Understanding Conflicts of Interest in Local Government (Part 3)
The Third Installment of a Four-Part Series on Ethics, Influence, and the Future of Public Trust in Ocean City, New Jersey
In this four-part series, we talk about conflicts of interest and recusal, with an emphasis on small towns. The first part covered the background of conflicts of interest and recusal, generally. The second discussed those concepts from the standpoint of land use decisions in towns like Ocean City. This installment talks about the real-life consequences of ignoring conflicts. The final part will cover what happens when those conflicts become pervasive.
The Price of Ignoring Conflicts
Unchecked conflicts of interest don’t merely raise eyebrows—they spark tangible, costly consequences that ripple throughout a community. Not taking action to address conflicts of interest can lead to serious repercussions.
Basis for Lawsuits: The Legal Foundation
The foundation for lawsuits involving conflicts of interest and compromised governmental processes often lies in statutes such as the New Jersey Local Government Ethics Law (N.J.S.A. 40A:9-22.1 et seq.), the New Jersey Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.), and constitutional principles of due process and equal protection. Citizens may challenge governmental actions when they believe conflicts have compromised decision-making, tainting outcomes with bias or undue influence.
How Lawsuits Unfold: Discovery as a Crucial Tool
After a lawsuit is filed, the litigation process typically enters a phase called discovery. Where allegations of conflict exist—and where the full extent of those conflicts cannot be publicly known without further investigation—the court often permits discovery. Many people don’t realize just how deep the discovery process goes – and are sometimes unpleasantly surprised by the results.
Discovery is the formal process by which parties request and exchange information relevant to the case. This includes:
Depositions (sworn, recorded interviews)
Subpoenas for emails, text messages, voice mails
Production of documents, including meeting minutes, business records, financial transactions
Interrogatories (written questions requiring sworn answers)
Discovery can expose informal practices, private relationships, and behind-the-scenes communications that paint a damning picture of how decisions were made.
Discovery Goes Deep
Once litigation begins, everything is exposed:
Emails, texts, and voicemails
Meeting logs and call records
Family business relationships
Campaign finance contributions
Even if no laws are ultimately found to have been broken, the litigation process reveals precisely how decisions were made—and exactly who influenced them. The resulting transparency can illuminate uncomfortable truths that erode public confidence.
The Process Itself Becomes Punishment
Before a judge ever renders a decision, damage is already done:
Projects experience months or even years of costly delays
Legal fees drain municipal resources meant for public benefit
City employees become entangled in prolonged litigation
Negative media coverage and growing public discontent overshadow governance
A project initially welcomed as a promising development quickly becomes radioactive, tainted by controversy.
Moreover, projects tied to a lawsuit often grind to a halt—sometimes for years. Lenders grow wary of advancing funds on projects clouded by legal uncertainty. Even preliminary discussions with builders may be abandoned, as lenders have other opportunities to deploy capital on other projects without entanglement in litigation. The chilling effect on investment can devastate redevelopment efforts.
Cities themselves are not immune. Municipalities regularly rely on borrowing to fund infrastructure, public facilities, and land acquisitions. A city’s reputation as a stable, well-governed entity directly impacts its ability to roll over existing debt or secure new financing. If a city’s approval processes are viewed as tainted by conflicts of interest or corruption, lenders may impose higher interest rates—or refuse to lend altogether. In extreme cases, cities facing balloon payments without access to reasonable refinancing options may find themselves pushed toward fiscal crisis or even bankruptcy.
No One Is Spared the Fallout
Anyone involved at any level—whether listed in emails, invited to meetings, or referenced in documents—can find themselves subpoenaed. Councilmembers, administrators, developers, financial officers, spouses, and even rank-and-file staff can all be drawn into legal proceedings. No one is immune from scrutiny.
The spillover effects for elected and appointed officials can also be profound. Someone holding a part-time position on council or a local board may find that their professional reputation—in their full-time career—is negatively impacted. Social relationships can fray; trust among peers and neighbors can deteriorate.
The saddest irony is how often individuals risk and sometimes lose their reputations over what appears to be a relatively small amount of money. Whether it stems from blindness to the consequences, a tendency to “go along with the flow,” or a feeling of having no real choice, the result is often the same: lasting personal and professional harm.
Reputations Are Harder to Rebuild Than Lawsuits Are to File
Trust, once lost, is incredibly difficult to regain:
Public officials lose credibility and political capital
Developers and businesses lose opportunities and face reluctance from future partners
Cities lose their reputations as fair, reliable places to invest and build
These aren’t abstract, theoretical costs—they directly impact who runs for public office, who invests in local projects, and who chooses to actively participate in civic life.
The Legal System is Not To Blame
Many people often blame the legal system for negative outcomes. They grumble about “that lawyer” or claim a judge was unfair. But in most cases, it’s not the legal system that causes the discomfort or consequences—it’s the individual’s behavior. Had they followed the rules and stayed within ethical boundaries, the punishment wouldn’t have occurred. In many ways, it’s a self-inflicted wound, and those affected are not blameless. They were the ones who failed to disclose a conflict, or perhaps they stood by silently while knowing the process was compromised. Either way, the consequences stem from behavior—not the system
What Happens Next?
In a town like Ocean City, where a major development proposal may be entwined with personal loans, appointments, campaign contributions, and personal gain,, the challenge of maintaining public trust is undeniable, and difficult. When potential conflicts touch nearly every point in the approval chain, recusal alone may not be enough. In our next piece, we’ll explore whether the entanglements can grow too deep for traditional safeguards—and what broader steps a community might consider when the usual guardrails begin to fail.