UPDATE: LYNCH PLEADS
GUILTY
Sentencing in
December on fraud, tax evasion charges
By KEN SERRANO and
RICK MALWITZ with AP from thnt.com September 15, 2006
NEWARK -- Admitting he
betrayed the trust of New Jersey residents, John A. Lynch, a former state Senate
president who wielded enormous power over the state's Democratic political
machine, pleaded guilty today to fraud and tax evasion charges.
A business partner also pleaded to tax charges.
The case involved his efforts to help a South Brunswick company get a project
approved.
Lynch, a former mayor of New Brunswick, admitted in federal court that he
accepted $25,000 from a sand mining company in return for helping the company in
its efforts to build a recreational park.
He also admitted failing to declare $150,000 in extra income he earned in 1999.
Lynch did not speak to reporters, but issued a written statement apologizing to
his family, friends, colleagues "and most importantly to the citizens of New
Jersey, whose trust I betrayed by engaging in the misconduct which I
acknowledged this morning."
The payments from Dallenbach Sand Co. took place between March 1998 and February
2002, according to court documents. In return, Lynch took a number of
actions, including sending a letter on official state Senate stationery to the
Department of Environmental Protection, vouching for the company's proposed
project.
The company had proposed building a 400-acre water park on state property.
Lynch's business dealings had been under scrutiny for months as prosecutors
apparently probed whether he used his political influence to earn money.
The FBI last year searched the Tinton Falls offices of Executive Continental, a
consulting firm that Lynch owns with John E. Westlake.
Lynch pleaded guilty to one count each of tax evasion and theft of honest
services through fraud. Each count carries a possible federal prison
sentence of five years, and a fine of up to $250,000. He is to be
sentenced Dec. 19, and was released until then on a $100,000 personal
recognizance bond.
He did not speak in court other than to answer, "Yes, your honor" to a long
series of questions about his conduct.
The admission of guilt will bring to an end the political influence of a man who
inherited from his father the role of Middlesex County political boss, and used
his considerable power in 2001 to help Woodbridge Mayor James E. McGreevey get
elected governor.
Westlake, 76, a prominent Monmouth County developer, also pleaded guilty to tax
charges today.
Neither Lynch, 67, nor his attorney Jack Arseneault of Chatham returned several
messages left on their cell phones last night.
Even for a Lynch rival, the news seemed to produce a sobering note of regret.
"It's a shame because he had so much to offer, if he were to only have kept his
focus on the good things, and his eye on the ball," said a Democratic Party
officeholder, who has often been at odds with Lynch.
The party official said Lynch's success in the political arena "as an extremely
smart and capable legislator gave him a sense of entitlement."
Another prominent elected official said the charges pertain to a development
project in New Brunswick.
Lynch a "choreographer"
In an exclusive interview with the Home News Tribune in November, Lynch said he
believed investigators were probing his role in a New Brunswick luxury-housing
project, the Highlands at Plaza Square. The project, at Route 18 and New,
Neilson and Richmond streets, is a four-story building of 415 luxury apartments.
Lynch told the newspaper he participated in a meeting in 2000 at which it was
agreed that three companies would create a joint-venture partnership for the
project: The Applied Cos. of Hoboken, Roseland Property Co. of Short Hills
and Matrix Development Group of Cranbury.
Bringing parties to the table as a "facilitator," a "choreographer," Lynch said
in the interview, "was my only involvement in the project."
His role, he said, "was to make sure the politics would work."
Lynch said he believed that a "success fee" obtained for his work is what
investigators were particularly interested in.
But in a wide-ranging investigation, federal authorities subpoenaed records from
more than 80 companies, individuals, municipalities and other entities.
The activities of Lynch and Westlake were first examined by a grand jury in
Camden County investigating activities involving McGreevey aides Gary Taffet and
Paul Levinsohn. The grand jury was looking into their role in the sale of
billboards that netted Taffet and Levinsohn more than $2.2 million.
Lynch said he became aware in the summer of 2004 that the investigation spread
to his role in the New Brunswick deal.
On Nov. 9, 2005, the FBI raided Lynch and Westlake's Tinton Falls office.
The search warrant special agents came armed with authorized the seizure of all
telephone diaries, logs, financial information and more specifically, tax
records from 1999 through 2004 for Lynch, Westlake and their two businesses.
It went on to mention any records reflecting any "concealment of funds" between
Lynch and Westlake and their two companies, Alma Ltd. and Executive Continental
Inc.
Arseneault has called Lynch's tax returns "extremely appropriate."
Westlake in a statement issued in November said he was proud of the work he's
done on behalf of his clients and of his friendship with Lynch, characterizing
the probe only as "upsetting."
Probe widens
The FBI wanted documents pertaining to dozens of development, real-estate and
engineering firms, and companies as large as General Electric and Walgreens and
as small as Amboy Aggregates of South Amboy and the Dallenbach Sand Co. in South
Brunswick.
Dallenbach President Harold Herbert said in November that the company spent
about $38,000 for consulting work performed by Lynch and Westlake on a proposal
for the company to open a sand mine in South Brunswick.
"We walked away from the project," according to Herbert, who said he explained
the work done by Alma Limited to FBI officials who questioned him about five
months earlier. He considered the $38,000 well spent, since it allowed the
company to avoid costly mistakes.
Soon after the Nov. 9 raid, towns across New Jersey received subpoenas in the
Lynch and Westlake investigation. Some of the subpoenas sent to New
Brunswick, Edison and other towns sought records related to Pennrose Properties,
a Philadelphia-based developer.
When news of the raid broke, Lynch dug in his heels.
"I am sure that I have been repeatedly investigated due to the repeated press
accounts calling me a "boss,' a "warlord,' and many other uncomplimentary names
as a result of the nonsense perpetrated by people associated with the McGreevey
Administration."
"I have done nothing improper and I am sure that any investigation will come to
that conclusion," he wrote in a prepared statement.
Political rise
In first entering public life, Lynch followed the path of his father, John A.
Lynch Sr., the man for whom a bridge over the Raritan River is named. Both
father and son served as mayor of New Brunswick and as members of the state
Senate. Both rose to the position of state Senate president.
The younger Lynch was elected mayor in 1979 and served for three terms. He is
widely credited with helping orchestrate the city's revival.
Lynch chaired the Democratic Party in Middlesex County, and was often referred
to as one of the state's most powerful political bosses — a term he loathed.
Along the way, Lynch gained unwanted notoriety when his brother-in-law, Louis
Auricchio Jr., who was poised to take control of the New Jersey faction of the
Genovese crime family gunned down the faction's boss, John DiGilio, in 1988.
Auricchio pleaded guilty to the slaying and remains in prison.
Lynch considered a run for the governor's office in the 1980s. Though that
would not happen, he co-chaired McGreevey's gubernatorial campaigns in 1997 and
2001.
When McGreevey defeated Republican Bret Schundler in 2001, Lynch was hailed as
the kingmaker.
But soon after McGreevey took office his relationship with Lynch soured.
Even before McGreevey resigned in August 2004, amid reports of a gay sex
scandal, Lynch was part of an effort to have McGreevey replaced on the
Democratic Party ticket by U.S. Sen. Jon S. Corzine.
Lynch abandoned public office in 2001, but remained active in politics and used
his political acumen to create the partnership with Westlake, Executive
Continental.
In May, Lynch faxed a statement to the media, announcing his decision, "to
withdraw — entirely, permanently and irrevocably — from a wide range of public
organizations, whether political or philanthropic in nature."
His withdrawal followed a Gannett New Jersey story that suggested he acted
improperly in his role as head of New Directions for Responsible Leadership, a
political action committee he headed.
The PAC paid Monroe Mayor Richard Pucci $150,000 for consulting services.
At the same time Jack Morris, a developer with close ties to Lynch, was seeking
approval of a development project in Monroe.
Lynch denied wrongdoing, claiming, "I am a liability because of perception, not
reality." He said that friends, such as Pucci, "have been hurt because of
their association with me."
In the five months since the announcement, according to Pucci, Lynch, "has been
in a very low-key mode. He is in a stop-and-hold pattern."
Contributing: Gannett New Jersey
kserrano@thnt.com
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