manager and Waste Management?

It has been reported by and the Hobbs News-Sun that Murphy’s method of fact-finding during our campaign to get public meetings webcast by the City of Hobbs was to simply call his city-government peers in other communities to find out what they had in place and through what vendors. Why wouldn’t that have been his same method to gather information about recycling?

What were the cost-saving measures Medico recommended at the Jan. 20, 2015, work session? According to the minutes, the city would save money if “a 64-gallon sized bin is used, after recycling, opposed to the 96-gallon bin which is currently being used.” Medico also stated that savings would be seen by reducing trash pick-up from twice per week to once per week. No kiddin’?

A representative from Waste Management also attended the meeting and told commissioners that at that time Rio Rancho was participating in a recycling program provided by Waste Management, and 85 percent of the residents were participating. Great information, but all it took to get that information was calling Waste Management, the current vendor, to invite a representative to address the commission at a work session or regular meeting about its menu of recycling programs. NO CONSULTANT WAS NEEDED.

Listen to the January 20, 2015, recycling work session of the Hobbs City Commission.

The kicker is Phase 2 of the contract with The Medico Consulting Group. To date, it does not appear the city accepted the consultant’s proposed waste and recycling program for Phase 1, but if and when it does, Phase 2 commences. In Phase 2, the consultant “will personally negotiate relevant waste and recycling rates with qualified disposal site and recycling brokers … and be in force for (24) months from the conclusion of any necessary negotiations relevant to implementing the waste and recycling program.”

The phrase “be in force” applies only to the compensation of the consultant. For two years, after the start of Phase 2, “Compensation to be paid to the Consultant shall be based upon cost savings to City…Consultant shall be entitled to the net result of fifty percent (50%) of the waste disposal cost savings and fifty percent (50%) of the recycling revenue increases realized by the City.”

It should go without saying, but it would be a shame if The Medico Consulting Group were to receive residual payments for two years as a result of the City of Hobbs renewing its contract with Waste Management for more competitive, more modern and more efficient services. It would be an even bigger shame if it came from unimaginative means like smaller bins and less-frequent pick-ups.

Alan Wohlstetter:
Three Firms, Two Cities, One City Manager

According to his resume, as the city administrator of the City of Wilkes-Barre, Pa., J.J. Murphy “[i]nitiated, managed, and secured grant funding for a citywide camera initiative.” While this would seem to be a worthwhile endeavor as part of the job description as city administrator, Murphy was pocketing a stipend as a consultant “for performing duties for Hawkeye Security Solutions, the non-profit organization he helped create to operate the surveillance system,” according to the Wilkes-Barre mayor in a Feb. 28, 2009, Times Leader story.

The consulting stipend didn’t pass the sniff test with residents, so by an April 8, 2009, Times Leader story, Murphy had “informed council … that he and the other two city employees were now ‘volunteers.’”

The nonprofit Hawkeye Security Solutions was set up over liability concerns, the Wilkes-Barre mayor said at the time. Murphy later wrote in a presentation slide that creating a “contracting entity distinct from the municipality,” such as Hawkeye Security Solutions, may “avoid the need to follow traditional procurement procedures.” Those darn procurement policies and codes! Wilkes-Barre’s nonprofit surveillance model would prove too difficult to sustain, however. By 2013, “[a]fter depleting nearly $5 million in federal and state grants” since 2008, according to an in-depth story by the Wilkes-Barre Scranton Independent Gazette, the Hawkeye board was “strapped for cash and barely able to meet the payroll of its camera monitoring staff.”

In December 2015, the Hawkeye board of directors elected to dissolve the organization and pass surveillance operations and assets to the City of Wilkes-Barre.

An Oct. 15, 2009, Times Leader article reported a Nov. 1 launch of 35 cameras, and Murphy was quoted as saying that the surveillance system, when fully operational, would have 150 cameras in operation, although his resume takes credit for 250 cameras. And just days later, Murphy announced he would be leaving the City of Wilkes-Barre in January 2010.

He went on to start his own consulting firm, Goals Consulting LLC, which would “assist other cities with securing grant funds for similar projects,” an October 2010 industry article stated. His consulting work would be frequently in collaboration with Alan Wohlstetter, Hawkeye’s contract attorney noted in the Oct. 15 Times Leader story.

In an article entitled “The Magic of P3s,” both Wohlstetter and Murphy were interviewed about public-private partnerships. In additon to Wohlstetter echoing the familiar notion that a “non-profit corporation can contract with integrators, monitors and other private sector vendors clear of the maze of a city procurement process,” Murphy was quoted as saying, “If you can turn a $500,000 project into a $1.2 million project, then everyone walks away happier.” Everyone? I don’t think that includes taxpayers.

Wohlstetter would be an enduring and controversial figure in Wilkes-Barre’s municipal dealings. As early as 2005, while he was an attorney at the Philadelphia law firm Cozen O’Conner, Wohlstetter worked with the City of Wilkes-Barre and Murphy on a citywide wi-fi project. Murphy’s brother, Patrick Murphy, who would later become a two-term U.S. congressman and now undersecretary of the Army, was also an attorney at Cozen O’Conner at the time.

When Wohlstetter got the Hawkeye contract, he was with the Philadelphia law firm Fox Rothschild LLP, where Murphy’s brother Patrick was then a partner after his failed run for a third term in Congress. In its reporting of Hawkeye’s 2013 money woes, the Citizens Voice wrote that Wohlstetter’s legal fees were among the financial drains, billing $5,494 over a three-month period at a rate of $510 an hour.

In January 2012, Wohlstetter secured another Wilkes-Barre contract for Fox Rothschild, this time with the city’s parking authority. According to an April 13, 2012, Citizens Voice article, Wilkes-Barre’s mayor said he and his former city administrator, Murphy, who was also a close friend, talked about leasing the city's parking assets, including multi-story parking and parking meters, to a private operator in order to generate revenue.

The mayor said Murphy recommended Fox Rothschild to do the consulting work. Not long after, in January 2012, the parking authority was entering into a contract with Fox Rothschild. While the mayor said the parking authority ultimately approved hiring Wohlstetter’s law firm, one parking authority board member accused the mayor of pressuring the board to contract with Fox Rothschild. Appearances were not helped by the fact that both Wohlstetter and his law firm had donated more than $6,000 to the mayor’s campaign fund since 2010.

Fox Rothschild then hired Murphy through his Goals Consulting to work on the parking authority project. Many news outlets reported that during the four months that Murphy worked on the parking authority project, he billed Fox Rothschild – and thus the parking authority – a total of more than $34,000. Murphy charged an hourly rate of $300 for his services, and that was after a 25 percent discount from a usual $400 rate, according to the Citizens Voice. See a time sheet. Wohlstetter made $535 per hour.

In an April 27, 2012, article, the Citizens Voice reported that, when asked for justification of his invoices, Murphy emailed, "My fee is based on my contribution to the value the city and the Parking Authority derive from this project. At the end of the day I hope to provide a dramatic return on investment for them and an equitable compensation for me."

By June 2012, however, the parking authority scrapped the idea to lease its parking assets to a private operator, after spending around $83,000 in consulting fees between Wohlstetter and Murphy.

For all the outcry and criticism his parking-authority consulting stint evoked, one would think that Murphy was ready to flee to greener pastures. Where did he find more green? Shortly after the parking-authority debacle, the City of Hobbs named him its city manager in August 2012 and extended to him a five-year contract, the evolution of which has been outlined here. Not far behind, though, was his longtime associate, Alan Wohlstetter.

According to the City of Hobbs procurement policy, “Professional services are procured at the direction of the City Manager for contracts under sixty thousand dollars ($60,000.00),” and the city’s definition of “professional services” comes straight out of state statute, which includes those of lawyers.

By the end of Wohlstetter’s second week at a new law firm, Zarwin Baum DeVito Kaplan Schaer Toddy P.C., on Oct. 24, 2014, Wohlstetter emailed Murphy “to see if we could catch up … on assisting with the policies and protocols for your video surveillance network.” The Hobbs Police Department’s citywide surveillance system, known as the Emergency, Action and General Law Enforcement Intelligence Center (EAGLE IC), officially went live on Sept. 23, 2014, but apparently still needed policies and protocols. Wohlstetter indicates in the email that Hobbs Chief of Police Chris McCall reached out to him earlier that month and asked for a proposal.

Within weeks, and apparently without any further email communication between Murphy and Wohlstetter needed (Wohlstetter provided no other 2014 emails), a contract was a done deal. In a letter dated Nov. 19, 2014, Wohlstetter provided confirmation to McCall that his firm, of which he is a shareholder, would provide “Representation of City of Hobbs New Mexico Police Department with Respect to Its Video Surveillance Network,” a $2 million project initiated by Murphy just months after arriving in Hobbs. If anyone ever wondered if Hobbs had been right-sized with its surveillance system, Wohlstetter notes in his Oct. 24 email that Hobbs’ “network makes Wilkes-Barre’s (and Philadelphia’s) look small!”

Although Wohstetter’s profile on the firm’s website says that he is admitted to only the New York and Pennsylvania bars, Wohlstetter practiced law for the City of Hobbs at a cost of $475 per hour, with services capped at $50,000. According to the letter, Wohlstetter’s services were to:

  • “draft a Video Sharing Agreement with the School District and other governmental entities as well as private businesses with respect to use of their video surveillance footage;
  • prepare a Memorandum of Understanding with respect to use of Police Department video surveillance footage by other City departments and agencies;
  • at the direction of the City Manager and Chief McCall, participate in meetings and conference calls to determine best ways to expand and fund the video surveillance network; and
  • such other matters as you reasonably [sic].”

Even though New Mexico has law-license reciprocity with Pennsylvania, an out-of-state, Pennsylvania-licensed attorney must still meet prescribed requirements to practice law in New Mexico. In the state's "Rules Governing Admission to the Bar," applicants from reciprocal states must submit $1,000 in fees, clear a background investigation to determine character and fitness, pass an ethics exam, and complete a state Supreme Court-approved course on New Mexico law, which includes Indian law, New Mexico community property law and professionalism. Wohlstetter is not found in the online directory of the New Mexico Bar Association’s website, which suggests Wohlstetter was never admitted to the bar to lawfully practice in New Mexico. Inquiries to both the New Mexico Bar Association and the New Mexico Supreme Court Clerk’s Office confirmed that neither possesses any record of Wohlstetter, which would suggest that Wohlstetter was not authorized to practice law in New Mexico. I’ll leave it to the Disciplinary Board of the New Mexico Supreme Court to make a determination.

Other City of Hobbs contracts obtained through IPRA requests consistently contain signatures from city staff attorneys to attest that executed contracts were “approved as to form.” From a $40-an-hour consulting contract, to a $100-an-hour legal-services contract with a Hobbs attorney (far less than what the city paid Wohlstetter), the city’s staff attorneys signed the contracts. No “as to form” signature by a City of Hobbs staff attorney appears on the contract with Wohlstetter, however. Aside from Wohlstetter’s, the only other signature is Chief McCall’s over the signature line printed for Murphy. McCall includes the initials “ACM” (acting city manager, in Murphy’s absense), which would suggest that executing the contract was so urgent that it couldn’t wait for Murphy to sign it himself upon his return.

Before McCall even signed the contract, Wohlstetter was already recording billable hours to the City of Hobbs, according to his first invoice for $10,497.50, dated Nov. 26. Claiming attorney-client privilege, the City of Hobbs redacted the billable activities on invoices obtained through an IPRA request. Wohlstetter’s firm invoiced the City of Hobbs a total of $24,085.23 between November 2014 and February 2015. A June 17, 2015, “Attorney Spotlight” on his firm’s website reads, “In the area of public-private partnerships, Alan serves as counsel” to a New Mexico city “on its public-private partnership with over 160 video surveillance cameras, having performed the same function for the City of Wilkes-Barre’s 250-camera network.” His LinkedIn profile confirms that “[h]e has represented the City Manager and Police Department of Hobbs, New Mexico.” See a screenshot.

Even a year after Wohlstetter’s City of Hobbs engagement ended, Wohlstetter expressed his gratitude to Murphy for helping him secure business within the first few weeks of starting his new job. In a March 17, 2016, email to Murphy, Wohlstetter wrote, “Thank you so much for starting me off here with the opportunity to work together. It meant a tremendous amount to me, JJ.”

Thick as thieves, these two. In fact, months before Wohlstetter began his legal work for the City of Hobbs, Wohlstetter and Murphy were named in a federal grand jury subpoena delivered April 15, 2014, to the Wilkes-Barre parking authority. Delivered by the FBI, the subpoena called for “meeting agendas, meeting minutes, correspondence, invoices, email correspondence, receipts, electronic fund transfers, agreements where those consultants (Murphy and Wohlstetter) were referenced” from “2009 to the present.”

All the “Fun” I Can Stand

Murphy, “The City Manager Every City Deserves,” recently applied for the city manager job in Dunedin, Fla. (pronounced DUN-EE-DIN). Murphy was among 87 applicants, but the Tampa Bay Times reported “commissioners were less than impressed with the results” of the city’s executive search. Dunedin Mayor Julie Ward Bujalski is quoted as saying, "The caliber of the applicant pool just didn't fit for Dunedin." Some, she said, even had background issues. One can’t help but wonder (hope?) whether she was referring to Murphy. Based on the results of their initial search, Bujalski said the city would scrap its city manager search until the spring of 2017.

In his cover letter for the Dunedin position, Murphy called himself a finalist for the city manager position in Las Cruces. Although Murphy did apply to be the replacement of outgoing manager Robert Garza, Murphy was not among the three candidates interviewed for the job. And Mayor Ken Miyagishima told the Las Cruces Sun-News that the three interviews didn’t result in any finalists. "We knew we weren't going to find someone of Robert's caliber right off the bat," Miyagishima was quoted as saying.

Amid familiar outcry and criticism, Murphy is trying to flee Hobbs to another city manager post, while trying to leverage, according to his resume, the “$178K PLUS $50K BONUS” the Hobbs City Commission bafflingly agreed to in the latest version of his five-year contract. His salary when he left Wilkes-Barre in 2010 was $81,120, by the way. It’s a nice thought that the elected officials in Dunedin and Las Cruces, who would potentially become his bosses, did some level of independent due diligence, maybe did some Google searches about Murphy. Too bad Hobbs was not so fortunate in 2012. There’s always next time, Hobbs, unless our city commissioners decide to give Murphy a new contract, which they discussed at his most recent performance evaluation.

Murphy calls himself a “Service-Minded City Manager,” but it is “crucial that all state and local government officers and employees in New Mexico understand their ethical responsibilities under the GCA (Governmental Conduct Act), as well as the specific prohibitions and limitations that ensure that public officers and employees conduct themselves solely in the interest of the public,” the introduction of the Attorney General’s Governmental Conduct Act Compliance Guide reads. Murphy's well-chronicled pattern of conduct does not appear to be "solely in the interest of the public." All New Mexicans – not just Hobbsans – should be outraged at his brazen behavior while at the helm of any level of government in our state. If conducting himself solely in the interest of the public isn’t something he wants to continuously do, he can go back to the private sector – although we know how his last private venture, Goals Consulting, went.

If we tolerate cronyism, conflicts of interest and corruption in one community, we tolerate them in every community. What’s happening in Hobbs can’t just be brushed off as a Hobbs problem to be dealt with by Hobbs. How much longer must we wait for that to happen? Government employees move on to other and higher government agencies. Elected officials run for other and higher offices. And if the citizenry chooses to be uninformed and unengaged, and if there are no term limits, some municipal officials keep their seats in uncontested reelections for decades.

What's even scarier and even more relevant to New Mexicans is that the politics and ideas that keep these officials in their appointed jobs and their elected offices are shared at gatherings sponsored by organizations like the New Mexico Municipal League, such as the recent City Management Conference from July 27-29 in Ruidoso. Murphy is listed as the New Mexico City Management Association’s second vice chair on the Municipal League's website. See a screenshot. According to the preliminary program, in one workshop, “[p]articipants will learn to recognize the warning signs of community unrest, gain insight into the manager’s unique role, examine personal and organizational costs, review the media’s role-for good and ill, and put the ‘fun’ back in dysfunctional.”

I’ve had all the “fun” I can stand. While the Aug. 1 and Aug. 29 closed-session meetings of the Hobbs City Commission might indicate some progress toward closing this infamous chapter of The Life and Times at Hobbs City Hall, giving Murphy a golden parachute to go away is not the ending Hobbs taxpayers deserve.

Let’s keep hoping State Auditor Tim Keller and Attorney General Hector Balderas will help write the epilogue.

Read part 2: "Funny business: contracts under Murphy 'may not have been at arm's length'"

Byron Marshall Courtesy Photo

Byron Marshall

Marshall is a Hobbs High graduate and former NMSU student. In 2013, Marshall returned to Hobbs from Las Cruces to support and improve his community through activism and enhanced public dialogue about important — and often overlooked — issues that merit the community’s consideration.