New Jersey Has A Race Problem
The inability of Black-owned companies to access capital is a driver of the state’s economic disparity.
BY HELENE FOX
In compelling and heartfelt testimony before New Jersey’s Joint Committee on Economic Justice and Equal Employment Opportunity, Blueprint Capital Advisors (Blueprint) CEO Jacob Walthour, Jr. laid bare a troubling history of racial animus and retaliation existing at the New Jersey Division of Investment. For the second time in a year, Walthour testified before the Joint Committee. In January 2020, he detailed the “embarrassingly wide” wealth and income disparities in his home state. Last week, he courageously detailed the racist abuse he and his firm experienced from Governor Phil Murphy’s administration, the Division of Investment (DOI), and other former and current individual plaintiffs working for the DOI.
Appearing before the committee via Zoom, Walthour noted: “There is a level of animus that exists in the Division of Investment toward people who do not look like them. For almost 12 years, that division has not had a single African American or Latino investment officer, and the current staff threatened to quit if Governor Murphy hired one.”
His remarks came after a tumultuous five-year battle for equity, fairness, and justice. In June 2020, Walthour filed a racial discrimination, theft, and fraud lawsuit against Governor Phillip Murphy, the DOI, BlackRock, Owl Rock Capital Corp., Cliffwater LLC, and others. An amended complaint filed in November 2020 exposed a far more pernicious and damning racial bias, racketeering, and fraud scheme playing out in the Governor’s office and the DOI.
Walthour’s legal team at Brown Rudnick LLP alleges that Murphy and his aides ran a quid pro quo system and systematically discriminated against Blueprint, the only Black-owned asset management company in the state.
The amended complaint alleges racist abuse began in 2015 when the DOI misappropriated a proprietary investment program developed by Blueprint, then launched the exact same program with BlackRock in 2016. After being questioned about the misappropriation of Blueprint’s intellectual property, the complaint alleges, the DOI reportedly:
• Ignored Blueprint after allegations of fraud and misappropriation were levied.
• Intentionally delayed Blueprint’s contract negotiations for 18 months. Reportedly, every other fund completes the contracting phase in three to five months
• Used threats to make Blueprint agree on contract terms substantially worse than the minimum industry standards and materially disparate from the terms the DOI had and used with its other funds.
• Refused to approve investment from which Blueprint could actually earn fees, even after a contract was signed.
• Engaged in retaliatory practices that included making attempts to coordinate redemptions from Blueprint with other clients.
Murphy has been quick to point out that the challenges faced by Blueprint at the DOI began before his tenure. Yet, it is clear that such challenges persist today in his administration. The national heads of the NAACP, Urban League, and National Action Network have contacted Murphy demanding an explanation for his staff’s conduct.
Many Black leaders have called for an investigation. They have strong feelings that because Murphy won 94% of the Black vote in 2017, he owes this community an explanation regarding the claims raised in this case. Murphy has also failed to deliver the disparity study he promised three years ago and has not released statistics on the level of business contracted with women and minority-owned firms since his administration took office.
Further, reports of Black people struggling to start, grow, or maintain a business under his watch persist. The inability of Black-owned companies to access capital is a driver of the state’s unemployment disparities. Black unemployment in the state is 6.9%, while the unemployment rate for whites is 2.6%, according to the latest figures provided by the Economic Policy Institute.
Even the impact of the coronavirus has been felt mainly along racial lines in New Jersey. In an October 21, 2020, reported piece, USA Today found “At the height of the first wave of the pandemic, Essex County was among the top 10 in the country for its death rate from the novel coronavirus. It still hovers in the top, 15 months later.”
While legal matters must play out in the court system, Murphy must explain his record, pattern, and practice of engaging with the Black community, then failing to deliver for the Black community. In the absence of such information, one can’t help ponder Walthour’s comments:
…there is rhetoric and reality to Phil Murphy. He claims to be about fairness. He claims that Black lives matter. He claims to support women’s causes. He claims to be about transparency. That is the rhetoric of Phil Murphy. The reality of Phil Murphy is that despite discussing disparity studies as a precursor to policy changes – he has yet to commission a disparity study in his first three years. The reality of Phil Murphy is that his 13-person front office staff had no Black employees…six months ago. The reality of Phil Murphy is that he refuses to release statistics on how much business is going to women and minority-owned businesses before and after his administration started. The reality is that when we uncovered a drinking water crisis in our largest city, he boarded a plane to India and abandoned the Newark water crisis. Shamefully however, he came back to steal credit from people who worked hard to fix the problem.
For persons watching on the sideline, it is clear New Jersey has problems. Its race problem is the one that looms large.