In the following press release New Jersey U.S. Attorney Christopher J. Christie and State Attorney General Anne Milgram announced that former Newark Mayor Sharpe James was charged in an Indictment today with using city-issued credit cards to spend lavishly on himself, eight female companions and others during personal trips and vacations to such places as Martha’s Vineyard, Rio de Janeiro, the Dominican Republic and Puerto Rico,.
The Indictment also charges James in a second fraud against the citizens of Newark in which he allegedly facilitated and approved the drastically cut-rate sale of city-owned land to Tamika Riley, one of his companions, who fraudulently reaped hundreds of thousands of dollars from the sales. She too is charged with this fraud in the Indictment.
Following the Indictment’s return, James, 71, surrendered voluntarily to Special Agents of the FBI and was scheduled to make an initial appearance in federal court. Riley, 38, was arrested by the FBI and was to appear in federal court as well.
Details of the credit card charges have been removed but can be seen by clicking here.
Riley of Jersey City is alleged to have made more than $500,000 from the purchase and sale of Newark properties in transactions facilitated by James’ official intervention as both Mayor and State Senator. The Indictment charges that James improperly steered properties to Riley under a program designed to enable experienced, financially sound and qualified developers to buy blighted municipally owned properties at substantially less than market rates on the condition that they rehabilitate the properties before reselling them at market prices. With James’s help, Riley acquired the properties at cut-rate prices and then quickly sold – or “flipped” – at least seven properties at much higher prices without any rehabilitation.
According to the charges, Riley had no real estate or construction experience; nor did she possess the financial wherewithal or backing required to participate in the program. She was, in fact, the owner of a failed Newark clothing store and had operated an entertainment and public relations firm that reported no income or assets on tax returns in 1999 or 2000, the years before she started flipping Newark properties, according to the Indictment.
At the same time, Riley raised and donated campaign funds for James and traveled internationally with him, enjoying vacations and meals funded in part with the Cityissued credit cards, according to the Indictment. James also intervened officially on Riley’s behalf in other ways, including attempting to help her secure a lease from Newark for office space; a $25,000 state grant for her corporation, TRI, and the sale of the basement level of 111 Mulberry Street, a City property. The latter two efforts did not succeed.
“The allegations in this Indictment are stark examples of the greed and arrogance of unchecked power,” Christie said. “When Sharpe James had a choice between enriching himself or helping the people of Newark, he chose self-enrichment. When he had the choice between impartially serving the citizens of Newark and the State of New Jersey or rewarding companions, supporters and himself with taxpayer money, he chose to cheat the people of Newark and the citizens of New Jersey.”
“The incidents of theft and abuse detailed in today’s Indictment allege a shameless and outrageous misuse of government funds that are stunning in their scope,” New Jersey Attorney General Anne Milgram said. “While a city struggles to balance its budget and provide vital services to its residents, its mayor spared no expense to entertain himself lavishly with public funds. Public officials are elected to serve the public, not exploit their positions for private gain.’”
“This Indictment of Senator and former Newark Mayor Sharpe James is powerful proof that the FBI will not allow corruption to exist in New Jersey government,” said FBI Special Agent in Charge Weysan Dun. “The citizens of this state place a tremendous amount of trust in elected officials when they vote them into office. When elected officials violate that trust the FBI will be there with its investigative resources and an unswerving resolve to fight corruption and greed.”
With respect to the Newark property fraud, the Indictment charges that James misused his positions as Mayor of Newark and State Senator to improperly favor Riley and obtain more than $500,000 in money and property for her by steering sales of city-owned property at steeply discounted prices to Riley, through her company, TRI. The charges further state that Riley, in turn, almost always shortly thereafter sold, or “flipped,” these properties for lucrative profits, without redeveloping them, as required by her contracts with Newark.
The Indictment alleges that Riley bought and resold the following Newark Properties:
Property Address | Date of Sale to TRI | Amount of Sale to TRI | Date of Resale by TRI | Amount of Resale by TRI |
51-53 St. James Place (Phase I) | 08-03-01 | $4,000 | 09-04-01 | $25,000 |
47 Parkview Terrace (Phase I) | 08-03-01 | $4,000 | 09-04-01 | $25,000 |
47 St. James Place (Phase I) | 08-03-01 | $6,000 | 11-29-01 | $155,000 |
829-831 South 12th St. (Phase I) | 08-03-01 | $2,000 | 11-29-01 | $130,000 |
592 Bergen St. (Phase II) | 04-09-02 | $6,000 | 05-08-02 | $50,000 |
740 S. 15th St (Phase II). | 04-09-02 | $6,000 | 05-08-02 | $15,000 |
380-82 Avon Ave (Phase II) | 04-09-02 | $6,000 | 05-08-02 | $15,000 |
590 Bergen St. (Amended Phase III) | 02-17-05 | $4,000 | 03-08-05 | $100,000 |
86-88 W. Alpine St. (Amended Phase III) | 02-17-05 | $8,000 | 10-31-05 | $150,000 |
During the fall of 2002, the City Council had approved and James had signed a contract for Riley to obtain another nine City of Newark properties. However, those sales were not consummated after James informed city employees, through an intermediary, that they should not conduct business with Riley at that time.
In 2004, as the issue of the power to engage in Newark property transfers remained a point of contention between James and the City Council, James introduced and shepherded to passage a state law that specifically expanded his powers over the land sales in the City of Newark. In support of the law, James accused City Council members of improperly arranging sales to benefit a “boyfriend, girlfriend, momma, poppa” and others.
The Indictment charges that in statements in support of his legislation before the state Senate’s Community and Urban Affairs Committee, on March 1, 2004, James said:
“What we have is that [City] Council people are giving themselves municipal land so that at the end of their term of office they will have acquired wealth based on the acquisition of municipal property which is contrary to law and very wrong …. This law is needed to ensure that we protect the public trust. That we do not allow thievery with municipal property….”
After this legislation was passed, and after a summer vacation and outings with James, according to the charges, Riley again began acquiring property from the City of Newark, including the purchase of two Newark parcels for $12,000 in February 2005, one of which she sold for $100,000 a month later and the other which she sold in October 2005 for $150,000, as described in the chart. She did not rehabilitate either of these properties as required.
The Indictment further charges that right after a stay with James at a resort in the Dominican Republic, Riley and James, as the City’s representative, executed another contract for the purchase of two more properties in May 2006, shortly before the end of James’ tenure as Mayor. These sales were never consummated based on court orders freezing those sales in late May/early June 2006.
The Indictment also charges Riley defrauding the New Jersey Department of Community Affairs (NJDCA) by obtaining significant housing subsidies ranging from approximately $666 per month in December 2001 to approximately $788 per month in or about 2005 to defray her personal rental expenses through false representations to the NJDCA, including failing to report the business income that she was obtaining through the Newark property sales.
The Indictment also charges Riley with corporate tax fraud for making false statements on her 2001, 2002 and 2005 corporate tax returns for TRI by intentionally not disclosing income from the property sales and by inflating certain items on her 2005 corporate return that under reported her business’s true gain for that year.
In connection with the land purchases and sales to Riley, James and Riley are charged with three counts of mail fraud and a count of fraud involving a local government which receives federal funding. James and Riley also are charged with conspiring to use the mails to deprive the governments that James served of his honest services as a Mayor and Senator, an offense that carries a maximum penalty of five years in prison, under Section 371.
Riley alone faces 20 years in prison per count in connection with the NJDCA mail fraud charges (Counts 26 to 29), 3 years in prison on each corporate tax fraud charge (Counts 30 to 32) and 5 years in prison on the tax evasion charge in connection with her personal tax return for 2005 (Count 33).
All counts in the Indictment carry a $250,000 fine, per count. An Indictment is merely an accusation. Despite Indictment, every defendants is presumed innocent unless and until proven guilty beyond a reasonable doubt.
Christie wished to credit Special Agents of the FBI, under the direction of Special Agent in Charge Weysan Dun; Special Agents of the IRS Criminal Investigation Division, under the direction of Special Agent in Charge William P. Offord, and investigators from the New Jersey under the direction of Attorney General Anne Milgram, for their combined expertise and exhaustive investigation of the case.
The case is being prosecuted by Assistant U.S. Attorney Judith H. Germano of the U.S. Attorney’s Office Special Prosecutions Division, and Special Assistant U.S. Attorney Perry Primavera, a Deputy State Attorney General on assignment from the New Jersey Attorney General’s Office.
Resources
FBI Press Release
Indictment - Part 1 (45 pages)
Indictment - Part 2 (45 pages)
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