The former head of the SJEDD fraudulently concealed the financial position of the district and took unauthorized raises he knew the agency could not afford, according to a counterclaim filed this week in New Jersey Superior Court.

In an unusual move for a public entity, the South Jersey Economic Development District is suing its former executive director, Gordon Dahl, for $551,000, plus any other costs determined by the court. The district is countering a lawsuit filed by Dahl last year, in which he claimed wrongful termination and sought reinstatement and unspecified financial damages.

SJEDD interim Executive Director Steve O’Connor declined to comment on specifics of the litigation but said the board believes the move is in the best interest of the taxpayers. The SJEDD is the only economic development district in the state. It was founded in 1979 as a means to attract federal grants by Atlantic, Cape May, Cumberland and Salem counties. Member counties are responsible for the district’s finances.

“The district’s board members believe the contents of its response and counterclaim accurately detail the circumstances of the litigation, as well as appropriately reflect what is in the best interest of the taxpayers of the counties,” O’Connor said.

Dahl, of Mays Landing, was hired as the district’s director in 1987, but a year ago he was ousted via a unanimous vote of no confidence by his board. The vote took place after the board learned that the district was more than two years behind on audits and had stopped paying the contractors who worked on the infrastructure at the NextGen Aviation Research and Technology Park in Egg Harbor Township.

But the board still didn’t know the full extent of the problems. Months later, it learned that more than $390,000 was missing from revolving loan funds and nearly $150,000 was owed on a flight simulator the district financed at Atlantic Cape Community College. Grant money secured for the simulator was likely used to pay bills at the NextGen park instead, officials have said.

The $551,000 sought in the lawsuit, filed by Philadelphia-based law firm Spector Gadon & Rosen on behalf of the district, represents money still owed for the simulator and money due back to federal agencies for the revolving loan programs.

The newly filed claim details the history of Dahl’s statements to the board and notes times at which he said the district had the money to fund its obligations. Research done by the district has since shown that was not the case. Had Dahl been truthful with the board about the district’s financial position, he would have been fired as early as October 2011 and the mismanagement would not have been allowed to continue, the claim states.

The lawsuit also takes issue with annual raises Dahl received and the legality of those pay increases. At the time, the district was operating on a fixed income of $220,000, yet Dahl continued to take raises unbeknownst to board members. This was done as the district’s grant funds, revolving loan funds and operational expenses were commingled in a single account, in violation of federal regulations.

“Nevertheless, between 2006 and 2011, Dahl significantly increased his own salary and other benefits, without receiving board approval for such increases or advising the board that the SJEDD did not have sufficient operational funds to cover the increases,” the lawsuit states. “Dahl knew or should have known that any employment agreement or raises or additional benefits he sought to receive needed to be approved by the full SJEDD board.”

A watchdog report by The Press of Atlantic City last year showed Dahl’s salary swelled by more than 40 percent — from $79,000 in 2005 to $112,000 in 2011 — while the district was in the midst of financial problems. The district had no documentation showing the raises were approved.

O’Connor would not elaborate on why the district chose to pursue a lawsuit.

Public entities settle most employment issues through insurance companies and attorneys, often reaching settlements outside public discussion. Exceptions can be seen when an employee is indicted for a criminal offense. No criminal action was taken against Dahl.

Dahl’s Mount Laurel, Burlington County-based attorney, Kevin Costello, could not be reached Wednesday night. Since leaving the district, Dahl is listed online as the CEO of Dahlson Consulting Group. A website states the firm handles grant writing and has previously secured millions of dollars in funding from the U.S. Economic Development Administration and the U.S. Department of Agriculture.

Contact Jennifer Bogdan:

609-272-7239

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