Did prosecutor's probe cut FBI sting short?

Published in the Asbury Park Press 02/24/05
By JAMES W. PRADO ROBERTS and JASON METHOD
STAFF WRITERS

Monmouth County Prosecutor John A. Kaye

Interference from the Monmouth County Prosecutor's Office compromised
an FBI undercover investigation that netted 11 public officials on
corruption charges, because county investigators were trying to learn
the identities of undercover agents and a cooperating witness, sources
said Wednesday.

As a result, the U.S. Attorney's Office and the FBI moved sooner than
they had planned when they arrested three mayors and eight other
public officials on Tuesday, the sources said. One source said county
Prosecutor John Kaye's actions "blew" the undercover phase of the
bribery sting.

"Had the compromise not occurred, (the FBI) may have been able to go
longer," the second source said.

Kaye acknowledged Wednesday night that his office is conducting its
own investigation into corruption in the county, but he hotly denied
any interference in the federal probe.

Ten of the public officials were charged Tuesday with extorting at
least $45,000 in bribes plus a free driveway paving job from a
construction contractor, who was cooperating with the FBI, in exchange
for promises of government contracts. The 11th official netted in the
sting was charged with taking a profit of more than $10,000 in a phony
money-laundering scheme.

On Wednesday, one of the mayors snared in the probe — prominent
Republican John J. Merla of Keyport — fired back at the FBI
investigation, proclaiming he was innocent and vowing to fight the
charges. "Yesterday I was shocked," Merla said. "Today, I'm pissed
off. I'm very upset. Now I got to face a year's worth of a trial. It's
a horrible thing."

Two sources, meanwhile, independently confirmed details of the alleged
interference by Kaye's office.

The Prosecutor's Office apparently opened its investigation after
Deputy Sheriff Allan D. Brunner committed suicide on Thanksgiving Day
in a cemetery in Keyport, one source said. Kaye contended his office
opened its investigation in July, shortly before detectives raided the
county Democratic Party headquarters in Hazlet.

The sources, who agreed to discuss the situation on condition of
anonymity, contended Kaye's investigation appeared to be aimed at
learning the identities of federal undercover agents and cooperating
witnesses.

The sources said Kaye's office initially agreed to halt its
investigation in December when county prosecutors were told the
federal government was in the midst of its own probe. But two weeks
ago, Kaye's office interviewed two targets of the federal
investigation — Keyport Mayor Merla and former Keyport Councilman
Robert L. Hyer.

"In interviewing Merla and Hyer, they were interested, not in anything
they had done, but in what the feds were up to," one source said.
"They were seeking information on the undercover officers. . . . You
just have to ask yourself, why?"

Both sources said Kaye's office also sent county investigators to
Florida to try to find Robert Steffer, who was the local contractor
and cooperating witness used by the U.S. Attorney's Office and the FBI
to set up the bribery sting.

"This was viewed as interference with the progress of the
investigation, and things had to be stopped sooner rather than later,"
one source said.

"They could not continue to do the undercover work because it was
being blown. And anything can happen when people think they are going
to be arrested," the source said. "Kaye knows there's a federal
investigation. The feds didn't know what he was trading with (Merla
and Hyer)."

Mike Drewniak, a spokesman for the U.S. Attorney's Office, would not
comment on the allegations.

Prosecutor responds

Kaye angrily denied the allegations in an interview Wednesday night.

Kaye said his office had been running an "official corruption"
investigation since July. He said he repeatedly asked FBI officials
and the U.S. Attorney's Office for a meeting to discuss that probe,
and that his telephone calls were never returned.

Kaye said he did speak by phone to U.S. Attorney Christopher J.
Christie three months ago and read him a list of 10 suspects. Christie
"appeared to mull it over. He said there was "No problem, go ahead,' "
according to Kaye.

"That conversation as described by Prosecutor Kaye never occurred,"
said Drewniak.

The Monmouth County investigation is continuing and is not a parallel
investigation to the FBI probe, Kaye said. But it involves some of the
same people as the FBI targeted, Kaye added.

Kaye, the longest-serving prosecutor in New Jersey, said his
detectives did speak with Merla and Hyer in connection with the
county's investigation. But Kaye said his investigators never talked
to Steffer, who was referred to in the criminal complaints — but not
by name — as a "cooperating witness." Some detectives went to Florida,
but are in Boynton Beach, not wherever Steffer is, Kaye said.

"To imply that they were on the verge of nailing Al Capone until we
messed them up is outrageous and false," Kaye said. "We bend over
backwards to cooperate with every law enforcement agency in this
state. . . . We're stunned by this. . . . Now we're being accused
apparently of working against them. It's preposterous."

Kaye said his office was asked by the FBI to avoid what he called an
informant, and his investigators complied with the request.

"I continuously said, "Let's get together. Let's talk. Let's see where
we're going.' Dates were promised, and they never happened," Kaye
said. "How many times did we ask for meetings and meetings and
meetings? No talk. No nothing."

He said he expects to make arrests from his investigation.

Michael Pappa, a Red Bank attorney who represents Merla, confirmed
county investigators interviewed the mayor approximately two weeks ago.

"(Merla) was not the target of the (county) investigation," Pappa
said, adding that some questions put to Merla by a county investigator
"were about a contractor who I assume is the same contractor in the
middle of the federal case."

Audio and videotapes

The criminal complaints filed Tuesday by the FBI read like scenes out
of the TV show "The Sopranos," in which envelopes of money change
hands at local eateries and conversations contain code words and
occasional profanity. One of the defendants even has a nickname —
"Joey Buses."

What the public officials — representing six towns plus county
government — didn't know is that the FBI was recording them on audio
and videotapes, as part of Operation Bid Rig, the FBI's probe into
local public corruption.

The 11 arrested:

John J. Merla, 43, Keyport mayor.

Robert L. Hyer, 63, confidential aide to County Clerk M. Claire French
and a former Keyport borough councilman.

Paul Zambrano, 48, West Long Branch mayor.

Joseph DeLisa, 48, a West Long Branch borough councilman.

Paul Coughlin, 41, Hazlet mayor.

Raymond J. O'Grady, 55, a Middletown township committeeman and head of
the county's central motor pool.

Thomas Broderick, 55, assistant supervisor at the county Division of
Highways, a former Marlboro councilman and former county undersheriff.

Patsy Townsend, 57, deputy county fire marshal and code enforcement
and emergency management official in Neptune.

Richard J. Iadanza, 49, Neptune deputy mayor and police commissioner,
and director of the county Division of Highways.

Joseph McCurnin, no age available, operations manager for the county
Division of Transportation.

John J. Hamilton Jr., an Asbury Park councilman.

All were charged with extortion except for Broderick, who was charged
with "laundering" tens of thousands of dollars from the unnamed
contractor's fictitious "loan-shark business." Each faces up to 20
years in prison and a $250,000 fine.

Merla said he was getting out of the shower when FBI officials came to
arrest him about 6 a.m. Tuesday.

"I was grabbing the phone to call the police," he said Wednesday, when
reached at home. "I thought someone was breaking into the house."

Merla said he will plead not guilty.

In the criminal complaint filed against him, federal law enforcement
officials said Merla extorted $11,500 from Steffer, the cooperating
witness, who in turn received a $96,350 contract for his company,
Steffer Demolition of Ocean Township, for a borough bulkhead
demolition and repair job in December 2003. The contract called for
the emergency removal, disposal and grading of approximately 280
linear feet of bulkhead.

Merla said Steffer did a "great job" in repairing the bulkhead, which
was awarded as an emergency contract because of unsafe conditions there.

Coughlin to plead innocent

Pappa, a Hazlet-based attorney who is also representing Hazlet Mayor
Paul Coughlin, said that client also intends to plead not guilty when
he is arraigned. Through Pappa, Coughlin declined comment.

"It's just mixed emotions," Pappa said of Coughlin. "There is anger,
because he feels he's been falsely accused. He's upset. Shocked. A
wide range of emotions."

Coughlin is accused of taking a $3,000 payment to steer demolition
work to Steffer. But the job promised to Steffer instead was given to
a legitimate bidder, Lertch Wrecking of Wall. Lertch was not named in
connection with the FBI investigation, and was not the contractor
working with the FBI.

Both Merla and Coughlin have expressed the belief that they were
caught up in a wide net of entrapment, Pappa said. He declined to
discuss what role the entrapment angle will play in his defense strategy.

"The one thing I think is obvious here is the government has indicated
they have video and audio" of all 11 men arrested Tuesday, Pappa said.
"The videos will speak for themselves, but the audio may be subject to
interpretation based on what was said and what the intent was when a
person said something. We need to look at and consider that down the
road when those tapes are made available."

Given that FBI officials said they made hundreds of recordings of the
11 men arrested in the sting, Pappa said carefully scrutinizing every
tape will be "an enormous task."

Asked how Coughlin was coping on the day after his arrest, the
attorney said, "I think the best advice anyone can give him is to
trust the system, and hope and pray it works for him — and that's what
he's going to do."

In Neptune, Township Administrator Philip D. Huhn would not comment
Wednesday on the employment status of township code enforcement
official Patsy Townsend, who is charged with extorting a $1,000 bribe.
Huhn said he and other township officials have yet to fully review the
allegation but expect to do so soon.

Decision up to Iadanza

Huhn said Neptune Committeeman Richard Iadanza, charged in the sting
with extorting $3,000 in bribes, "will have to make his own decision"
about his future on the governing body.

Attorney Edward J. Plaza of Red Bank, who represents Iadanza, said
Wednesday his client is not prepared to discuss plans for his
committee post.

"We're still trying to find out what the charges are," Plaza said.

Both Townsend and Iadanza also are employed by Monmouth County, and
both were suspended without pay by the county Tuesday after the
charges were announced.

Charles J. Uliano, a West Long Branch attorney who represents both
Townsend and West Long Branch Mayor Paul Zambrano, also would not
comment Wednesday on the charges. Zambrano is charged in the sting
with extorting $15,000 in bribes.

Public officials and political observers were intrigued yesterday
about the identity of unnamed Monmouth County officials described in
three of the complaints filed against the 11 defendants.

The spokesman for the U.S. Attorney's Office said Wednesday that
individuals referred to by such titles as "Official #1" in complaints
against many of the accused were not necessarily the same person. Some
complaints referred to local officials, while charges filed against
Townsend, O'Grady and McCurnin all referenced county officials.

County Counsel Malcolm V. Carton said he did not believe the payoffs
cited in the complaints involved any county operations.

"There is no involvement with county government," Carton said. "This
doesn't go to county contracts and the operations of county
governments. It has to do completely with municipalities."

Freeholders Amy H. Handlin, Theodore J. Narozanick and Thomas J.
Powers, and former Freeholders Harry Larrison Jr. and Edward J.
Stominski said they do not know the identities of the unnamed officials.

Handlin said as the freeholder liaison to the finance department, she
is requesting all expenditures requested or approved by the suspect
department heads be reviewed.

Staff writers Nina Rizzo, James A. Quirk, and Bob Cullinane
contributed to this story. James W. Prado Roberts: (732) 643-4223; or
[EMAIL PROTECTED] Jason Method: (732) 643-4236 or [EMAIL PROTECTED]

http://www.app.com/apps/pbcs.dll/article?AID=/20050224/NEWS/502240334

--- In AsburyPark@yahoogroups.com, "SkipDragon" <[EMAIL PROTECTED]> wrote:
> 
> Published in the Asbury Park Press 02/23/05
> By KATHY MATHESON STAFF WRITER
> 
> A handcuffed Keyport Mayor John J. Merla (left photo) frowns in
> response to a reporter's question after his arrest. Right: West Long
> Branch Mayor Paul Zambrano is taken out of the FBI office.
> Related Media
> • Thomas Broderick
> • Paul Coughlin
> • John J. Hamilton Jr.
> • Richard Iadanza and Joseph McCurnin
> • John J. Merla and Robert L. Hyer
> • Raymond O'Grady
> • Patsy Townsend
> • Criminal Complaints (in .PDF format) for:
> Paul Zambrano & Joseph DeLisa
> - advertisements -
> The FBI on Tuesday unveiled an undercover bribery sting in Monmouth
> County, rousting three mayors and eight other public officials from
> their homes in early-morning raids, clapping handcuffs on them and
> charging 10 of them with extortion.
> 
> The 10 accepted at least $45,000 plus a free driveway paving job worth
> $5,000 in exchange for promises of government contracts, authorities
> said. The 11th was charged with money laundering for a profit of "more
> than $10,000."
> 
> The criminal complaints filed by the FBI read like scenes out of the
> TV show "The Sopranos," in which envelopes of money change hands at
> local eateries and conversations contain code words and occasional
> profanity. One of the defendants even has a nickname — "Joey Buses."
> 
> What the public officials — representing six towns and county
> government — didn't know is that the FBI was recording them on audio
> and videotapes.
> 
> At the center of the sting — an extension of "Operation Bid Rig," the
> FBI's probe into public corruption in the area — was an unnamed
> cooperating witness who represented himself to officials as someone
> involved in a Florida-based construction business as well as loan
> sharking. He was occasionally accompanied by two "employees," who were
> really undercover law enforcement agents.
> 
> U.S. Attorney Christopher J. Christie called the investigation the tip
> of the iceberg and vowed more names would be added to the list of
> defendants.
> 
> "Just when you think that you've seen it all in New Jersey, we peel back
> 
> another layer of the onion and see something uglier," Christie said at
> a news conference. "There is an epidemic in New Jersey of public
> corruption. . . . People (are) selling their offices for envelopes of
> cash."
> 
> The bribery investigation was spearheaded by Edward J. Kahrer,
> supervising special agent of the FBI's area office in Tinton Falls,
> and three other special agents: William Waldie, Thomas Jobes and
> Donald Russ.
> 
> "This case boils down to greed, ego and arrogance," said Joseph Billy
> Jr., special agent-in-charge of the FBI's New Jersey operations.
> 
> Billy then quoted Kahrer in describing the impact of the sting: "The
> corruption in Monmouth County has been like an infection untreated,
> which has spread to threaten the health of the entire county. Today,
> we have applied the tough medicine. But only constant attention and a
> change in the environment will determine if the infection is
eradicated."
> 
> The defendants are:
> 
> John J. Merla, 43, Keyport mayor.
> 
> Robert L. Hyer, 63, confidential aide to County Clerk M. Claire French
> and a former Keyport borough councilman.
> 
> Paul Zambrano, 48, West Long Branch mayor.
> 
> Joseph DeLisa, 48, a West Long Branch borough councilman.
> 
> Paul Coughlin, 41, Hazlet mayor.
> 
> Raymond J. O'Grady, 55, a Middletown township committeeman and head of
> the county's central motor pool.
> 
> Thomas Broderick, 55, assistant supervisor at the county Division of
> Highways, a former Marlboro township councilman and former county
> undersheriff.
> 
> Patsy Townsend, 57, deputy county fire marshal and code enforcement
> and emergency management official in Neptune.
> 
> Richard J. Iadanza, 49, Neptune deputy mayor and police commissioner,
> and director of the county Division of Highways.
> 
> Joseph McCurnin, no age available, operations manager for the county
> Division of Transportation.
> 
> John J. Hamilton Jr., an Asbury Park city councilman.
> 
> All were charged with extortion except for Broderick, who was charged
> with "laundering" tens of thousands of dollars from the unnamed
> contractor's "loan-shark business." Each faces up to 20 years in
> prison and a $250,000 fine.
> 
> The accused made their initial appearances Tuesday afternoon in U.S.
> District Court in Newark before Magistrate Judge Ronald J. Hedges. All
> were released on personal recognizance with the stipulation that they
> cannot leave Monmouth County, except for work or case-related travel.
> The defendants also had to surrender their passports and firearms.
> 
> Several of the men had private attorneys, but some were represented by
> the federal Public Defender's Office. Except for Hamilton, who asked
> about the penalties for the crime he was accused of, the rest waived
> the reading of the charges.
> 
> "It's not fair," Hamilton said as he left the courthouse, adding that
> he believed he was set up.
> 
> Most of the attorneys declined to comment.
> 
> Eugene M. Lavergne, an Asbury Park lawyer representing Zambrano, said
> he had not reviewed the case or spoken to his client at length. "He
> said to me he just wants to go home," Lavergne said.
> 
> Hazlet attorney Michael J. Pappa, representing Coughlin and Merla,
> said his clients plan to plead not guilty.
> 
> Broderick, when asked by a reporter if he took a paper bag full of
> cash as alleged in the complaint, replied: "No, absolutely not. Who do
> you think I am?"
> 
> A cooperating witness
> 
> The central figure in the investigation is a contractor identified in
> the complaints only as "CW," an abbreviation for "cooperating
> witness." Authorities described him as being known to numerous
> officials in Monmouth County.
> 
> The FBI complaints allege that:
> 
> John J. Merla took $9,000 in cash on Sept. 11, 2003, from the
> contractor at a borough restaurant. The mayor wanted money to cover
> costs of a political fund-raising picnic in exchange for government
> work. Between December 2003 and February 2004, the contractor was
> awarded jobs for bulkhead removal and tree chipping. Merla accepted
> $2,500 more from the contractor for steering the bulkhead work, as
> well as cash payments in connection with other projects.
> 
> Keyport Borough Administrator David Palmara confirmed that the
> bulkhead job, which he said was worth about $30,000, was given to
> Steffer Demolition of Ocean Township.
> 
> In the same complaint, Robert L. Hyer was described by Merla as "our
> point guy" on projects steered to the contractor. For his role, Hyer
> allegedly took a $5,000 payment on June 18, 2003, outside a Neptune
> restaurant, as well as numerous smaller payments. Hyer was recorded in
> one conversation with the contractor saying: "We'll do whatever you
> want. . . . I know the game."
> 
> Paul Zambrano accepted $5,000 in cash from the contractor on Sept. 30,
> 2003, at a Tinton Falls restaurant — $3,500 for Zambrano and $1,500
> for Joseph DeLisa ($500 of DeLisa's payment was for the purchase of
> tickets to a DeLisa fund-raiser). In return, the contractor was
> promised municipal projects, including possible demolition work on the
> old West Long Branch borough hall. That contract has not yet been
awarded.
> 
> On Oct. 16, 2003, the FBI says, Zambrano accepted $2,000 in cash from
> the cooperating witness at a Tinton Falls restaurant. On Nov. 18,
> 2003, at the state League of Municipalities conference in Atlantic
> City, DeLisa allegedly accepted an envelope with $1,500 in cash while
> Zambrano accepted $1,500 for himself and $1,000 for an unidentified
> official for help obtaining contracts in another Monmouth County town.
> Zambrano allegedly accepted two more payments: one for $4,000 on Jan.
> 29, 2004, and one for $1,500 at the league conference on Nov. 17,
> 2004, from an agent posing as an employee of the contractor.
> 
> Thomas Broderick accepted more than $10,000 for laundering large sums
> of cash from the contractor's purported loan-sharking operation.
> Broderick became involved through an unnamed Keyport councilman who
> already had engaged in similar transactions with the contractor. In
> one transaction, Broderick accepted $50,000 in cash in a paper bag in
> a Tinton Falls restaurant on May 4, 2004. In return, Broderick wrote a
> check to the contractor for $45,000 and kept the difference in cash,
> which he later referred to using the code word "munchkins."
> 
> "I wish I would have known you sooner," Broderick is quoted as having
> told the contractor.
> 
> Patsy Townsend accepted $1,000 in cash from an "employee" of the
> contractor in exchange for steering future fire-related work
> (demolitions and such). The cash was exchanged during a party attended
> by several county officials and sponsored by the contractor at the
> League of Municipalities convention in Atlantic City in November 2004.
> Two county officials who had taken bribes from the contractor —
> including one that night — introduced Townsend to the contractor.
> 
> Richard J. Iadanza accepted $1,500 on June 25, 2004, for future work
> to be steered to the contractor and as a reward for warning the
> contractor to steer clear of a county official who might be
> cooperating with law enforcement. He took another $1,500 on Nov. 17,
> 2004, in exchange for future government work for the contractor.
> Iadanza was repeatedly captured in recordings discussing other
> payments, including his belief that his vote in favor of someone in
> line for a $45,000-a-year municipal position entitled him to a $10,000
> to $12,000 cash payment.
> 
> The same complaint alleges that Joseph "Joey Buses" McCurnin accepted
> $1,000 for warning the contractor away from a public official who
> might be cooperating with authorities.
> 
> Raymond O'Grady is accused of accepting $6,000 from undercover agents
> who he believed were employees of the contractor — one payment for
> $1,000 on Oct. 21, 2004, and one for $5,000 last Thursday — in return
> for future work. The meeting was set up by an unnamed county official
> who was not cooperating with authorities and who told the agents that
> O'Grady was politically well-connected and about to become mayor of
> Middletown. During the meeting with the undercover agents, O'Grady
> bragged he could "could smell a cop a mile away."
> 
> "Mr. O'Grady should have his olfactory senses tested immediately,"
> Christie said during the news conference.
> 
> John J. Hamilton Jr. had the contractor install a paved driveway
> valued at about $5,000 or $6,000 for free at his home in August 2001
> in exchange for the promise of municipal contracts. Hamilton
> subsequently asked the contractor for a $1,000 receipt in the event
> that he had to explain the driveway. FBI agents approached Hamilton in
> November 2002, at which time he falsely told the agents that he had
> received a discount because the contractor was doing other work in the
> area at the same time.
> 
> Paul Coughlin took $3,000 in an envelope on May 19, 2004, from the
> contractor in exchange for future municipal work, including the
> demolition of Hazlet's town hall. That work was performed Sept. 4,
> 2004, by Lertch Wrecking of Wall and Freehold.
> 
> Assistant U.S. Attorney Mark McCarren said Keyport was the only
> municipality where the contractor actually received work because of
> the bribes.
> 
> "Our targets were far better on taking the money than they were on
> awarding the promised work," McCarren said.
> 
> Pay-to-play "alive and well"
> 
> The investigation stemmed from an earlier probe into corruption in
> Asbury Park that led to the convictions of former Mayor Kenneth E.
> "Butch" Saunders Jr. and his adviser, Rayfield James; former City
> Councilman James Condos; former housing authority Executive Director
> Kenneth Nixon; and former City Manager and former Ocean Township Mayor
> Terrance D. Weldon.
> 
> And it comes at a time when public officials are under greater
> scrutiny. The Legislature is scheduled to convene a special session
> Monday to try to pass tougher ethics laws and a ban on pay-to-play,
> the practice of rewarding campaign contributors with government
contracts.
> 
> "This news today shows that pay-to-play is alive and well in counties
> and municipalities," Assemblyman Steve Corodemus, R-Monmouth, said
> Tuesday. "It is now time to act for a comprehensive pay-to-play reform."
> 
> Seventy-six public officials in the state — including those arrested
> Tuesday — have been charged with, been convicted of, or pleaded guilty
> to corruption charges in the past 37 months, according to Christie.
> The officials come from all corners of the state and include Democrats
> and Republicans, proving that corruption is "an epidemic," he said.
> 
> Monmouth County Freeholder Thomas J. Powers said he doesn't believe
> corruption is widespread in the county — particularly in county
> government — even though six of the 11 officials arrested in Tuesday's
> sting are county employees. But he noted none of the alleged offenses
> dealt with county contracts.
> 
> "Since I've been on the Board of Freeholders, I've never had any
> suspicions that anyone on the board had any dirty dealings," Powers
> said, adding, "If so, I would have walked" away a long time ago.
> 
> But Christie noted one conversation cited in the complaints in which
> an unnamed county official said, "Nobody watches, nobody hears, nobody
> sees."
> 
> "I am here to tell them that somebody watches, somebody hears,
> somebody sees and, most importantly, somebody acts," Christie said.
> "You would think that they'd get the idea by now."
> 
> http://www.app.com/apps/pbcs.dll/article?AID=/20050223/NEWS/502230357





 
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