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Lynch pleads guilty to fraud, tax evasion charges

Ex-senator and Democratic Party kingpin admits taking kickbacks
Saturday, September 16, 2006


Former state Sen. John Lynch yesterday admitted secretly taking tens of thousands of dollars from a contractor while lobbying to help him develop state parkland, a stunning acknowledgment of corruption by one of New Jersey's most influential politicians.

Standing before a federal judge in Newark, Lynch pleaded guilty to defrauding the state's citizens and to tax evasion. He said he and his business partner, Jack Westlake, used a Tinton Falls consulting company as a "conduit" to accept and hide kickbacks they demanded from contractors.

Westlake, a developer and longtime member of the Monmouth County Board of Taxation, pleaded guilty to a separate tax evasion charge.

Their pleas marked a sudden end to a four-year investigation that began with an inquiry into billboard sales by two high-level aides to former Gov. James E. McGreevey and ended with the prosecution of Lynch, the former Senate president, Democratic Party leader and McGreevey's political mentor.

U.S. Attorney Christopher Christie called it possibly "the most significant" case in his office during a four-year barrage of corruption prosecutions that has sent dozens of elected officials, public employees and contractors to prison.

None was as powerful as Lynch, who left the Senate after two decades in 2002, but remains widely viewed as one of the state's reigning political bosses.

"Today, an era of corruption and influence peddling for personal profit has been put to an end," Christie said at a news conference.

Under the terms of his plea, Lynch, who is also a former mayor of New Brunswick, agreed to serve between 33 and 41 months in prison, although U.S. District Judge Stanley Chesler could opt to impose a longer or shorter term. He released Lynch on $100,000 bail but ordered him to return for sentencing Dec. 19.

The plea spared Lynch, the de facto leader of the Middlesex County Democrats, a trial on more serious charges that, if proven, could have sent him to jail for three times as long. Prosecutors had threatened to charge him with racketeering, a sweeping charge that would have portrayed Lynch as the mastermind of a criminal enterprise spanning years, according to three attorneys with knowledge of the negotiations.

Typically reserved for organized crime figures, a racketeering charge, if proven, could have exposed Lynch to a decade in prison and allowed the government to first freeze then seize millions of dollars of his assets. For months, Lynch had been characteristically defiant, telling friends he would fight the allegations.

Once the racketeering charge was introduced, the prospect of a trial "became a high-stakes game," according to one attorney close to the case.

Lynch decided not to play. He signed his plea agreement Thursday and the fire that made him a legendary and sometimes abrasive figure in state government barely flickered as he stood yesterday next to his attorney, Jack Arseneault, and admitted his crimes.

For nearly 30 minutes, Lynch stood almost motionless with his back to a courtroom of spectators and replied "yes" or "no" to questions from the judge. The only time he said more was when Chesler asked if he had taken any medication that might affect his ability to understand the proceedings.

Lynch, a 67-year-old attorney, said he had been taking pills for stress and anxiety and that he took his last dose "real early this morning, like 4 o'clock." But he said he was alert enough to plead.

After the hearing, Lynch's attorney released a statement in which Lynch apologized to the citizens of the state, his family and his supporters. He said he recognized his misconduct "will forever overshadow" his achievements during 20 years in the state Senate and three terms as New Brunswick mayor.

"I cannot adequately describe the extent to which that reality pains and sorrows me," he said in the statement. But, he said, "by instead electing to acknowledge my misconduct I hope that I can cease being part of the problem and start being part of the solution."

Christie, the U.S. attorney, said he believed the statement was sincere and he hoped it would send a message to other corrupt politicians. He praised the case prosecutors, Assistant U.S. Attorneys Jeffrey Chiesa and Ricardo Solano, and lead investigators, Special Agents William Grace of the FBI and William Frederick of the IRS.

Grace, an agent assigned to the FBI's Philadelphia division, started the probe nearly four years ago when he began investigating the sale of a 60-foot billboard in Washington Township, Gloucester County, by two top McGreevey aides, Gary Taffet and Paul Levinsohn, before they took office.

The trail eventually led to Westlake, who had been a partner in some of their billboard deals. Agents discovered Westlake, now 76, had formed a consulting partnership with Lynch in 1993, under the firm names Alma Ltd. and Executive Continental Ltd.

Lynch has previously said the two companies were essentially the same, and collected "success fees" for helping developers navigate the governmental approval process. Prosecutors said the firms were actually "conduits" for Lynch to receive secret corrupt payments.

As part of his plea hearing, Lynch acknowledged Alma demanded and received between $120,000 and $200,000 between 1998 and 2002 from a South Brunswick sand-mining firm that wanted to develop state parkland. The name of the company was not identified in court, but sources, news clippings and subpoenas in the case indicated it was Dallenbach Sand Co., which was run by Jack Whitman, a former mayor of Milltown.

In 1998, the company wanted to mine and redevelop Pigeon Swamp State Park in South Brunswick. The proposal drew opposition from those who feared it could disturb wetlands and the ecology in the area.

In court yesterday, Lynch admitted that twice that year he wrote letters on Senate letterhead to ranking officials at the state Department of Environmental Protection vouching for the company and supporting the project. At the same time, he said, he received at least $25,563 from the mining company in checks that were funneled through Alma to Executive Continental to the senator.

Company officials refused to comment.

Lynch also admitted he hid $150,000 in income that was funneled to him through Alma from a developer involved in the 1999 sale of 10 acres of riverfront land in New Brunswick.

Those deals were among at least a half-dozen projects that had come under scrutiny by federal investigators on the Lynch case. Christie declined to say if any developers would face charges or if they were victims who had been forced to pay. He also said his office would notify state pension officials about the conviction, but could not be sure if Lynch would lose his pension.

Gov. Jon Corzine, who like many Democrats had at one point relied upon Lynch's help to win office, was disappointed by the news.

"It's completely undermining to the public's confidence to see people of such senior position placing their own interests ahead of the public's," he said.

Senate President Richard Codey, one of Lynch's longtime political foes, said, "Clearly we've had our battles, but he did accomplish many good things for the city where he was born and raised and still lives, and certainly I feel for his wife and three children."

Staff writers Jeff Whelan and Deborah Howlett contributed to this report. John P. Martin covers federal courts and law enforcement. He may be reached at or (973) 622-3405.

Asbury Radio Editorial - John A. Lynch, Jr -

Twenty-five years gone by.

Twenty-five years ago, I had sources telling me how Lynch and his cohorts were operating the redevelopment of New Brunswick. One was a N.B. cop. One was an accused arsonist with 30 arrests on his record. I interviewed him in jail.

One more reference to the wonderful job Lynch did in New Brunswick and I'll be ill. Any politico who comments about his successes and how these "proceedings" have marred an otherwise brilliant career should be investigated themselves.

Back then, I wrote a story about the working poor in New Brunswick who were frozen out of their apartments, so that the code official - a political hack - could post the condemned sign on the door. Can't occupy a building with no heat or hot water.

    Tenants would pay their rents only to have the collector take off with the money. Then they'd be evicted for nonpayment. One family was burned out of the apartment they rented in a building owned by the police director's cousin. My magazine article was called "The Other 30-percent", after the quicky poll the city hired Eagleton Institute to do in reaction to my NYT's piece. (The Eagleton poll had showed that 70% thought redevelopment was good for New Brunswick.) The NYT's piece is up on this site under, 'Who is Asbury Radio?'. The magazine piece won a journalism award. 

A lot more needed to be written, but my jailhouse source clammed up after a contract was put out on him. I wasn't alone though, he also refused to testify in court, which earned him an extra 6 mos. on his sentence. 

The Hungarian community that gave New Brunswick some of its rich history was largely forced out by the tax concessions Lynch made to his cronies.

The minorities and low income people were forced out to Franklin. Urban Removal.

20 years later, Lynch finally tripped up a la Al Capone. He didn't pay his taxes. That allowed Christie's office to come in and do the job the state and local authorities wouldn't touch and tell the story the media for decades wouldn't report.

Now today (12/19/06) The Asbury Park Press printed an editorial calling for "no mercy" for Lynch; and US District Court Judge Stanley R. Chesler sentenced Lynch to 39 months in prison. Amen.

Maureen Nevin


For the Record - John Lynch, former mayor and state senate president, Entered Prison on Jan. 16, 2007

From the Home News (THNT):

LORETTO, Pa.: John A. Lynch Jr. surrendered to federal prison authorities here today, and was assigned to the prison camp at the Federal Correction Institute at Loretto.
Last month the 68-year-old Lynch was sentenced by U.S. District Judge Stanley R. Chesler to 39 months in federal custody, after pleading guilty to two counts of mail fraud and one count of income tax evasion.

Prison camps have the lowest level of security within the federal prison system. Inmates with the lowest flight risk are assigned to the camp. Unlike the adjacent low-security facility, the camp is not surrounded by a fence.

According to a prison official Lynch arrived at noon at the facility, located about 90 miles east of Pittsburgh...

His surrender date of Jan. 15 was changed by one day for the federal Martin Luther King Day holiday.

Home News Tribune Online 12/24/05
NEW BRUNSWICK The probe into the business activities of former Mayor John A. Lynch Jr. was widened yesterday when city officials received a subpoena from the U.S. Attorney's Office seeking all records of its business since 1993 with Lynch and 19 other individuals and companies.

"I have no clue what this is all about, and I'm not concerned," Lynch said yesterday.

"Whatever they want we will provide," said city spokesman Bill Bray.

According to the subpoena, received by the city yesterday in a FedEx delivery, it seeks delivery of the documents by Jan. 11.

The office of U.S. Attorney Christopher Christie informed the city it is not the target of the probe, according to Bray.

The investigation into Lynch's business dealings became widely known Nov. 9, the day after the Election Day, when the FBI carried out a search warrant in Tinton Falls at offices where Lynch and John E. Westlake share ownership in Executive Continental, a consulting firm.

Westlake alone also operates Alma Limited, another consulting firm.

The Nov. 9 search warrant sought all records of the dealings between Lynch, Westlake and the two consulting companies and 57 companies and individuals. It sought records for all of the city's business transactions from Jan. 1, 1999, to Dec. 31, 2004.

The subpoena delivered yesterday to the city began with Alma Limited and Executive Continental, followed by the names' Lynch and Westlake.

Also on the list were Penrose Properties, Richard K. Barnhart, MRA Plaza Associates, AEW, Roseland Property Co., Applied Development, AJD Construction Co., Joseph Taylor, Marshall Tycher, Carl Goldberg, Joseph Barry, David Barry, Anthony J. Diaco, and Hetal J. Patel.

Similar subpoenas have been issued to counties and to municipalities in Middlesex and Monmouth counties, according to a person familiar with the investigation.

The day the FBI searched the offices of Lynch and Westlake in Tinton Falls, New Brunswick Mayor James Cahill was subpoenaed and ordered to testify before a federal grand jury in Camden and to bring all documents concerning The Highlands at Plaza Square, luxury apartments off Route 18.

However, his appearance was eventually canceled, according to Bray.

The subpoena delivered to Cahill referred to documents "involving or regarding Alma Ltd. Inc., Executive Continental Inc., John Lynch, John Westlake."

The Highlands at Plaza Square at Route 18 and New, Neilson and Richmond streets is a four-story building of 415 luxury apartments. The $70 million project was a joint development project that Lynch helped facilitate.

In an interview published in The Home News Tribune Nov. 20, Lynch explained that he formed the partnership with Westlake in 1993. He was serving in the state Senate at the time, but his influence waned when the Democrats suffered significant losses in the 1991 election.

As a result of the losses, Lynch said in the interview, he decided it was time to enter "the real world" and begin developing business interests in addition to his law practice.

When Westlake and Lynch started working together in 1993, they decided that Lynch, still a state senator, would not share in ownership of Alma. Were his name associated with Alma, Lynch said, "I would become the story, as opposed to the project."

The two then established Executive Continental to act as a subcontractor working for Alma, with Westlake and Lynch sharing 50/50 ownership and with Lynch the "choreographer."

Lynch explained that his role was "to make sure the politics would work."

Lynch was mayor of New Brunswick from 1979 to 1991 and served in the state Senate from 1981 until 2002. He is often given credit for the city's revival in recent decades.

Rick Malwitz

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