Sept. 11 (Bloomberg) -- A former chairman of the Bergen County Democratic Organization in New Jersey was accused of extorting $1.7 million from a Virginia firm that developed a now-stalled retail and entertainment center in the Meadowlands sports complex.
Joseph Ferriero, 56, was indicted today on racketeering charges in federal court in Newark, New Jersey, where he was accused of soliciting bribes from a real estate investment trust that developed the project once known as Xanadu. The REIT, which wasn’t identified, paid $35,000 a month in bribes from 2002 to 2006, according to the indictment.
Ferriero also engaged in kickback schemes involving a software developer seeking public contracts and a consulting company that sought grants and loans for local towns. In 2009, Ferriero was convicted of conspiracy and mail fraud related to the consulting company, but that verdict and indictment were later set aside by the judge.
“Joseph Ferriero ran a political organization as a racketeering enterprise, abusing power for profit,” U.S. Attorney Paul Fishman said in a statement. “Today’s charges expose years of peddled influence, from grants to building projects to software contracts.”
Ferriero also is charged with conspiracy, mail and wire fraud, and a violation of the Travel Act. He faces as long as 20 years in prison on the racketeering and fraud counts. He is to make an initial appearance in federal court in Newark.
“This indictment is a tragic and unprincipled attack on Mr. Ferriero’s life, without any legal or factual basis,” his attorney, Michael Baldassare, said in a statement. “The U.S. Attorney’s Office has refused to listen to reason after his lawyers have, for months, sought to show them that neither the law nor the facts support their allegations.”
Ferriero will be vindicated at trial, Baldassare said.
Holdups over financing, property control, lawsuits and labor contracts have stalled the $3.7 billion, decade-old mall project, now known as the American Dream Meadowlands. With its facade of multicolored rectangles fronting the New Jersey Turnpike, it has been called by Governor Chris Christie “the ugliest damn building in New Jersey, and maybe America.”
According to the indictment, the Virginia REIT secretly agreed to pay $35,000 a month to a consulting company run by Ferriero and two of his law partners.
In exchange, Ferriero agreed he wouldn’t publicly oppose, or cause any public official he influenced to oppose, the REIT’s plan to develop land owned by the New Jersey Sports & Exposition Authority in East Rutherford, according to prosecutors.
The payments also helped secure Ferriero’s public support and official action in favor of the REIT, Fishman said.
Plans for the mega-mall about 10 miles (16 kilometers) west of Manhattan include the nation’s first indoor ski slope and a theme park.
The project is on its second name and its third developer. Formerly known as Xanadu, the mall in the shadow of MetLife Stadium, the Izod Center and the Meadowlands Racetrack in East Rutherford has been plagued by delays and financing difficulties since Mills Corp. was picked to help build it in 2003.
Mills, now a unit of Indianapolis-based Simon Property Group Inc., ran out of money, and Thomas J. Barrack Jr.’s Santa Monica, California-based Colony Capital LLC took over in 2006. Construction foundered again after a Colony backer, Lehman Brothers Holdings Inc., entered bankruptcy in 2008. A group of five lenders assumed control of the development in August 2010.
Triple Five Group, an Edmonton, Alberta-based developer, agreed with Christie in December 2010 to take over the project. It planned to invest $1.76 billion, after $1.9 billion was spent by previous companies, to create a 7.5 million-square-foot (697,000-square-meter) retail goliath that would be the world’s largest mall.
After objections from the National Football League’s New York Jets and Giants, who play their home games at MetLife Stadium, the project was cut back to 2.8 million square feet.
Triple Five, owned by Edmonton’s Ghermezian family, scrapped the Xanadu name and veered from the retail-heavy plan, adopting the entertainment component from two of its properties, the Mall of America in Minnesota and the West Edmonton Mall. In May 2011, it projected American Dream would open in 2013 and attract 55 million visitors a year. Since then, the company has scaled back its forecast to 40 million visitors.
The Bergen County Improvement Authority approved an application yesterday that seeks to issue as much as $800 million in bonds on behalf of Triple Five to revive the project, the Bergen Record reported today.
Bonds issued by the authority could produce as much as $524 million backed by future tax payments due to East Rutherford and $276 million backed by sales and corporate-income taxes due to the state, the Record said.
The case is U.S. v. Ferriero, U.S. District Court, District of New Jersey (Newark).