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Informant, Rabbi's Son Allegedly Aided Massive New Jersey Corruption Bust

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July 23: FBI agents lead arrested suspects from their headquarters as part of a corruption investigation in Newark, N.J. (AP)

Officials are decrying political corruption in New Jersey after more than 40 people, among them rabbis and elected officeholders, were arrested in a far-reaching black-market and money laundering sting.

Federal authorities allege that some of those in custody trafficked merchandise as diverse as fake Gucci handbags and kidneys and laundered tens of millions of dollars in cash.

The 44 arrests Thursday were a remarkable number even for New Jersey, where more than 130 public officials have pleaded guilty or have been convicted of corruption since 2001.

"New Jersey's corruption problem is one of the worst, if not the worst, in the nation," said Ed Kahrer, who heads the FBI's white-collar and public corruption division. "Corruption is a cancer that is destroying the core values of this state."

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In a dramatic twist to the massive corruption bust, the son of a rabbi from Deal, N.J., allegedly helped to bring down the more than four dozen arrested.

“For these defendants, corruption was a way of life,” The New York Times quoted Ralph J. Marra Jr., the acting United States attorney in New Jersey. “They existed in an ethics-free zone.”

Click here to read more on this story from The New York Times.

The arrests were headline news in Israel on Friday morning, with the front pages of all three of the country's mass-circulation dailies featuring pictures of bearded ultra-Orthodox Jews being led away by law enforcement officials.

Gov. Jon Corzine said: "The scale of corruption we're seeing as this unfolds is simply outrageous and cannot be tolerated."

Micky Rosenfeld, a spokesman for Israel's national police force, said Friday that Israeli police were not involved in the investigation. He would not comment further.

Federal prosecutors in the U.S. said the investigation focused on a money laundering network that operated between Brooklyn, N.Y.; Deal, N.J.; and Israel. The network is alleged to have laundered tens of millions of dollars through Jewish charities controlled by rabbis in New York and New Jersey.

Prosecutors then used an informant in that investigation to help them go after corrupt politicians. The informant — a real estate developer charged with bank fraud three years ago — posed as a crooked businessman and paid a string of public officials tens of thousands of dollars in bribes to get approvals for buildings and other projects in New Jersey, authorities said.

Among those people arrested were the mayors of Hoboken, Ridgefield and Secaucus, Jersey City's deputy mayor, and two state assemblymen. A member of the governor's cabinet resigned after agents searched his home, though he was not arrested. All but one of the officeholders are Democrats.

Also, five rabbis from New York and New Jersey — two of whom lead congregations in Deal — were accused of laundering millions of dollars, some of it from the sale of counterfeit goods and bankruptcy fraud, authorities said.

Others arrested included building and fire inspectors, city planning officials and utilities officials, all of them accused of using their positions to further the corruption.

The politicians arrested were not accused of any involvement in the money laundering or the trafficking in human organs and counterfeit handbags.

Hours after FBI agents seized documents from his home and office, New Jersey Community Affairs Commissioner Joseph Doria resigned. Federal officials would not say whether he would be charged. Doria did not return calls for comment.

Authorities did not identify the informant, described in court papers as a person "charged in a federal criminal complaint with bank fraud in or about May 2006." But the date matches up with an investigation that led to charges against Solomon Dwek, the son of a Deal rabbi.

The younger Dwek was charged at the time in connection with a bounced $25 million check he deposited in a bank's drive-through window. He has denied the charges. Dwek's lawyer did not immediately return a call for comment Thursday.

Most of the defendants facing corruption charges were released on bail. The money laundering defendants faced bail between $300,000 and $3 million, and most were ordered to submit to electronic monitoring.

Among those ensnared by the informant was Hoboken Mayor Peter Cammarano III, prosecutors said. The 32-year-old Cammarano, who won a runoff election last month, was accused of accepting money from the developer at a Hoboken diner.

"There's the people who were with us, and that's you guys," the complaint quotes Cammarano saying. "There's the people who climbed on board in the runoff. They can get in line. ... And then there are the people who were against us the whole way. ... They get ground into powder."

Cammarano was accused of accepting $25,000 in cash bribes. His attorney Joseph Hayden said his client is "innocent of these charges. He intends to fight them with all his strength until he proves his innocence."

The Associated Press contributed to this report.