New Jersey Commerce Chief Quits Under Fire

NEW YORK —  New Jersey Commerce Secretary William Watley, under investigation on allegations of directing state funds into businesses he owned and of awarding government contracts to friends, resigned Wednesday in the latest controversy involving Gov. James E. McGreevey’s administration.

The move came a day after prosecutors charged Charles Kushner, McGreevey’s biggest contributor, with hiring prostitutes to try to block a federal campaign financing probe. And David M. D’Amiano, one of the governor’s top fundraisers, faces arraignment today on charges of extorting $40,000 from a farmer in return for promising to help to obtain a favorable government ruling in a land deal.

All of this has provided ammunition for state Republicans as they prepare to challenge McGreevey, a Democrat who faces an election next year.

“It is a sad day for New Jersey,” said state Sen. Joseph Kyrillos, chairman of the New Jersey Republican State Committee. “We are unfortunately living up to our [corrupt] stereotype.”

The governor “is guilty of allowing this super-money-crazed culture to develop,” Kyrillos said.

In his letter of resignation Wednesday, Watley denied any wrongdoing. “Despite the swirl of speculation and innuendo my departure may generate, I leave this office with my pride intact, confident in knowing that an objective evaluation of my tenure will confirm that I discharged my duties responsibly,” he said.

State officials had canceled an $11.5-million loan offer to a church Watley was affiliated with after it was discovered he was involved in a partnership that would have received the funds.

In a statement, McGreevey called Watley “an integral part of this administration’s highly successful economic development strategy.”

On Tuesday, federal prosecutors in Newark, N.J., charged that Kushner, a real estate developer, had paid $25,000 to two intermediaries and two prostitutes in a scheme to videotape and blackmail potential witnesses in an investigation of his campaign contributions.

Court papers alleged that a co-conspirator, at Kushner’s direction, mailed a tape and photos of a sexual encounter between a call girl and one of the potential witnesses to the man’s wife, who turned it over to the FBI.

If convicted on charges of conspiracy to promote interstate prostitution, retaliation against a witness and obstruction of justice, Kushner could receive 25 years in prison and be fined $750,000.

Prosecutors said the second witness rejected a prostitute’s advances.

In announcing the charges, U.S. Atty. Christopher J. Christie said there was no connection between Kushner’s alleged crimes and the governor.

In a statement, McGreevey’s office said that while “saddened” to learn of the allegations, “it would be inappropriate, however, to comment further on matters unrelated to this office.”

Ingrid Reed, director of the New Jersey Project at the Eagleton Institute of Politics at Rutgers University, said Wednesday that McGreevey’s poll numbers had been rising recently, but that it was hard to judge how voters next year would interpret all that has happened.

“You have these dramatic cases that come up and get very wide media attention,” Reed said. “It is very hard to see how you can reverse the tide of cynicism in the state.”