Political Corruption

Eric McCutcheon

Forensic Accounting

Professor Evangelista

Political Corruption

Due October 13, 2010

It is hard to open up a newspaper today or search current events on the internet without finding a story about politicians and state officials getting in trouble or acting in ways that are less than expected of a person in their position. In an era that has seen the resignation of two presidents in the past 50 years for political scandals, it is easy to see why political corruption is on the rise. Political corruption is defined as the use of legislated powers given to government officials that are used for illegal purposes or illegitimate private gains. Political corruption only occurs if the act in question is a directly related to the duties bestowed upon that official. While there are many cases that involve political corruption, it is important to look at those which directly pertain to the State of New Jersey, in particular the case against Joseph Vas, Operation Bid Rig and the case against Sharpe James. In each case, it is important to discuss different acts that constitute political corruption as well as the motivations involved and the consequences for each act. The conditions which are more favorable for political corruption will also be discussed.

As previously stated, political corruption can come in many different forms although some acts are more prevalent than others. Some forms of government are also more susceptible to corruption than others. For example, local governments tend to have more corruption because of the high level of intimacy between officials and private individuals and in part to the high level of frequency. Many times local officials are no more than common citizens and have many more interactions with the people they govern as opposed to someone like the President of the United States. For this purpose the focus will stay on the local and state governments and specifically the State of New Jersey.

The first case is that of former Mayor of Newark Sharpe James. James was elected to the Mayoral Office in 1986. In 2001 James began dealing with a woman named Tamika Riley, a sole proprietor who owned an entertainment public relations company. Together Riley and James partook in a scheme to fraudulently buy and sell city owned property under the Ward Redevelopment Plan in Newark. Between 2001 and 2006 James fraudulently sold Riley 11 pieces of property on the terms that she would develop them within a certain time period. These transactions first came into question because it was obvious through Riley's lack of experience that she would not be able to develop the properties as promised. Riley sold the properties at a substantial discount. James, who was having an intimate relationship with Riley, helped Riley immediately sell nine of the eleven properties at enormous gains. Both James and Riley were convicted of five counts of fraud, namely on four counts of fraudulent sales of city owned property and one count of conspiracy to defraud the public. Both James and Riley appealed stating that the convictions did not have sufficient evidence to convict. On appeal, the court upheld the four counts of fraudulent sale of city owned property but overturned the conspiracy to defraud the public on the basis of a previous case in the matter. James in the end was sentenced to 27 months in prison and was ordered to pay a fine of $ 100,000.

The second case is a case known by its more common name; Operation Bid Rig. This operation is an ongoing investigation by the FBI, IRS and the United States Attorney for the District of New Jersey that focused on the political corruption in New York and New Jersey. As a result of this operation, more than 60 officials were arrested for crimes ranging from organ trafficking to money laundering. This case came to light in 2006 when a man named Solomon Dwek was arrested for a $50 million bank fraud. Fearing a harsh sentence, Dwek decided to become an FBI informant to reduce his sentence. Dwek infiltrated the money laundering scheme that directly connect the Syrian Jewish community to Israel. This network laundered money in the millions through nonprofit organizations and charities. Later, Dwek was introduced to a man named Moshe Altman, a Hudson county developer, who introduced him to a building inspector in Jersey City. From there, Dwek met countless political officials. Of the 44 arrested these are some of the most notable. Jack Shaw, a political operative of Jersey City, was arrested for political corruption and was later found dead in his apartment, apparently from suicide. Former Jersey City Mayor Leona Beldini was convicted of two counts of bribery and was sentenced to three years in prison. Former Hoboken Mayor Peter Cammarano III was convicted of extortion and bribery for accepting $ 25,000 in bribes. He was sentenced this past summer to 24 months in prison and was fined $ 4,000. Maher Khalil, former deputy of the Jersey City Department of Health and Human Services, was charged with extortion conspiracy for accepting $ 72,500 in bribes. He is currently awaiting sentencing.

The last case discussed is the current case against former Assemblymen Joseph Vas, the Mayor of Perth Amboy. Vas was indicted on March 11, 2009 on eleven counts including mail fraud, bid rigging, conspiracy and official