White Collar Crime News

Assemblyman Anthony Chiappone and His Wife Charged with Official Misconduct August 26, 2009

Another day in New Jersey, another politician indicted.  As a politician myself and a white collar crime attorney, I pay special attention to these cases.  Some people come up with amazing schemes while other people just make mistakes. I don’t know Chiappone, but this doesn’t seem like a big scheme.  Are you seriously going to throw away everything for $8000?

I really want to know how this campaign operated.  I am sure there was a treasurer that handled all of the money.  That person seems to be missing from this  press release.  In any campaign, there are many people involved and all of them need to be interviewed.

In addition, I would want to see all bank records from this campaign, other campaigns as well as personal bank accounts.  As an attorney, you not only need to know the entire scope of the case but you need to see if another hammer is going to drop at some point.  If all of the records show that this was an isolated incident, it is more likely that this was a paperwork snafu and not a big scheme to pocket money. 

Should be an interesting case, especially since Chiappone refuses to step down.  I am really skeptical about his wife’s participation in this.  In my own practice, I’ve seen the “squeeze play” before where the wife is indicted in hopes that the husband falls on the sword to save her.

TRENTON – Attorney General Anne Milgram announced that New Jersey Assemblyman Anthony Chiappone and his wife were indicted today on charges they conspired to funnel more than $8,000 in state-issued paychecks for a legislative aide and a purported aide into their own personal bank accounts and Chiappone’s 2005 Assembly campaign.

They allegedly had $7,532 in paychecks issued to one legislative aide, who donated all of his checks to the campaign. The defendants allegedly diverted $4,299 of those checks into their bank accounts for personal use, as well as a $629 paycheck issued to a woman they claimed was another legislative aide.

While the remaining checks from the male aide did get deposited into the campaign’s bank account, the defendants allegedly failed to include those contributions in reports filed with the New Jersey Election Law Enforcement Commission (ELEC). Chiappone, who was first elected to the Assembly in 2003, lost the Democratic primary in June 2005, but was elected to the Assembly again in November 2007. He is running for re-election in November.

“We charge that Assemblyman Chiappone and his wife conspired to have the state issue more than $8,000 in paychecks for legislative aides, knowing that the money was really destined for the couple’s own pockets or his re-election campaign,” said Attorney General Milgram. “This indictment chronicles a betrayal of the public trust by this elected official.”

According to Criminal Justice Director Deborah L. Gramiccioni, Assemblyman Chiappone, 51, of Bayonne, who represents the 31st Legislative District, and his wife, Diane Chiappone, 54, were charged in a seven-count state grand jury indictment with conspiracy (2nd degree), two counts of official misconduct (2nd degree), theft by deception (3rd degree), tampering with public records or information (3rd degree), falsifying or tampering with records (4th degree), and concealment or misrepresentation of contributions or expenditures (4th degree).

The indictment alleges that in 2005, Anthony and Diane Chiappone conspired to have 13 state paychecks totaling $7,532.96 issued to a man who was a legislative aide to Assemblyman Chiappone, knowing that the checks would actually be deposited into the personal bank accounts of the couple or the 2005 Chiappone for Assembly campaign account.

The aide, who is not named in the indictment, donated all of the paychecks he received to the 2005 Chiappone for Assembly campaign. However, instead of depositing all of the checks into the campaign’s bank account, Anthony and Diane Chiappone allegedly deposited eight of the checks totaling $4,299.32 into their own bank accounts for their personal use.

The defendants did deposit the other five paychecks totaling 3,233.64 into the 2005 Chiappone for Assembly campaign account. However, those checks were not reported in the campaign contribution and expenditure reports they filed with ELEC. Moreover, it is alleged the defendants falsely certified that contributions to the campaign did not exceed ELEC limits, even though the aide’s checks exceeded the limit of $2,600 for contributions from a single individual.

The indictment further alleges that in April 2004, Anthony and Diane Chiappone conspired to have a state paycheck in the amount of $629.47 issued to a woman who they claimed was a legislative aide to Chiappone. In fact, the woman, who is not named in the indictment, did not work as his aide. The woman endorsed the check, and the defendants allegedly deposited it into their own joint bank account.

State Warehouse Employee May Avoid Prison for Misappropriating Computer Equipment August 19, 2009

These probation with 364 deals are mostly for show.  Putting someone in jail for 364 days for non-violent offenses is a waste of tax payer money and everyone knows it.  New Jersey needs more creative sentences.  A thousand or so hours of community service would serve New Jersey much better than taking up another bed in the jail.  But since it is either prison, probation with jail or probation with no jail, the State likes probation with jail because it looks good and then they can lay off the blame on the judge when the defendant doesn’t get jail. 

TRENTON – Attorney General Anne Milgram announced that a suspended state warehouse employee pleaded guilty today for his role in misappropriating computer equipment from the Department of Treasury’s First Avenue Warehouse in Hamilton.

According to Criminal Justice Director Deborah L. Gramiccioni, Thomas Sundstrom, 67, of Southampton, pleaded guilty to third-degree official misconduct before Superior Court Judge Robert Billmeier in Mercer County.

Under the plea agreement, the state will recommend that Sundstrom be sentenced to 364 days in the county jail as a condition of a term of probation. Sundstrom was required by the state to forfeit his state job and will be permanently barred from public employment in New Jersey. He could face a fine of up to $15,000.

Judge Billmeier scheduled sentencing for Sundstrom for Oct. 29. Deputy Attorney General Anthony Picione, deputy chief of the Division of Criminal Justice Corruption Bureau, and Deputy Attorney General David M. Fritch prosecuted the case and took the guilty plea.

In pleading guilty, Sundstrom admitted that he gave computer equipment from the warehouse to people who were not entitled to receive it at the direction of the supervisor of the warehouse, David Winkler, 47, of Bordentown. Sundstrom said he gave computer equipment to a co-worker, Dominick Mangine, 45, of Jackson, who previously pleaded guilty in the case, and also gave computer equipment to juveniles who were assigned to the warehouse as part of a work study program of the Juvenile Justice Commission.

Winkler and Sundstrom were indicted on Nov. 20, 2008. The indictment charged that Winkler and Sundstrom misappropriated computer equipment for the personal use of other individuals, including other warehouse employees. Winkler was also charged with running a scheme in which he and other employees illicitly sold more than $24,000 in scrap metal and divided the proceeds between July 2005 and April 2007. Winkler and Sundstrom were suspended from their state jobs after their arrests on April 10, 2008.

Three other former warehouse employees have pleaded guilty in connection with the scrap metal scheme. They are James Mate, 49, of Yardville; Mangine; and William Gawroski III, 33, of Hamilton.

The charges resulted from a year-long investigation by the New Jersey State Police that commenced when Treasury officials obtained information that Gawroski was taking illegal payments from a recycling company in return for helping the company to secure more valuable equipment in auctions of surplus state computer equipment. The probe quickly expanded to include allegations that employees at the warehouse were taking home state-owned computers and that Winkler and other employees were taking surplus metal equipment to a non-approved recycler, selling it for cash as scrap metal, and splitting the money. The surplus metal items sold as scrap included desks, filing cabinets and other furniture and equipment.

The investigation was conducted and coordinated by Lt. Keith Dangler, Detective Sgt. 1st Class John Cappetta and Detective Sgt. Vincent Greene of the State Police State Governmental Security Bureau Investigations Unit, and Deputy Attorneys General Picione and Fritch.

Mate pleaded guilty to second-degree official misconduct and was sentenced on March 26 to three years in state prison. He and his co-defendants who pleaded guilty in the scrap metal scheme are responsible for full restitution for the thefts of $24,292. All of them forfeited their state jobs.

Mangine, who held the job of storekeeper at the warehouse, pleaded guilty to a charge of third-degree pattern of official misconduct and was sentenced on Feb. 26 to 364 days in the Mercer County Jail as a condition of two years of probation. He also was ordered to perform 50 hours of community service.

Gawroski pleaded guilty on April 11, 2008 to third-degree pattern of official misconduct. He faces probation.

The charges are pending against Winkler, who is free on $25,000 bail. The indictment charges him with conspiracy (2nd degree), two counts of official misconduct (2nd degree), theft by unlawful taking (3rd degree), and misapplication of entrusted property and property of government (3rd degree).

Family is indicted for official misconduct and other charges August 17, 2009

Its times like this that a family is going to quickly learn how tight they really are.  In just about any multi-defendant case, either someone flips or everyone pleas out at the same time.  In this case, it is unlikely that family members will flip on each other.  Thus, everyone will have to act as one.  This can really complicate things as it is tough to get everyone on the same page.  The lawyers need to  work together from the start to achieve the best results. 

TRENTON – A local administrator of the New Jersey Home Energy Assistance (HEA) Program was indicted today with her three sisters, her brother and her sister-in-law on charges they stole $24,086 from the state program.

In a related case, the owner of a Paulsboro-based heating oil company pleaded guilty last week to defrauding the HEA Program of $400,000 by offering low-income beneficiaries of the program cash for their state-issued assistance checks instead of fuel to heat their homes. The charges in both cases stem from investigations by the Division of Criminal Justice Corruption Bureau, conducted with assistance from the New Jersey Department of Community Affairs.

According to Criminal Justice Director Deborah L. Gramiccioni, Constance Campbell, 23, of Chester, Pa., was indicted today on charges she used her position as an HEA manager for Tri-County Community Action to process false HEA applications for herself and five family members. Tri-Community Action is a nonprofit contracted by the state to administer the HEA program in Cumberland, Gloucester and Salem counties.

Family members allegedly received a total of $24,086 in benefits for which they were not eligible, including $15,012 in HEA checks intended for heating oil purchases. They allegedly traded the checks for cash from the local fuel supplier who pleaded guilty last week.

That supplier, Thomas J. Harris, 66, of Woolwich, owner and sole proprietor of Harris Fuel Oil, purchased state assistance checks from numerous beneficiaries of the HEA Program. He pleaded guilty on Aug. 10 before Superior Court Judge M. Christine Allen-Jackson in Gloucester County to second-degree charges of financial facilitation of criminal activity (money laundering) and misapplication of entrusted property and property of government.

“This supplier’s conduct was outrageous,” said First Assistant Attorney General Ricardo Solano. “He tempted low-income residents with instant cash, exploiting their financial condition as well as the government program set up to help them heat their homes. When oil costs soared, so did his business, to the point where he misappropriated $400,000 in state funds in just 17 months.”

“Today’s indictment charges that a manager for the HEA Program in Salem and Gloucester counties abused her position of trust so she and her family could illegally profit,” Solano added. “We will not tolerate fraud against public assistance programs.”

The HEA Program is administered by the New Jersey Department of Community Affairs and local agencies contracted by DCA. The New Jersey HEA Program encompasses two separate programs, the Low-Income Home Energy Assistance Program (LIHEAP) and Universal Service Fund Program (USF). The LIHEAP program provides direct financial assistance to beneficiaries in the form of payments to utility companies and to fuel vendors to help low-income households meet the cost of home heating and medically necessary cooling. The USF program assists such households by providing credits against their natural gas and electric bills. The Harris plea involved the LIHEAP program. The Campbell indictment involves both programs.

“Those who think they can cheat government assistance programs will find themselves facing charges like these defendants.” said Director Gramiccioni. “We will work with the government agencies involved to uncover and aggressively prosecute anyone who defrauds these programs. Our investigation into misuse of HEA funding is continuing.”

Constance Campbell was indicted with her three sisters – Denise Campbell, 35, of Penns Grove, Patsy Campbell, 29, of Chester, Pa., and Priscilla Campbell, 21, of Paulsboro – her brother, Dennis Campbell, 37, and his wife, Hollyann Allen, also 37, both of Philadelphia, Pa.

Constance Campbell was an office manager/HEA manager for Tri-County’s Salem County and Gloucester County offices. Her duties included processing HEA benefit applications.

Between January 2007 and June 2009, Constance Campbell allegedly created fraudulent accounts for herself and each of the indicted family members, none of whom were eligible for benefits. Four, including Constance, didn’t even reside in New Jersey. Some used the family member’s name on the account, but others used the name of another person or a fictitious name to hide the beneficiary’s true identity. Certain applications also deliberately understated household income or included additional fictitious dependents in order to increase the amount of benefits paid out on the application.

Where a false name was used, the family member’s name would be listed on the account as the authorized representative of the household, so checks would be payable to the family member. The four defendants who did not reside in New Jersey allegedly used the address of a New Jersey resident family member or Post Office boxes in New Jersey to receive the benefit checks. The sisters who did live in New Jersey, Denise and Priscilla, allegedly received USF benefits in the form of credits to their utility accounts, in addition to LIHEAP checks.

All of the defendants were charged in the indictment with misapplication of entrusted property and property of government (3rd degree) and financial facilitation of criminal activity (money laundering) (3rd degree). In addition, Constance, Patsy and Dennis Campbell and Hollyann Allen were charged with official misconduct (2nd degree), theft by deception (3rd degree), tampering with public records or information (3rd degree), and falsifying records (4th degree).

All of the indicted defendants allegedly used Harris to obtain cash for HEA fuel oil checks issued during this past heating season.

Under Harris’ plea agreement, the state will recommend that he be sentenced to four years in state prison on each of the two charges, with the sentences to be served concurrently. He must also pay full restitution of approximately $152,000, and he is barred for life – along with any business in which he owns more than a 5 percent interest – from doing business with the state. Judge Allen-Jackson scheduled sentencing for Harris for Nov. 20.

In pleading guilty, Harris, admitted that he paid HEA beneficiaries for their program checks without delivering any fuel oil. Harris admitted that he would pay the HEA beneficiary a sum less than the amount of the state check, either by cash or company check, and keep the difference, depositing the HEA check into a company bank account.

Under the LIHEAP program, beneficiaries who pay heating costs to a fuel oil supplier receive energy assistance in the form of two-party checks payable to the head of the household and their fuel oil supplier, identified only as “Your Heating Supplier.” These checks are marked with specific instructions to the bank that they are only for deposit by the heating oil supplier.

Harris Oil was a participating energy supplier in the LIHEAP program, providing fuel oil in Gloucester County, but Harris would purchase benefit checks from beneficiaries who were not regular customers of his company.

Investigators learned that word had spread among HEA beneficiaries that Harris was engaging in the business of paying for HEA benefit checks. These transactions were generally conducted by Harris while parked in one of his business vehicles outside his office on West Broad Street in Paulsboro. Although the investigation by the Division of Criminal Justice Corruption Bureau revealed that Harris has been involved in this fraud for the past five or six heating seasons, the money involved grew substantially with the dramatic increase in the size of the HEA checks issued in the past season.

Investigators identified 259 specific transactions between January 2008 and May 2009 where Harris deposited an HEA benefit check and wrote out a contemporaneous check to the HEA beneficiary. From these 259 transactions, HEA funds totaling $399,812 were deposited into accounts maintained by Harris. Harris paid out $247,700.50 in checks to the HEA beneficiaries in exchange for these checks and, through these transactions, retained $152,111.50 of the HEA funds for himself.

Deputy Attorneys General David M. Fritch and Robert Czepiel took the guilty plea from Harris and presented today’s indictment to the state grand jury. The investigations in these cases were conducted and coordinated for the Division of Criminal Justice Corruption Bureau by Lt. Keith Lerner, Sgt. Robert Ferriozzi, Detective Andrea Salvatini, Detective Anthony Luyber, Deputy Chief of Detectives Neal Cohen, Analyst Alison Callery and Deputy Attorneys General Fritch and Czepiel with assistance from the New Jersey Department of Community Affairs.