Lynch pleads guilty to fraud, tax evasion charges

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."