Matt O’Donnell entered into plea agreement in June 2018, but state still allowed him to bill government clients

The state’s cooperating witness in a small fish corruption sting operation continued to practice law and bill public entities for two years despite entering into a plea agreement in June 2018, lawyers said in a Superior Court hearing this morning in Hudson County.

Under that agreement, the state now allowed the witness, widely known to be Morristown attorney Matt O’Donnell, to become the recipient of a considerable amount of public funds even after he acknowledge an unspecified criminal act.

Since entering into a plea agreement, O’Donnell billed government bodies for tax appeal work – sometimes precluding other firms from obtaining the work – and represented the State of New Jersey in court in his role as a municipal prosecutor.

Deputy Attorney General John Nicodemo admitted that O’Donnell, has not yet entered a guilty plea and that the attorney general’s office has not notified the state Office of Attorney Ethics.

O’Donnell has agreed to return profits from unlawful actions, but the state doesn’t know how much that is.  He remains an attorney in good standing despite his 31-month-old plea agreement with the state.

“In the plea agreement, there is language that indicates that as part of his forfeiture, this person #1 is to forfeit prospective profits that he derives from illegal activities occurring after the date of this agreement but in connection with his cooperation,” said Leo Hurley, an attorney for one of the defendants in the sting, Jason O’Donnell, told Superior Court Judge Mitzi Galis-Menendez in Hudson County.

Hurley says he intends to seek a subpoena to obtain billing records after the state told him they did not obtain copies of them from counties and municipalities that Matt O’Donnell and his now-shuttered law firm, O’Donnell McCord, billed since the plea agreement was signed.

That infers that the state has not tracked how much O’Donnell owes for illegally-gotten gains from public contracts.

Matt O’Donnell has been identified as the cooperating witness in charges against five candidates and former elected officials in December 2019.

“He is truly the witness in this case,” Hurley said

Hurley is also seeking to learn more about the scope of Matt O’Donnell’s cooperation, saying he has been a “cooperating witness in a series of other matters, some charged and some uncharged.”

He wants copies of all federal law enforcement reports related to Matt O’Donnell and said he would make additional requests for discovery of documents.

“I’m not just looking for reports of federal law enforcement related to the charge that he has entered a written plea agreement into, but any reports from federal enforcement that emanate from the joint investigation that was conducted by the AG’s office and federal law enforcement,” said Hurley.  “Not just related to the plea that he entered into here, but any other plea agreement that he entered into for anything else.”

That is likely to result in a faceoff between Hurley and prosecutors.

“The state has honored its discover obligation in this matter,” Nicodemo said.

Hurley told Galis-Menendez that he planned on seeking a dismissal of an indictment against Jason O’Donnell, “based on gross and rank prosecutorial misconduct in pursuing procuring this indictment.”

Galis-Menendez agreed to rule on requests for discovery before deciding on the bid to throw out the indictment.

The attorney general’s office declined to answer questions regarding the plea agreement.

“Our practice is to leave it to the Court to release a plea agreement once it is put on the record,” said Peter Aseltine, a spokesman for the attorney general.  “In this case, no plea as to person #1 has been put on the record in court.”

The state has charged O’Donnell’s former law partner, Elizabeth Valandingham, with lying about pay-to-play violations.  Some of her relatives who allegedly served as straw donors have also been charged.”

Prosecutors alleged that Valandingham and an unnamed co-conspirator strongly believed to be O’Donnell, recruited friends and family members to act as straw donors.

The New Jersey Globe first reported in December 2019 that an anonymous whistleblower contacted law enforcement in June 2017 about allegations that O’Donnell and Valandingham used straw donors to funnel money to local candidates he was pitching for tax appeal work.

The whistleblower told state and federal authorities that the two lawyers moved substantial amounts of money through relatives, employees and friends who have made large campaign contributions.

The attorney general’s office later effectively confirmed the report, saying that the firm used straw donors who would later be reimbursed in cash for their contributions in order to secure legal work.

Valandingham rejected a plea deal that included three years in prison last summer.

One week before Christmas 2019, the state charged five current and former elected officials and candidate— including Jersey City Board of Education President Sudhan Thomas and former Morris County Freeholder John Cesaro—with taking bribes as part of an investigation into political corruption by the state attorney general’s office.

Also charged were former Mount Arlington Councilman John Windish, former Morris County Democratic freeholder candidate Mary Dougherty, a Democratic State Committeewoman from Morris County.

Jason O’Donnell, a former assemblyman from Bayonne, plead not guilty on Tuesday.