Firms that once thought they had nothing to hide are finding themselves under uncomfortable scrutiny now that the scandal surrounding New Jersey-based Armacon Securities has forced the industry to rethink political relationships.

In Camden County, N.J., the unwelcome attention is being aimed at a circle of companies - all housed in the same office building in Cherry Hill - that includes a bond counsel firm, a municipal under-writing company, a bank, an insurer, and the county's most powerful political action committee.

Late last month Assemblyman Alex DeCroce, R-Morris, asked the state treasurer to explain why one member of the Cherry Hill group, Cypress Securities, was selected as a co-financial adviser on a recent $500 million competitive issue by the New Jersey Transportation Trust Fund.

DeCroce said he questioned the selection of Cypress because he had never heard of the firm and because the trust fund had always used just one financial adviser, Dillon, Read & Co. After inquiring about the deal, he said he learned of Cypress' political connections.

These include a managing director, Melvin Primas, who was formerly mayor of Camden and Gov. Jim Florio's community affairs commissioner. In addition, Cypress is owned by Vernon Hill, president and chief executive officer of Commerce Bank, which has made numerous loans to Camden County Democratic political action committees. Hill was also one of 64 members of Florio's transition committee in 1989.

David B. Thompson, president of Cypress and a 20-year veteran of the public finance business, rejected any implication that Cypress was awarded the business based on connections, rather than its abilities.

"We were indeed qualified and have had lots of experience," Thompson said. He called DeCroce's questions "thinly veiled innuendo designed to do nothing more than point a finger and raise a question."

In addition to being home to Cypress Securities, Hill's Commerce Bank building at 1701 Astoria Boulevard in Cherry Hill also houses a branch of the bond counsel firm Parker, McCay & Criscuolo. Also among its tenants are the Greater Camden County Committee Inc., a political action committee run by Democratic fundraiser George Norcross, and Keystone National Co., an insurance company owned by Norcross that has also loaned money to his PACS.

Over the past three years Norcross has used the Camden PAC, one of at least a dozen that he runs, to raise more than $2.7 million in campaign contributions for Democratic candidates in Camden County elections. He is also the brother of Philip A. Norcross, a partner at Parker McCay.

During that time Hill's Commerce Bank was the leading lender to Norcross' political action committee, with state election records showing $600,000 of loans between 1990 and 1992. His Keystone National insurance company loaned the PAC $185,000 during the period, and Norcross himself loaned $50,000.

The only other loans came from Midlantic National Bank, at $310,000, and Community National Bank, at $125,000.

Norcross says he plays golf with Hill but has no business dealings with the bank president. Hill was unavailable for comment.

Parker McCay is also a major contributor to Norcross' political action committee. Over the past three years, the bond counsel contributed $39,000 to the Greater Camden County Committee, more than twice as much money as any other bond counsel firm, according to state contribution records.

That understates the contributions, according to Norcross. He said the records do not include donations to other political action committees that he established to "hide" contributor lists from Republican opponents.

New Jersey now forbids that practice. Recent changes in election law require each entity supporting a candidate to register under just one political action committee.

Parker McCay has acted as either bond counsel or underwriters' counsel on 10 Camden County and city of Camden bond deals totaling more than $314 million since 1989, according to Securities Data Co. During the same period, the firm also worked on 63 other bond deals in New Jersey totaling $596 million.

The firm has a policy against speaking to the press. But a source familiar with the firm said Parker McCay won all of its assignments based on its competence, not political connections.

"Nobody in New Jersey really has clean hands, but then again, everybody has played by the rules set up by the Legislature," the source said.

The firm has worked for a wide variety of issuers in southern New Jersey and has made political contributions to both Republicans and Democrats.

David Thompson and Barry Parker, managing partner at the firm, have been friends for decades and worked together on bond issues before Cypress was set up, according to a common acquaintance.

Fundraiser George Norcross says he has no connection to bond underwriting in Camden or anywhere else. "I have nothing at all to do with the awarding of bond business," he said.

Thompson said Cypress has a policy against doing county business, because of previous questions raised about the friendship between Hill and Norcross.

Last fall, the New Jersey attorney general's office issued subpoenas to the Camden County administrator requesting information on leases or other business dealings between the county and Hill and Norcross.

Norcross says nothing ever came of the investigation. The attorney general's office declined to comment on the subpoenas.

The second biggest contributor to Norcross' PACs among bond counsel firms came from Saul, Ewing, Remick & Saul, which contributed $17,500, and has handled six county-level issues in the past four years. Florida-based Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel placed third; and Freeman, Zeller & Bryant was fourth.

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