[almost two years ago, I noted in news about the indictment of a former EnCap executive that "it never hurts to mention how profound “innocent until proven guilty” is when someone’s freedom is at stake." Here's why]
William Gauger, a founding father of the failed Meadowlands EnCap golf and housing project, recently pleaded guilty to one count of wire fraud under terms of a plea agreement with federal prosecutors that would lead to the other 10 counts of the Jan. 2012 indictment being dropped.
Under federal sentencing guidelines, Gauger appears likely to receive 0 to 6 months in prison at sentencing in January with the added possibility of up to three years of “supervised release,” although all parties agreed that the specific sentence technically will be at the discretion of the sentencing judge.
The core of the indictment was an alleged shakedown of a financial consultant and former friend of Gauger for $100,000 stemming from an Asbury Park condo development in which the adviser wound up receiving nearly $900,000 in “success fees.” But all five of those counts, which were for an alleged scheme to deprive North Carolina-based Cherokee Investment Partners of Gauger’s “honest services,” would be dropped as part of the deal.
Gauger has agreed to plead guilty only to obtaining reimbursement of $299 for a March 2007 flight from Newark to Raleigh, N.C. even though Gauger’s credit card was reimbursed because a snowstorm caused the flight to be cancelled. Gauger has agreed to pay back Cherokee $299 as part of the plea deal.
EnCap Golf Holdings was created in 2000 by Gauger to remediate nearly 800 acres of landfills in North Arlington, Lyndhurst, Rutherford, and Kearny as part of an initiative by the state Meadowlands Commission. Cherokee, which remediates brownfields nationwide, signed on with Gauger in 2004 and entered into preliminary deals to remediate sites in Asbury Park, Camden and Pennsauken in addition to the Meadowlands.
That same year, Gauger negotiated a deal in which the consultant would be paid $10,000 per month, with more money to come should the consultant be able to bring in private lenders to fund construction of the Asbury Park project, according to the indictment. A pair of loans totaling $95.7 million were arranged in 2006, with the consultant being paid an extra $881,500 and with Gauger receiving $150,000.
The charges dropped against Gauger included the allegations that he demanded $100,000 from the consultant through a scheme involving Gauger’s brother-in-law, who had been alleged to have, at Gauger’s direction, purchased an LCD television and “season hockey tickets” as well as made a $10,000 payment to Gauger’s father and another $10,000 payment to a soccer club to which Gauger’s children belonged.
An extortion charge also is to be dropped as part of the plea deal, as are four of the five charges of conspiracy to defraud via use of the mail or wire transmissions. One of those dropped charges is an allegation that Gauger’s brother-in-law had falsely billed EnCap for $20,000 in 2005 for “the review of concept plans and permits for a train station to be built in connection with the Meadowlands project.” The financial consultant also had been alleged to have billed the same amount for “financial consulting for the Meadowlands project.”
Another dropped charge had to do with an allegation that Gauger, his brother-in-law, and the financial consultant had spent $1,153.54 — including $452.75 on liquor — on a dinner at a Weehawken restaurant in Sept. 2006, then submitted a false expense report to Cherokee that claimed the get-together was a business dinner.
Ground was broken at the EnCap site, atop the landfills near the New Jersey Turnpike, in May 2004. By 2006, Lyndhurst, Rutherford, and North Arlington each had reached agreements to share hundreds of millions in future tax revenues with the developer. The state gave approval for $300 million in low-interest and no-interest loans to cover the cost of cleaning up the site. But in Nov. 2006, the Trenton-based Local Finance Board denied a bid by EnCap officials to cash out up to $450 million in future tax revenues.
State Inspector General Mary Jane Cooper initiated an investigation in Jan. 2007, and by June the state Attorney General’s office declared the project to be in default. Later that year, real estate mogul Donald Trump agreed to take over the cleanup effort.
In Feb. 2008, Cooper released a report that found, in part that politically-connected attorneys and EnCap executives had gained extensive insider access to key government officials. Four months later, the Meadowlands Commission board voted to kill the project in May 2008. A day after that, EnCap filed for bankruptcy protection. The Chapter 11 filing was dismissed in Feb. 2009, and the company went out of business.
The only criminal trial to come out of the failed project ended in 2012 with the acquittal of former state Sen. Wayne Bryant, a once powerful Camden County Democrat who had been charged with trading his influence in the legislature for $192,000 in payments.
