Sharpe James Ex-Mayor of Newark – GUILTY – Corruption in Real Estate Scheme!

April 21, 2008

Anyone accused of a crime deserves their day in court. Former mayor Sharpe James got his and along with it a big fat guilty verdict for his unethical behavior! Guilty on all corruption charges that enabled his girlfriend, Tamika Riley, to fraudulently obtain steeply discounted city-owned land and resell it for hundreds of thousands of dollars in profits.

Riley was convicted with James on the same five charges: three counts of mail fraud related to the sale of the city lots to Riley, one count of fraud involving a local government receiving federal funds, and one count of conspiracy to defraud the public of James’ honest services.

“Sharpe James was among the most powerful and well-known political figures in New Jersey history, but he was not above the law. Justice has finally been done,” U. S. Attorney Christopher J. Christie said. “There were deep passions on either side of this case. But what everyone should now recognize is that 12 ordinary citizens from New Jersey heard the evidence and independently found what we’ve said all along – that Sharpe James is guilty of stealing from Newark and its citizens and of using Newark resources for his personal benefit.”

James remains under indictment on another set of charges related to his alleged fraudulent use of city credit cards to fund lavish trips with female companions, including Riley, and other personal expenses. Christie said he will consult within the office, with federal investigative agencies and with state Attorney General Anne Milgram before deciding how to proceed on those charges.

The prosecution was built around the sale to Riley of municipally-owned properties in Newark. The properties were steered to Riley by James, who had a long-running romantic relationship with her. Riley paid only $46,000 for a total of nine properties, and then quickly resold, or “flipped” the properties for more
than $600,000.

James used his influence and power as both mayor and as a state senator to manipulate and control a city program designed to redevelop run-down properties in the city. The program was intended to enable experienced, financially sound and qualified developers to buy blighted lots and houses at substantially less than market rates on the condition that they rehabilitate the properties before re-selling them at market prices. With James’s help, Riley acquired the properties at cut-rate prices and resold them without any rehabilitation.

Riley had no real estate or construction experience and did not possess the financial wherewithal or backing required to participate in the program. She was, in fact, the owner of a failed Newark clothing store and had operated an entertainment and public relations firm that reported no income or assets on tax returns in 1999 or 2000, the years before she started flipping Newark properties.

Throughout the period of their relationship and the property transactions benefitting Riley, James and Riley traveled and socialized together, shared hotel rooms and stayed in fine resorts, among other things. Testimony also revealed that James once directed his security personnel to purchase and install an air-conditioner in Riley’s Jersey City apartment. Riley also donated several times to James’ political campaigns.

According to a New York Times report, “Mr. James stood stony-faced and Ms. Riley appeared stunned as the jury foreman delivered the verdict, then quickly left the courtroom. Mr. James then took an elevator to the first floor of the federal courthouse, where he kissed his wife, Mary, on the cheek.”

Ethics Comments: Sharpe James was mayor for 36 years. What a sad way to end a career. However, as I say often when addressing groups: Every choice has a consequence. It’s funny – not haha funny, but odd – it seems the longer a person is able to get by with behavior that is unethical or wrong, the greater chance they have of perpetuating that behavior.

My guess (and it’s only a guess) is that James has been an honest man. He was well respected and, likely, proud of his service to the city – at least at first. Then, as time went by, he, like most white collar criminals, began to feel invincible. When you first do something wrong and there is no immediate consequence, you begin to feel that there is no consequence. Then you begin to feel that it just isn’t wrong – that somehow you’re entitled.

No one is entitled and you do reap what you sow. Perhaps with the history of Newark one assumes that actions like James are acceptable since five of the last seven mayors have been indicted. Hum…don’t think I’d want that job if it were given to me…

Judge Martini scheduled sentencing for James and Riley for July 29. Both will receive active prison sentences is my prediction. Having been in their shoes, I suspect that the time they are given now will be precious, as time in federal prison is reflective and lonely.

Business Ethics and White Collar Crime speaker – Chuck Gallagher – signing off…