11-04-04 -- Nardone Sr., Joseph et al -- Conviction -- News Release

Father and Son Labor Union Officials Convicted in Embezzlement of Jersey City Local

NEWARK - A federal jury today convicted two former labor union officers in an embezzlement scheme against Local 148 of the Novelty and Production Workers Union in Jersey City, U.S. Attorney Christopher J. Christie announced.

Joseph Nardone Sr, 80, the founder and retired President of Local 148, and his son Joseph Nardone, Jr. 50, the recently removed Welfare and Pension Fund Administrator and the Local's President, were both convicted following a six-week trial before U.S. District Judge Jose L. Linares.

The Nardones, both of Delray Beach, Fla., were each convicted of one count of conspiracy in the embezzlement of more than $350,000 from the Local's Welfare Fund. Nardone Jr. was also convicted of one count of embezzlement. Both counts carry maximum penalties of five years in prison and a $250,000 fine.

Judge Linares scheduled sentencing for Feb. 15, 2005. Both men remain free on $50,000 personal recognizance bonds.

The case was tried by Assistant U.S. Attorney V. Grady O'Malley, Senior Litigation Counsel, and Assistant U.S. Attorney Anthony Moscato.

The Nardones were Indicted in October 2002 and charged in the two-count Indictment with conspiracy to embezzle in excess of $350,000 in welfare funds and union funds as a result of a multi-faceted fraud scheme existing between 1996 and 2001. Local 148 is presently under a federal court-ordered trusteeship because of corruption and abuse of fiduciary powers.

Testimony in the Nardones' trial revealed that the main source for the embezzled funds was a scheme to generate cash from the Welfare Fund by creating construction projects at the union's Jersey City office building. The construction projects were unnecessary and provided no benefit to the Welfare Fund or its participants.

The Nardones conspired with contractor Stanley Rothman, who previously pleaded guilty and testified as a government witness. Rothman testified that he skimmed $250,000 from the inflated costs of the construction projects at the Jersey City office and split that money with Nardone Sr. Rothman and another government witness, an architect hired by the Welfare Fund, both testified that change orders and the inflated costs of the project were rubber-stamped by the architect.

The conspiracy also included the purchase for $300,000 of three lots a block away from the union office building. The Jersey City Planning Board required a parking lot to go with the union building expansion, but Rothman inflated the paving costs and pocketed $95,000.

Nardone, Jr. was convicted of orchestrating the sale of four pieces of property by the Welfare Fund in Jersey City to Rothman who then resold them days later for a 100-percent profit, causing an additional $75,000 loss to the Welfare Fund.

Under federal court order in March 1996, Nardone Sr. was barred from his position as administrator of the Welfare Fund. Nonetheless, he continued to operate in that role until his Indictment.

Rothman, before his guilty plea in September 2003 to the embezzlement scheme, was also charged separately in a scheme to defraud the federal Housing and Urban Development Agency (HUD).

As a result of this investigation, numerous other Local 148 officers and business agents have also been convicted. Among them were Business Agent Edward Bigham Sr.; Local Vice President Edward Bigham Jr.; Business Agent Joseph Girlando, and Hudson County construction subcontractor Steven Freeman.

For the successful investigation and prosecutions, Christie credited Special Agents from the Department of Labor, Office of Inspector General, under the supervision of James Vanderberg, Assistant Special Agent in Charge in New Jersey; as well as Agents from the Housing and Urban Development Agency, under the Supervision of Jean Dauman and the U.S. Department of Labor (EBSA) under the supervision of Frank Clisham.

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Defense Counsel:

Nardone Sr. - Robert Aiello, Esq. Maspeth, N.Y.

Nardone Jr. - Glenn H. Ripa, Esq, New York, N.Y.