NEWARK, NJ — Two business owners and the former deputy mayor and director of Newark Economic and Housing Development have been charged in the bribery scheme involving Newark Community Economic Development Corporation, United States Attorney Craig Carpenito announced Thursday.
Carmelo Garcia, 45, who also served as executive vice president of NCEDC (now Invest Newark) while deputy mayor, is facing a criminal complaint for one count of conspiracy to commit bribery in connection with the business and transactions of a federally funded local government organization. Alleged co-conspirators Frank Valvano and Irwin Sablosky are charged with the same crime.
Garcia is a long-time Hoboken resident who served on the Hoboken Board of Education and later as Director of the Hoboken Housing Authority. He was also elected to the New Jersey Assembly for the 33rd Legislative District, representing Hoboken, Union City, Weehawken and portions of Jersey City.
Upon being ousted from the Hoboken Housing Authority in 2014 over questionable contracts with vendors, Garcia filed a lawsuit against then-mayor Mayor Dawn Zimmer, accusing her of “ethnic cleansing”— claiming Zimmer and husband Stan Grossbard were attempting to stack the housing authority with “upwardly mobile, white” political allies.
Garcia then went on to run for Hoboken’s City Council in 2015, losing to current Council President Jennifer Giattino.
According to court documents, from 2017 through April 2019, Garcia sought and received significant monetary payments and other benefits from Valvano, Sablosky, and others in exchange for redevelopment agreements (RDAs) with the city. Garcia also issued preliminary designated developer status to allies to ensure Garcia’s cooperation and accepted jewelry from Valvano and Sablosky, who co-own a pawnbroker and jewelry business.
In October, the sitting West Ward Councilman and former Invest Newark board member Joseph McCallum was also charged with one count of wire fraud in similar pay-to-play activities. Court documents referred to an unnamed co-conspirator which was later revealed to be Garcia by the New Jersey Globe, though federal charges hadn’t been pressed at the time.
McCallum, 65, was charged with one count of wire fraud for allegedly conspiring to use interstate wire communications to defraud Newark and Invest Newark of the right to McCallum’s honest services, according to a statement from the U.S. Attorney's Office. Invest Newark, which has undergone several name and leadership changes since 2014, is a quasi-governmental organization that mostly does work with the City of Newark.
In April, city council awarded a $5 million contract to Invest Newark to act as the city’s land banking institution, which entails that the organization will hold vacant city-owned property for later sale or redevelopment. Bernell Hall, current Invest Newark CEO, said in October that the organization has been purged of bad actors and is cooperating with the U.S. Attorney’s Office.
"Since our relaunch as Invest Newark in 2019, we have strengthened our policies and procedures to prevent conflicts of interest and protect against fraud," he said. "From overseeing a COVID-19 small business grant program, piloting a Section 8 Homeownership Conversion program, launching Newark’s first cooperatively owned company, and more, we take great pride in the future of Newark, and we are committed to transparency and accountability.”
The U.S. Attorney’s Office said it is in possession of numerous phone and text message records between Garcia, Valvano, Sablosky and others referring to the bribery scheme. In June 2019, Garcia, then serving as EHD directory and deputy mayor, allegedly received an envelope containing $25,000 in cash from Valvano’s intermediary in a restaurant bathroom. Text messages allegedly show that Garcia used his personal mobile phone to coordinate the timing and location of the hand-off.
“Approximately five days later, the EHD Department issued letters granting preliminary designated developer status for several properties to two limited liability companies controlled by Valvano and Sablosky,” the U.S. Attorney’s statement says. “Garcia, whose name and official title were also prominently displayed on the letterhead, was copied on both letters.”
Other text messages between Valvano and Sablosky were more explicit in their alleged communications. In March of 2019, Valvano complained to Sablosky that Garcia’s associate and intermediary was “already looking for [more] money.”
“We’ve done nothing but spend tons of money and give away jewelry,” Valvano’s alleged text messages continue. Sablosky responded by stating, “that “Carmelo [Garcia] wants more too. We can’t afford it . . . We’re a [expletive] money well for these guys to keep coming back to.”
Subsequent text messages naming Garcia further reveal the nature of Valvano and Sablosky’s involvement with Garcia, according to federal officials. A few weeks later, Sablosky also sent text messages to Valvano regarding a meeting he had with Garcia the previous day and a payment of $5,000 to Garcia.
Garcia “showed up [at] 5pm last night” to discuss another RDA he and Valvano were attempting to obtain from the city. When Valvano asked whether there was “Any mention of $$,” Sablosky responded, “He [Garcia] didn’t just come to visit!! Lol. He got another 5,” referencing the $5,000 payment.
Sablosky also told Valvano, “When you get back we have to add everything and sit down with him [Garcia]. I want to get these RDAs through before we start rocking the boat.”
Garcia's attorney, Tim Smith, indicated that the former deputy mayor would pursue a not guilty plea.
"Mr. Garcia has the distinct reputation of someone who rose from public housing to his current status as a devout family man and upstanding citizen,” Smith said. "He has full faith in the process and looks forward to it proceeding to the point of exposure of the true facts and his full vindication."
In response to the charges, a city spokesperson said that Garcia left the city's employment more than two years ago, but did not provide a reason. Neither Valvano nor Sablosky retained their status as designated developers.
The city said it plans to fully cooperate with the investigation. Valvano’s attorney, John J. O'Reilly, did not respond to messages and Vincent Nuzzi, Sablosky’s defense, declined to comment.
A court date has not yet been set for the three men, who face a maximum of five years in prison and up to $250,000 in fines.