Suit pursues damages from fruits of corruption
Former officials, indicted developers named by Marlboro
BY REBECCA MORTON Staff Writer
Summonses are out for former officials and current developers of Marlboro who are the named defendants in a civil lawsuit brought against them by Marlboro Mayor Robert Kleinberg on behalf of the township.

Kleinberg, a Republican who is seeking his second term as mayor, has said he realized there were corrupt individuals operating in Marlboro over the past decades and said the township is dealing with the effects of their actions today.

The lawsuit names as defendants former Marlboro Mayor Matthew Scannapieco, former Planning Board member Stanley Young, former Marlboro Township Municipal Utilities Authority Chairman Richard Vuola and local indicted developers Anthony Spalliero and Joseph Spalliero, and local convicted developers Bernard Meiterman, Steven Meiterman and Edward Kay, along with holdings of the defendants.

Scannapieco, Young, Vuola, Bernard Meiterman, Steven Meiterman and Kay have all pleaded guilty in connection with corrupt activities in Marlboro. The Spallieros have not pleaded guilty nor been convicted of any crime relating to corruption in Marlboro.

A court official in the Trenton office of the U.S. District Court for the District of New Jersey confirmed that the case had been filed on Oct. 17 and is slated to be heard by Judge Freda L. Wolfson.

In a telephone conversation Oct. 23, attorney Mitchell Ansell, who represents Scannapieco, said he had not heard from his client concerning this particular lawsuit.

Attorney Stephen N. Dratch is representing Marlboro in the case against the officials and the developers.

"If a public official accepts bribes, under New Jersey law, that money belongs to the person's boss, in this case the township," Dratch said.

State Sen. Ellen Karcher (D-Monmouth and Mercer) endorsed the recently passed Public Corruption Profiteering Penalty Act. According to the law, the possibility is opened to seek civil damages whenever an official is convicted of public corruption.

"I am glad to see they are pursuing it (the lawsuit)," Karcher said.

The senator, who is a resident of the township and a former member of the Township Council, spoke about the toll of corruption on Marlboro. She said there are no definite numbers as far as she knew, but said one just needs to look at large class sizes in the township's schools to see the results of the corruption related to the construction of housing.

The time frame covered by the Scannapieco, Vuola and Young corruption is generally the late 1990s and first several years of this decade.

Karcher said the corrupt activities that occurred in Marlboro helped lead to her endorsement of the Public Corruption Profiteering Penalty Act. The senator said there are other communities in New Jersey that are trying to make the law work to their advantage.

Jonathan Hornik, the Democratic candidate for mayor, said, "I fully support all efforts to recover damages to Marlboro's residents caused by the corrupt acts of prior officials" when he was asked his opinion of the lawsuit he will inherit if he defeats Kleinberg in the Nov. 6 election.

He went on to say, "My issue with Kleinberg is simply one of timing. To announce and bring these lawsuits three weeks before an election is nothing more than a political ploy, typical Kleinberg. Why was this not done three years ago when it really could have actually made a difference to the Marlboro residents?

"As previously reported in [the News Transcript] on June 28, 2006, the Reform Democrats called on Kleinberg to go after the former Republican Mayor Scannapieco in order for our town to recover actual monetary damages. Kleinberg's response at the time we made this request was 'reserving the option to sue former Mayor Matt Scannapieco and others for their wrongdoing,' " Hornik said.

"While Kleinberg pondered his decision, Scannapieco's assets were sold, assets that could have been used to repay Marlboro residents. The proceeds from these sales are forever lost. Kleinberg's delay has hurt Marlboro and should be explained," Hornik said.

In a previous article about the lawsuit, Kleinberg said he waited until an agreement could be made to retain Dratch on a contingency basis, since Dratch was successful in a similar suit involving a bank and Essex County.

Explaining the upcoming steps in the lawsuit's progress, Dratch explained that the defendants are to be served and then they may make a motion to dismiss the lawsuit if they choose to do so.

He said the case would then enter a discovery period during which time testimony and documents would be produced. A magistrate judge who oversees the discovery process will set a timeline and eventually set a date for the trial, according to Dratch.

"We know there will be a lot more defendants down the line as we go through the discovery period," Kleinberg said, adding that more defendants may be named.

Dratch said summary judgment is possible, which is when a decision can be made on evidence and statements presented for the record without a trial. It is used primarily when there is no dispute over the facts of the case and one party is entitled to judgment as a matter of law.

Dratch said he believes some of the defendants named in the Marlboro case would be settled without trial in this matter because they have already been found guilty or plead guilty to charges involving corruption.

According to the complaint, the township is seeking a judgment among which includes an amount equal to the sum of all bribes and/or gratuities, disgorgement of all profits illegally obtained and received by the defendants pursuant to the illegally obtained land use approvals, treble damages, punitive damages, interest, the dissolution of the defendants' corporations, the denial, suspension or revocation of the charter of the defendants' corporations, the denial, suspension or revocation of the licenses and permits of all corporate defendants, counsel fees and costs of suit, and any other relief the court deems just and proper.

"This has the potential to be the largest return of its kind in the state of New Jersey," Kleinberg said, adding that to his knowledge this case is the first of its kind in Monmouth County.

The complaint filed by the township states, "[T]he corrupt defendants engaged in a pattern of racketeering activity individually and through the respective corporations and business entities in order to defraud Marlboro through an elaborate bribery and extortion network. Because of the corrupt defendants' efforts in concealing the aforementioned conduct, Marlboro did not discover, nor could it have reasonably discovered the underlying pattern of racketeering activity until the conclusion of the federal prosecution against them. As a direct and proximate cause of the corrupt defendants' pattern of racketeering activity, Marlboro has suffered injuries and losses, including the total sum of all bribes and/or gratuities paid by and among the corrupt defendants, and such other losses as will be established by evidence."

Concerns have been expressed by various residents concerning the possible cost of the lawsuit to the township.

Payment to Dratch is through a contingency basis.

"I convinced him (Dratch) to do this for Marlboro on a contingency," Kleinberg said, adding that had an attorney been hired on an hourly basis it could have cost the township hundreds of thousands of dollars.

A one-third contingent of the net recovery will go to the firm of Franzblau Dratch, according to a letter between the firm and Kleinberg. The firm is responsible for advancing out-of-pocket disbursements.

The firm will first be reimbursed for its out-of-pocket disbursements and then the one-third contingent percentage will be applied should there be any recovery.

The letter also states, "In the event that the court awards this firm counsel fees against any person or party, the counsel fees will be in addition to the one-third contingent recovery, subject to the Rules of Court."

Dratch explained the contingency, using the example that if the recovery is $1 million but the law firm spent $50,000 on expenses such as experts, that amount ($50,000) would be taken from the $1 million. The remaining $950,000 would then have the one-third contingency applied to it.

"If there is no recovery we (Franzblau Dratch) may essentially eat the costs. It's a risk the law firm takes," the attorney said.

On an Internet forum the question was raised on the cost of defense fees should a counterclaim erupt from the litigation. Dratch said there would be no cost as the firm would defend against any counterclaims, although he doubts there would be one.

"I wish that Marlboro was never in this position to go after corrupt individuals," Kleinberg said, adding that the contingency was the best alternative.

The mayor said that as this case moves forward, people will understand what he has been dealing with over the past four years and said they will see what is not in the mayor's control.

"Somehow, in most cases, all the (township's) problems go back to corruption," Kleinberg said.