Corruption - Ledger - How Sting of 11 occurred

Published in the Star Ledger, Sunday, September 9, 2007

How Jersey's remarkable sting occurred
It all started in Pleasantville

BY JOHN P. MARTIN AND JEFF WHELAN
Star-Ledger Staff

Jack Surrency got the offer last year, the same one countless other New Jersey officials had received.

Surrency, the school board president in Bridgeton, Cumberland County, was invited to an all-expenses getaway at an Atlantic City casino. And, he acknowledged Friday, the offer included $2,600 in campaign donations.

There was only one catch: He would have to support a new insurance company seeking municipal contracts.

Surrency refused.

But 11 other public officials allegedly didn't, as the state's corruption-weary residents learned from prosecutors last week.

The case, dubbed Operation Broken Boards by the FBI, began in the economically depressed Atlantic County city of Pleasantville. Located just a dice throw from Atlantic City, the town of 19,000 residents may look like another suburban outpost along the Atlantic City Expressway, but it struggles with many of the same problems that beset poor urban centers.

Pleasantville receives about $65 million a year in state aid, and had been designated as one of the state's 31 underperforming Abbott districts. Low test scores, cash woes and a leadership void -- more than a dozen superintendents in a decade -- led the state to seize control of the school district this summer.

Now prosecutors say a majority of the school board agreed to be bought, as did the chief of staff to Newark's city council president, two one-time Passaic councilmen, the Passaic mayor, and two members of the state assembly, Alfred Steele of Paterson and Orange mayor Mims Hackett Jr. Most have declined comment or promised vindication.

In some ways the corruption charges have a same-old, same-old Jersey feel to it. Like the scores of cases that have preceded it in the last five years, this one had secretly wired informants, cash payoffs in parking lots and restaurants, and a trail that led investigators to elected officials in three counties.

But some aspects of the case are remarkable, even by Garden State corruption standards.

Some of the bribes allegedly occurred weeks after investigators had gone public with a similar pay-to-play undercover operation in neighboring Atlantic City.

And suspects allegedly continued to take the cash despite glaring signs that a sting operation was under way.

"I thought I could no longer be surprised by a combination of brazenness, arrogance and stupidity. But people elected in this state continue to defy description," U.S. Attorney Christopher Christie said after the arrests.

For years, the Pleasantville school board had been as troubled as the system it attempted to manage, drawing headlines because of its squabbling and embarrassing gaffes.

"Thirty-four years in law enforcement was telling me that something really wasn't right with that board," said Pleasantville Mayor Ralph Peterson Sr., a former police chief, and critic.

THE CALLAWAYS

Some say the real trouble began four years ago, when Maurice "Pete" Callaway won a Pleasantville council seat; last year he joined the school board.

Callaway was part of a politically active family that had been consolidating power across Atlantic County. His brother, Craig, was the bullhorn-wielding council president in Atlantic City; other siblings held appointments or party jobs.

"The Callaways always seem to offend people and get in the middle of all that kind of stuff," said Shirley Bond, 71, who lives in the area and knows the family. "When Pete first came to Pleasantville, I said, 'Look out.'"

FBI agents had caught Craig Callaway taking bribes in 2002, and secretly turned him into a wire-wearing informant. By last summer, they were focusing on the school board that Callaway allies controlled.

Agents enlisted two businessmen to be the sting's cooperating witnesses -- the informants who would meet with the targets, record their conversations and pass them bribes, according to criminal complaints and agents' affidavits filed last week in federal court.

Neither cooperator was named in court filings, but public records and sources briefed on aspects of the investigation identified them as John D'Angelo, an insurance broker from Egg Harbor Township, and Bruce Begg, president of Aetna Roofing, a Trenton-based company.

Together, the two men boasted a broad network of contacts. Begg's family-run business had been operating for more than 30 years, and won municipal contracts throughout New Jersey and Pennsylvania.

D'Angelo was a well-known businessman in South Jersey circles and a regular at Atlantic City conventions, where the mix of money, politicos and parties has for years proved a fertile ground for FBI agents.

Why the men would cooperate -- whether for money, leniency or public service -- was unclear.

In a phone interview Friday, D'Angelo acknowledged his role but would not elaborate except to say: "I wasn't in trouble. I didn't do anything wrong. And I was used in a capacity that the U.S. attorney's office will clarify -- hopefully in the next couple days."

Also on Friday, D'Angelo's attorney, Richard King, released a letter from Assistant U.S. Attorney James Nobile that confirmed D'Angelo was never a target in the case but rather had "volunteered his cooperation" in the Pleasantville investigation.

Begg declined to discuss the case.

CAUGHT ON TAPE

In May 2006, prosecutors allege, the two cooperators struck deals to pay Pleasantville board members for insurance contracts. Then the cash and cameras began rolling.

One of the first payoffs occurred in June 2006, when Maurice Callaway met the roofer outside an Egg Harbor Township restaurant, prosecutors said.

Callaway brought along a friend, Louis Mister, and allegedly instructed the roofer to hand the $1,500 bribe to Mister. According to the complaint, Callaway spoke as if he believed that he wasn't doing anything wrong if he didn't touch the money.

"Being a candidate, I always bring somebody with me," he allegedly explained.

The alleged point man in the scheme was Jayson Adams, 27, who at the time was board president. Adams boasted about his ability to "keep people in line" and decide who receives how much, according to the criminal complaints. He also received the promise of a consulting job with the insurance benefits company the contractors represented.

If Adams had any inkling that he was dealing with FBI informants, he never showed it. According to the complaint, during one conversation with the insurance broker last summer, he allegedly joked, "We're either gonna get this job together or go to jail together."

The contractors handed out more than $30,000 to Pleasantville board members in about five months, according to prosecutors. Some of the payoffs occurred in September, less than three weeks after Craig Callaway and two other Atlantic City council members were named as defendants in a highly-publicized sting.

In November 2006, FBI agents decided to confront one of the Pleasantville board members. James McCormick had allegedly accepted $3,500 two months earlier, wired to a bank account in Georgia. In an interview at the bureau's Atlantic City office, McCormick did not dispute the payment, according to an FBI agent's affidavits filed with his complaint.

McCormick allegedly said he needed the money to renovate his basement so the Pleasantville Democratic Club had somewhere to meet.

By early this year, others began scrutinizing the board.

In March, the Pleasantville Board of Education hired the law firm Decotiis, FitzPatrick Cole & Wisler, which had served as board counsel in past years, to review the new insurance contracts. A board member, who was not part of the majority but was concerned about district finances, pressed for the review and convinced his colleagues to agree.

In a 27-page report delivered a month later, the firm cited "enormous gaps" in record-keeping, threats or intimidation against at least two witnesses and "a reasonable suspicion" of crimes including bribery, retaliation, official misconduct and a failure to abide by state pay-to-play regulations.

The report noted a maze of insurance companies and contracts with ties to allies of Craig Callaway's political organization and to D'Angelo and George Miller, a prominent Atlantic City attorney. And it noted that D'Angelo and Adams were employees of a new insurance firm called Coastal Solutions, LLC, but said it was unable to find much information about the company.

Around the same time, the Press of Atlantic City published its own investigation suggesting ethical or possibly criminal activities regarding the district's insurance contracts.

After both reports, the board directed the law firm to forward its conclusions to state law enforcement officials for possible action.

"We never got any reply," said George Frino, the attorney who led the investigation.

THE CASE WIDENS

By that time, D'Angelo had again made the convention rounds and identified new targets from other towns for the sting. One, Passaic Councilman Jonathan Soto, allegedly told the insurer last November that he "had friends in other municipalities" and could help land more contracts. Weeks later, prosecutors say, Soto sent the contractor a text message: "Will need that green broccoli for the 1st entrée."

By spring, agents had identified possible targets in Paterson, Passaic and Orange.

Steele, a minister and Passaic County undersheriff, allegedly accepted $14,000 and guaranteed help with contracts. Prosecutors say Marcellus Jackson, a Passaic council member, took $16,500.

The final payoffs came this summer: $5,000 each to Hackett, the Orange mayor, and Samuel Rivera, the Passaic mayor.

One of the defendants, Keith Reid, of Newark, wasn't an elected official but promised access to them. Reid, chief of staff to Newark City Council President Mildred Crump, allegedly told the roofer and insurer that he had a consulting firm that could win them contracts in Newark, East Orange, Irvington and Elizabeth.

"There are folks there who we can pick up the phone and call, who can open doors," he said in January, according to the complaints.

Not long after, the contractors hired Reid.

Prosecutors acknowledged last week that they ran the sting through a fake insurance corporation, but would not name it.

Sources and public records -- including the Pleasantville board report -- suggest it was Coastal Solutions, which was formed last summer. On state incorporation records, Coastal Solutions listed its address as the same Trenton location where Begg's family runs Aetna Roofing.

The company's Web site -- which once listed D'Angelo and Adams as employees -- was removed last week, about 12 hours before agents swept in and arrested the suspects. An older copy of the site touted a line of praise from one of its so-called satisfied customers -- the roofer, Begg.

Coastal's success "is rooted in experience and integrity," he said. "When they represent us, we know we are being heard."

Staff writer Wayne Woolley contributed to this report.

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