Dwek Laundered $3 Million in FBI Sweep Snaring Mayors (Update2)

July 24 (Bloomberg) -- Solomon Dwek bribed a politician, arranged to buy a kidney and tried to hide assets from creditors in a bankruptcy -- all with the blessing of prosecutors.

Dwek, a real-estate developer from Deal, New Jersey, who was charged with bank fraud in 2006, is the “CW” -- cooperating witness -- in criminal complaints against 44 people arrested yesterday in a corruption and money-laundering case, according to three people familiar with the matter.

The 36-year-old’s undercover work in political and religious communities in New Jersey and New York makes Dwek the main link between the three mayors, two state assemblymen, five rabbis and one alleged human organ dealer taken into custody in the sweep, these people said.

“How could one guy bring down so many people?” said Charles Stanziale, a Newark-based trustee liquidating Dwek’s property in a personal bankruptcy. “Well, if you stay with it and you’re working full time, one guy gets to meet another guy and it’s like a chain.”

Stanziale, a lawyer with McCarter & English, isn’t involved in the criminal probe, he said in an interview. Dwek’s lawyer, Michael Himmel, didn’t return a call seeking comment. Dwek couldn’t be reached.

The roundup of suspects was one of the largest ever in New Jersey, where more than 100 public officials have been convicted of corruption since 2001.

‘Web of Corruption’

Under the direction of the Federal Bureau of Investigation, the cooperating witness laundered $3 million through the rabbis and their charitable organizations and paid bribes to public officials, prosecutors said. Investigators made hundreds of hours of audio and video recordings of illicit transactions, according to the government lawyers.

“This case uncovered a web of corruption that spanned the state,” said Weysan Dun, special agent in charge of the FBI office in Newark. “All of the individuals were connected through their illicit activities with the undercover witness.”

The Syrian Jewish community, of which Dwek is a member, figures prominently in Dwek’s undercover dealings, according to the people with knowledge of the case. After migrating to Manhattan in the early 1900s from the cities of Aleppo and Damascus, many Jews from Syria moved to Brooklyn in the 1920s, according to Walter P. Zenner, who wrote about them in “A Community of Many Worlds.” By the 1950s, they had begun summering along the shore in the borough of Bradley Beach and many later moved three miles up the beach to the wealthier town of Deal, Zenner wrote.

‘Polycystic Disease’

Dwek’s father, Isaac, is a rabbi at the Synagogue of Deal. The younger Dwek was vice president of the Deal Yeshiva in West Long Branch, New Jersey.

Those community ties may have allowed him to build trust among people he would eventually help the government charge and arrest, according to Stanziale.

In February 2008, the cooperating witness in the case traveled from Tinton Falls, five miles (8 kilometers) east of the 139-year-old Monmouth Park racetrack, to Brooklyn with a person posing as his secretary to visit Levy Izhak Rosenbaum, according to the criminal complaint against Rosenbaum. The complaint said Rosenbaum, 58, was told the secretary’s uncle had polycystic disease, was on dialysis and wanted to secure a new kidney in a faster time frame than the legal transplant waiting list would allow.

“He needs to, uh, you know, organize to buy one and, uh, you know, we need to find, uh, how we can do this,” the CW said to Rosenbaum, according to the document.

$22.8 Million

It said Rosenbaum offered to find a donor from Israel, for $160,000, with 50 percent paid up front, and accepted a $10,000 deposit. No kidney actually changed hands, prosecutors said.

Lawyers for Rosenbaum and the other suspects either couldn’t be identified or couldn’t be reached.

Dwek’s path to government witness may have begun in 2006, when he deposited two $25 million checks against an account with a zero balance, prosecutors alleged at the time. Dwek then wired $22.8 million out of the bank, which was owned by PNC Financial Services Group Inc., falsely assuring officials that he would forward funds to cover the overdraft, according to authorities.

Never indicted, Dwek received 17 extensions from a judge to delay presentation of his case to a federal grand jury.

PNC, based in Pittsburgh, and two other lenders filed an involuntary liquidation petition on Feb. 9, 2007, that forced Dwek into Chapter 7 bankruptcy. He owes PNC about $22.9 million, Washington Mutual Inc. $22.7 million and Four Star Builders $58,388, according to court records.

‘I Can Live’

The bankruptcy was converted to a Chapter 11 reorganization under a trustee’s supervision in Trenton, with Dwek’s consent.

In June 2007, the FBI’s cooperating witness set up a meeting with Edmond Nahum, the principal rabbi of Deal Synagogue in the oceanfront getaway for metropolitan New York’s Sephardic Jewish community, the criminal complaint said.

The CW told Nahum, 56, that he was seeking to hide assets from creditors in his bankruptcy so “this way I can live,” according to complaints against Nahum and Saul Kassin, 87, chief rabbi of Sharee Zion, a synagogue on Ocean Parkway in Brooklyn.

Nahum received checks in amounts up to $50,000 made out to Kassin’s charity, agreeing that Kassin would write checks to the cooperating witness, minus a 5 to 10 percent service charge, the complaints said. Those checks would be made out to a second Jewish foundation, run by Eliahu Ben Haim, the rabbi of a Deal synagogue called Congregation Ohel Yaacob, and Ben Haim would pay the money to the CW in cash, the government said.

Property Business

Ben Haim, 58, was an investor in Dwek’s real estate business, according to bankruptcy court documents. Haim is a defendant in an asset recovery lawsuit filed by Stanziale to recover funds the lawyer said are fictitious profits from a real estate investment scam that the suit alleges Dwek ran.

The cooperating witness met with Republican Assemblyman Daniel M. Van Pelt, 44, of Ocean County, saying he wanted to ensure real estate developments he was planning in coastal areas got appropriate permits from the state Department of Environmental Protection, according to charges against Van Pelt. The lawmaker accepted $10,000 in cash from the CW, who said he was a member of the “green party,” not a Republican or Democrat, prosecutors allege.

“Green is cash,” the complaint quotes the CW as saying.

In May, when Peter Cammarano, a Democrat running for mayor of Hoboken, was short on cash, the CW gave the candidate $10,000 from the trunk of his car in exchange for a promise to expedite approvals of developments in Hoboken, the complaint said.

FBI Search

“We’re going to be friends for a good long time,” Cammarano, 32, told the cooperating witness on June 23, according to the complaint. It said the CW promised to help cover a shortfall in the campaign with $10,000.

Also arrested yesterday was the mayor of Ridgefield, New Jersey, Anthony Suarez, 42; the mayor of Secaucus, New Jersey, Dennis Elwell, 64; Jersey City Council President Mariano Vega Jr., 59; and Assemblyman L. Harvey Smith, a Jersey City Democrat.

FBI agents searched the house of Joseph Doria, a former Democratic assemblyman resigned yesterday as Department of Community Affairs commissioner, according to Governor Jon Corzine’s spokesman, Robert Corrales.

Doria wasn’t charged. His spokesman, Chris Donnelly, didn’t return phone calls or e-mails.

‘Tragic Day’

“This is obviously just another really tragic day for the people of New Jersey,” said Christopher Christie, the Republican candidate for New Jersey governor and the former U.S. Attorney under whom the criminal probe began. The case was continued under acting U.S. Attorney Ralph Marra.

The arrests could have an effect on the gubernatorial race, according to Brigid Harrison, professor of political science and law at New Jersey’s Montclair State University.

Corzine, a Democrat, trails Christie in polls by eight percentage points among likely voters, according to a Monmouth University-Gannett New Jersey poll conducted the week of July 16. Corzine, who described yesterday’s charges as “simply outrageous and cannot be tolerated,” asked Doria to resign from the Department of Community Affairs.

“We’re seeing that fallout, with the governor asking the cabinet member he appointed to resign,” Harrison said. “This problem of corruption has been one that Republicans have tried for years to make hay with. This is, in my mind, one more sweep they will use.”

At least six members of the 80-seat Assembly have been charged with or convicted of crimes in the past two years.

Former state Senator Wayne Bryant, 61, a Democrat from Camden County, was sentenced to 48 months in prison and fined $25,000 today for using political influence to obtain a job at the University of Medicine and Dentistry of New Jersey in return for securing government funding for the school. He will also be on supervised release for two years.

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net; Pat Wechsler in New York at pwechsler@bloomberg.net; Dunstan McNichol in New York at dmcnichol@bloomberg.net

To contact the editor responsible for this story: William Glasgall at wglasgall@bloomberg.net.