Updated news on the Gambino, Genovese, Bonanno, Lucchese and Colombo Organized Crime Families of New York City.

Thursday, December 6, 2012

Charges and lawsuits fly after gambling bust and murder of informant

It was one of Bergen County’s most spectacular gambling busts ever.

Under the code name Operation Jersey Boyz, a team from the county Prosecutor’s Office and the state police swept out across North Jersey on Dec. 1, 2004, and hauled in dozens of alleged mobsters and their associates from multiple crime families. Also seized were guns, drugs and more than $1 million.

The investigation was credited with chopping down a virtual money tree for the mob.

But the results haven’t matched the early headlines. Since the dragnet, charges have been dismissed, plea bargains struck, court records sealed. Nobody has been sentenced to a day in jail.

It might have all faded from view if not for two lawsuits with explosive allegations of law enforcement corruption related to the rub-out of one of those arrested, a reputed Lucchese-family soldier who lived in Tenafly named Frank Lagano.

The suits and the gambling case itself offer a rare glimpse into the murky world of mob investigations, confidential informants and the interplay between sometimes rivalrous law enforcement agencies.

Revealed is a tangled and complicated story that spans more than eight years and is filled with large characters, thorny legal decisions, quick judgment calls and suspicions. It hangs on three entwined elements — Lagano’s 2007 slaying, a judge’s ruling to throw out thousands of wiretaps critical to the gambling case and the actions of a respected mob investigator whose agency was not involved in Operation Jersey Boyz but who became enmeshed in it in a combustible mix of ways.

That investigator, the late James Sweeney, brought the first of the suits, contending he was fired from his job at the state Division of Criminal Justice for pursuing serious questions — against his bosses’ |wishes — stemming from Lagano’s arrest and murder.

The more recent suit, filed in late summer by Lagano’s estate, is largely based on Sweeney’s claims but goes further. Among the allegations: Investigators with the Bergen County Prosecutor’s Office stole money from Lagano after his arrest; the office’s onetime chief of detectives, a legendary county lawman named Michael Mordaga, pushed Lagano to hire a handpicked criminal attorney; and somebody from the office leaked sensitive information that led to the rub-out.

Those allegations have sparked vehement denials from Mordaga and Bergen County Prosecutor John L. Molinelli, who has launched a furious counteroffensive against the lawyers who brought both actions. Two weeks ago, though, Molinelli withdrew a bid for contempt charges against Sweeney’s attorney after Bergen County’s top judge derided the move as “deeply troubling.”

Molinelli says the real issue behind the latest lawsuit is an attempt by the Lagano family to bully his office into returning confiscated cash that is the product of gambling, money laundering and extortion.

“They are dealing with a prosecutor that is not going to be intimidated that way,” he said.

In many ways, the allegations in both suits are most provocative about Mordaga, once cited by then-Gov. James E. McGreevey as the most decorated law enforcement officer in county history. They contend that Mordaga and Lagano had a personal and business relationship that soured after the bust and that Mordaga borrowed money from and vacationed with Lagano. The rules of conduct for the Prosecutor’s Office prohibit such a relationship.

When the claims about Mordaga were raised in the Sweeney lawsuit, Molinelli said, his office reviewed them and found none “to be of any merit whatsoever.”

Mordaga dismissed all the claims as “bogus.”

“I have never had a personal relationship with Frank Lagano. Or a business relationship. None,” he said in a telephone interview.

Mordaga said bills for his county-issued cellphone, obtained by The Record, would support his assertions. But, in fact, those bills indicate repeated contact between the two men. When this was related to Mordaga, he called the information “surprising.”

Lagano becomes a focus

The Jersey Boyz case began in early 2004, with authorities focused on a small café on Park Avenue in East Rutherford. Inside Caffe Roma, a red-awninged storefront on a busy commercial street, patrons placed bets along with their orders for pastry and cappuccino, authorities said. Molinelli would call it a Genovese crime-family base, and said at the time that the owner was not thought to be involved in the illicit activity.

The joint team marshaled undercover officers, informants and street surveillance. Wiretaps were key: Some 21,000 calls flowed through a listening post in the Prosecutor’s Office.

To win approval for wiretaps, law-enforcement agencies have to persuade a judge to allow them to intrude on citizens’ most sensitive and constitutionally protected privacy rights. It’s typically an exhaustive process. Applications can run more than 100 pages, and if misstatements or omissions of relevant information surface later, they can jeopardize the evidence provided by the taps.

In gaining authorization from Superior Court Judge Marilyn C. Clark, investigators had to show what steps they had already taken to gather information and justify why less intrusive techniques weren’t viable. And they had to periodically renew the authorization to keep listening.

As the probe progressed, information about two offshore gambling operations surfaced. So did an assortment of activities, including loan-sharking, extortion and trafficking in stolen property, according to authorities.

Lagano became a focus “quite some time” after the start of the probe, Molinelli said.

Known by some as a smart, charismatic builder, Lagano seemed the picture of a wealthy suburbanite. He could be seen around Tenafly carrying The Wall Street Journal, striking up conversations at the local diner or talking on his cellphone about stocks. In addition to his homes in Tenafly, Lagano built two multimillion-dollar houses in Alpine in the 1980s.

But authorities had long associated him with organized crime. One state official said law enforcement documents dating to 1989 identified Lagano as a Lucchese family member “involved in loan-sharking across North Jersey.”

Mordaga in charge

Directing the investigation for the Prosecutor’s Office was Mordaga, known for daredevil arrests and cracking cold cases during his storied 30-year career.

While with the Hackensack police, his exploits included saving a man who dangled from a bridge and clinging to the hood of a speeding car as he shot at a drug dealer through the windshield.

When Mordaga was named chief of detectives for the Prosecutor’s Office in 2002, McGreevey made the announcement himself, at the same time he nominated Molinelli.

That larger-than-life persona is reflected in Mordaga’s cellphone records from his time as chief. Amid routine police business, there are calls to a good number of the region’s elite and powerful, as well as to clients of his private security consulting business. The Record analyzed 34 months of bills from January 2003 to September 2006, most of which list outgoing calls only.

The records show nine brief calls to Lagano phones, starting in April 2003, months before the investigation was launched the next January.

They include three calls to his home and cell on Christmas Eve of 2003.

When told about them, Mordaga offered differing explanations.

“I have no knowledge of that at all,” said Mordaga, who retired in 2007.

Later in the same interview, he added that “every conversation” he had with Lagano was “professional” and “police business.”

And he said any conversations “are under seal because they’re related to the case.” He did not offer an explanation why most of the calls predated the investigation.

Molinelli said he was “unaware” of the calls but was not bothered by them. “I can’t give you an explanation for the calls,” he said, adding, “I’m sure Mike makes a lot of phone calls to a lot of people.”

One possible reason for contact would be that Lagano was a confidential informant for the Prosecutor’s Office, but Molinelli said he was not.

Mordaga’s cellphone records also show calls to Lagano’s attorney after his arrest. The lawsuits allege that in purportedly trying to steer Lagano to an unnamed defense attorney, Mordaga told him the lawyer could make “90 percent” of his legal problems go away. Mordaga denied the allegation, saying he “never” recommended an attorney.

Lagano’s attorney, Carl Losito, was the only lawyer for any of the defendants who appears on Mordaga’s cellphone bills the day after the bust; there are a total of six outgoing calls to Losito in the week after the arrest. The Record could identify only one other call in the phone records to a law firm or attorney representing other defendants in that week. Losito declined comment.

“There’s probably other attorneys we were calling, too,” Mordaga said when asked about those records. “And like I said, it’s part of a sealing order.”

Molinelli, too, dismissed the significance of the calls to Losito, maintaining that it’s “very common” for the chief of detectives or other high-ranking officers to talk to defense attorneys after an arrest. He said he has “every faith” that Mordaga did not violate state rules prohibiting law-enforcement officers from making referrals to criminal defense attorneys.

There is another indication that Mordaga and Lagano had crossed paths independent of the probe.

John Doyno, a Saddle River accountant who described himself as an acquaintance of both men, said the two knew each other for perhaps 15 or 20 years. Doyno said he prepared Mordaga’s taxes for a time and also did work for Lagano, including forming one of his corporations.

“Once in a while they had dinner together,” Doyno said. He recalled joining them at a restaurant on one occasion at least a decade ago.

Asked if the two men were friends, he replied, “Oh, no doubt about it.”

Sweeney, a voice on tape

After nearly a year of collecting wiretaps and other evidence, more than 100 officers fanned out on that December morning in 2004, executing about 20 search warrants at homes and businesses. Among the biggest fish was Joseph “The Eagle” Gatto, who allegedly inherited his father’s position as boss of the Genovese family’s North Jersey gambling rackets. Authorities said Gatto controlled one of the two offshore “wire rooms” in Costa Rica where bets were processed.

More than $264,000 was seized from Lagano, whose home and safe deposit box were searched. He was charged with racketeering, promoting gambling and loan-sharking. Molinelli identified him as the point man for the Lucchese family in the scheme.

At a news conference, Molinelli said the bookmaking operation turned out to be much larger than his office had anticipated. “There were millions and millions and millions of dollars changing hands,” he said.

But the case was already in trouble.

The issue revolved around a startling conversation picked up on a phone tap.

According to a state police affidavit, detectives monitoring a call on Oct. 5, 2004, heard the voice of a man who they determined was an investigator for an agency not involved in the case — James Sweeney.

Sweeney’s agency, the state Division of Criminal Justice, handles investigations for the state attorney general. He was overheard talking to one of his confidential informants — who turned out to be a target of the Jersey Boyz probe — and telling him that another agency had been asking about him.

“I’m telling you don’t worry about it. If it was something, I’d come and get ya, I’d pick you up off the street,” Sweeney said.

The affidavit does not provide any details about what agency Sweeney was referring to and does not indicate that the conversation was related to the Jersey Boyz case. Several law enforcement officials said such an exchange between an investigator and a source would be permissible under any number of circumstances, but it was impossible to determine from the limited excerpt in the affidavit whether this was one of those cases.

A former Marine, Sweeney spent much of his more than four decades in law enforcement as an organized-crime investigator for three state agencies. Those who worked alongside him recalled the Upper Saddle River resident as a hard-nosed investigator and a “trusted” colleague whose knowledge of underworld activities ran deep.

But the picture is more conflicted than that.

Sweeney was let go by the state in 2008, nearly four years after the intercepted call. As an “at will” employee of the Attorney General’s Office, he could be dismissed without explanation, and he said in his suit that he never got one.

Clark faces a big decision

The investigators for Operation Jersey Boyz faced a critical juncture concerning the overheard conversation: What to do with such sensitive information? Their decision: They didn’t tell Sweeney’s agency. They didn’t tell their legal team, according to a sworn statement signed by Molinelli. And, most importantly, they also didn’t tell the judge overseeing the wiretaps.

Marilyn Clark has a reputation as a tough-minded but fair jurist, known for her attention to detail. She was the first woman to serve as a Superior Court judge in Paterson, after working as an assistant Bergen County prosecutor until 1989, and the first to be named presiding judge of the criminal courts in Passaic County. She is a daughter of the best-selling mystery novelist Mary Higgins Clark of Saddle River.

She is also one of a select group of Superior Court judges designated to consider wiretap requests in New Jersey.

When she did finally get the news about the intercepted call, a year after the raid, she stopped the case in its tracks — and eventually tossed out all the wiretaps and search warrants and the evidence that emerged from them.

Her thinking is not fully reflected in public documents – she sealed her 103-page decision on the matter. But in a letter to the attorneys in the case, the clearly alarmed Clark wrote that some of the wiretaps were “tainted because of the failure of the Bergen County Prosecutor’s Office to inform me … of certain information that would have alerted me to serious legal issues.” She cited the existence of a confidential informant as creating those issues.

The letter also shows she was disturbed not about the substance of the conversation but the fact that the Prosecutor’s Office had continued to seek wiretap authorizations without telling her that one of the suspects in the case was an informant with another agency.

Her decision was a rare move that surprised even veteran defense attorneys on the case.

Some legal experts say one issue may well have been the caution that courts often display before authorizing wiretaps, in deference to privacy protections. In this case, the question might have been whether authorities exhausted all other means to obtain information in a less intrusive way — for example, through Sweeney and his informant.

In an affidavit, a state police supervisor said he didn’t realize there was an obligation to notify Clark. But Detective Sgt. Hugh A. Johnson’s sworn statement also laid bare deep divisions and mistrust between law enforcement agencies. He wrote that his team did not want to risk compromising the investigation by informing Sweeney’s agency. He described Sweeney’s conversation with his informant as another example of what he termed the unprofessional way that agency handled informants. “There was no question in my mind that the line between CI and handler was clearly blurred in this instance.”

Sweeney’s agency, meanwhile, opposed releasing any information to the defense out of concern that it would reveal the identity, and risk the safety, of the informant.

Three years of appeals and closed-door hearings followed Clark’s ruling, with an appellate panel restoring some of the evidence in its own sealed decision. A third of the cases were ultimately thrown out.

Amid the legal turmoil, Lagano was killed. On the afternoon of April 12, 2007, while getting out of his BMW in the parking lot of a Middlesex County diner he owned, he was shot in the head. In the days that followed, investigators said they were treating it as a mob hit. His killing remains unsolved.

The case against Lagano would have gone forward had he not been gunned down.

Sweeney resurfaces

Sweeney filed his lawsuit two years after he lost his job. In it, he laid out a sequence of events that included a surprising turn. After his gambling arrest, Lagano wanted to talk — and at least some of what he wanted to talk about involved Mordaga. The mobster met Sweeney — introduced to him by Sweeney’s source.

Lagano then became another of Sweeney’s informants, according to the lawsuit.

Among its allegations of corruption in the Prosecutor’s Office, the lawsuit described the purported relationship between the former chief of detectives and Lagano. Sweeney attributed the information in part to Lagano and Lagano’s immediate family.

The suit used only initials, but the details made it clear he was referring to Mordaga, Lagano and the Bergen County Prosecutor’s Office.

Sweeney claimed that he had told his bosses about the alleged corruption but that they took no action and then retaliated against him because they believed he was continuing to pursue the murder and corruption investigation after they told him to stop.

The Attorney General’s Office declined to comment, either about the circumstances of Sweeney’s termination or about whether they had conducted an investigation into his corruption allegations.

A Superior Court judge sealed Sweeney’s lawsuit, saying disclosure could cause “serious injury to a person or entity.” Sweeney died at age 70 in July 2011, after which the suit was withdrawn.

For a time, it seemed that his claims had died with him. But in late August of this year, Lagano’s estate filed its lawsuit in federal court against the Prosecutor’s Office, Mordaga and the state Criminal Justice Division. The suit, which in many instances mirrors Sweeney’s earlier filing, further alleged that unnamed members of the Prosecutor’s Office had told mobsters that Lagano was Sweeney’s confidential informant — thereby causing his death.

Molinelli said his office had no knowledge that Lagano was a state informant.

Frank Lagano Jr., the trustee of the Lagano estate, told The Record in an email message that the aim of his family’s lawsuit is to “unearth the truth.” He added, “This will not happen in Bergen County without the intervention of the federal courts.”

In a statement to The Record, Mordaga defended the handling of the Jersey Boyz case, saying: “The integrity of my detectives and [state police] detectives was beyond reproach.”

Molinelli takes a stand

John Molinelli has had a high-profile decade as prosecutor, gaining attention for his aggressive pursuit of child predators and for solving generation-old murder cases. His office won a corruption conviction earlier this year against Hackensack’s longtime police chief, and he earned praise for his arrests of two suspects in a series of synagogue attacks.

He has attacked the lawsuits head on, asking a judge to find Sweeney’s lawyer, Robert Tandy, in contempt of court for allegedly leaking sealed material to the Lagano family’s lawyer.

Tandy did not comment. But a state judge delivered a blistering critique of Molinelli's request during a hearing last month, saying the prosecutor had scant proof to back up the “naked allegations.”

Superior Court Judge Peter Doyne, the assignment judge in Bergen County, also questioned Molinelli's authority to unilaterally seek contempt charges.

“Twenty years on the bench, and I've never seen an application like this,” Doyne said. He gave Molinelli a week to withdraw it; Molinelli did so last week.

Molinelli has said he also intends to seek sanctions against William H. Buckman, the Lagano family attorney, noting his accusation that investigators stole money “is just an absolute lie from an attorney at law.” He called the allegation “mind-boggling” because, he said, Buckman knows the money was seized under the state’s forfeiture law.

“We have always offered the Lagano family to give us some legitimacy of the money,” Molinelli said. “They have never done that.”

Buckman said the prosecutor would be “way off base” in seeking sanctions against him.

Asked if he had any independent verification of the allegations in the federal lawsuit, beyond the Sweeney complaint, he declined to comment.

“The federal lawsuit has not come into full swing yet,” he said.

And what of the defendants in the gambling case that started it all? Charges filed against 15 of them were thrown out. A grand jury failed to indict Gatto, the reputed Genovese kingpin, who has since died.

Several defendants pleaded guilty to downgraded disorderly persons charges or agreed to a deal with prosecutors and got probation.

A handful skipped court dates and are referred to in current court records as “inactive” fugitives.



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