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DiFrancesco's top choice for treasurer pulls hat out of ring

Originally appeared in the Star Ledger on 03/29/01

Acting Gov. Donald DiFrancesco's nominee for state treasurer withdrew yesterday under a cloud over her departure from a top job at Citibank five years ago.

Isabel Miranda had been scheduled to appear today at a confirmation hearing before the Senate Judiciary Committee. A Monday hearing was postponed following a report in the New York Times that she had been fired from her job at Citibank in 1996 after being accused of misusing her expense account while having an affair with a fellow employee who is now her husband.

Miranda has angrily denied that report and said her departure stemmed from disagreements with her boss, which she has declined to specify, citing a confidentiality agreement with Citibank.

But that controversy and questions about her plan to serve as treasurer while on leave from U.S. Trust Co. of New Jersey proved too much.

In a letter to DiFrancesco yesterday, Miranda said she was withdrawing because "it is clear to me that my nomination has fallen victim to a vicious and unfair effort to discredit me."

She also said she did not believe -- as she initially had hoped -- that she could serve as treasurer while on leave as a senior vice president at U.S. Trust.

That arrangement, which DiFrancesco had approved, raised concerns of a conflict of interest among legislators and the state's top ethics officer. The parent company of U.S. Trust earns about $300,000 a year trading securities for the state Division of Investments, which Miranda would oversee as treasurer.

DiFrancesco said yesterday he was "disappointed" by her decision and called Miranda, a longtime friend, "a brilliant woman" and "an outstanding person of integrity."

He blamed the demise of her nomination on "innuendo."

"She's upset. She saw her picture in the paper, the front page of the newspaper, alleging that she did something wrong . . . And she feels that the circumstances were just too much for her to handle at this time, given the kind of allegations that were thrown around by everyone," an angry DiFrancesco said.

The controversy over Miranda's nomination comes at a difficult time for DiFrancesco, who is seeking the GOP nomination for a first full term as governor.

DiFrancesco, who is also the Senate president, became acting governor Jan. 31 when former Gov. Christie Whitman resigned to head the U.S. Environmental Protection Agency. Since then, he has found himself on the defensive over questions about financial help he received from a state contractor and a developer because of troubled real estate investments.

Miranda's nomination began unraveling Monday with the publication of the Times report. That led Sen. William Gormley (R-Atlantic), the Judiciary Committee chairman, to delay the nomination over DiFrancesco's objection.

Gormley and other committee members wanted time to look into the allegations. Democrats also raised concerns about potential conflicts with the leave arrangement.

Miranda initially told the state Executive Commission on Ethical Standards that neither Charles Schwab Co. nor U.S. Trust, a Schwab subsidiary, did business with the state. It then turned out that Schwab collected $713,828 in commissions from the state for stock transactions between 1998 and 2000.

Upon learning of those transactions Tuesday, Rita Strmensky, executive director of the Executive Commission on Ethical Standards, reconsidered her approval of Miranda's leave. She then agreed to the arrangement late Tuesday after Miranda said she would recuse herself from any matter involving Schwab, U.S. Trust or Morgan Stanley, her husband's employer.

But that same night, Gormley said State Police investigators were "expanding" their background review of Miranda's departure from Citibank. By yesterday morning, word had spread that Miranda had withdrawn her nomination.

In a letter to DiFrancesco, Miranda said, "It is clear to me that the only way I can meet the high ethical standards that you have established would be to formally resign (from U.S. Trust). I cannot, under these conditions, serve both the people of New Jersey and the real needs of my family."

Several GOP officials publicly rallied behind DiFrancesco yesterday.

"I don't think it's a black eye for Donnie at all," said Sen. John Matheussen (R-Gloucester). "Her resume looked very good. But obviously we're dealing as much with her qualifications as with her alleged indiscretions."

Representatives of the state's Dominican-American Congress also defended Miranda, who is a Cuban native.

But Sen. John Lynch (D-Middlesex) said DiFrancesco had mishandled the nomination and that Miranda had suffered as a result.

"If there's anything here that's meaningful, it's the management of the nomination," said Lynch. "I have enormous empathy for Isabel Miranda, this individual. It shouldn't have happened the way it happened."

Staff writers Jim Lockwood, Joe Donohue and Dunstan McNichol contributed to this report.

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