2002-06-11 -- Russo, Dominick et.al. -- Indictment -- News Release

Deputy U.S. Marshal, Co-Conspirators Charged in Scheme to Sell Seized Property to Friends and Family at Considerable Discounts

NEWARK - A deputy U.S. Marshal formerly in charge of the Asset Forfeiture Unit was arrested this morning, charged in an Indictment with arranging cut-rate sales of cars and real estate for family and friends, often at a fraction of market value, U.S. Attorney Christopher J. Christie, U.S. Marshal James Plousis and Department of Justice Inspector General Glenn A. Fine announced.

Dominick Russo, 41, of Union, was arrested at his home early this morning by Special Agents of the U.S. Department of Justice Office of the Inspector General. A 21-count Indictment charging conspiracy, mail fraud, embezzlement of public funds, false statements and witness tampering was returned on Friday and unsealed with the arrests of Russo and his co-defendants, according to Assistant U.S. Attorney Michael F. Buchanan.

Also charged in the Indictment are Anthony Russo, also known as Anthony Abate, 56, of Waretown, Dominick Russo's half-brother, and Patricia Eichelsdoerfer, 37, of Parsippany, a real estate agent who worked in northern New Jersey and had a close personal relationship with Dominick Russo.

The Russos and Eichelsdoerfer each profited in the fraudulent sales of seized automobiles and homes worth hundreds of thousands of dollars, according to the Indictment.

Anthony Russo was also arrested this morning. Eichelsdoerfer was allowed to turn herself in to Special Agents of the DOJ Office of the Inspector General. The defendants are scheduled to appear at 2 p.m. before U.S. Magistrate Judge G. Donald Haneke for an initial appearance.

Plousis, who took over as U.S. Marshal on March 27, said that Dominick Russo began in the Marshals Service in 1988. On March 29, Russo was suspended with pay. Plousis suspended him today without pay.

"First and most important, it must be known that the Marshals Service has always operated with distinction and honor, serving this office and the public," Christie said. "This defendant acted alone, allegedly taking advantage of his position and inside knowledge of the asset forfeiture program to conceal the embezzlement. He is the proverbial bad apple in the bunch, and like others charged with public corruption, Dominick Russo will be prosecuted to the fullest extent possible."

"This is a disturbing case involving a DOJ law enforcement officer," said Ralph F. Paige, Special Agent in Charge of the Office of Inspector General New York Field Office, whose Special Agents were the primary investigators in the case, with support from the U.S. Marshals Internal Affairs. "The challenge of the OIG is to be vigilant in its responsibilities to investigate corruption by DOJ employees. But this indictment should in no way diminish the important contributions the vast majority of Marshals Service employees make on a daily basis to federal law enforcement nationwide."

In 2001, the Marshals Service in New Jersey dealt with in excess of $9 million in seized real property, automobiles and currency.

Upon assuming office, Plousis undertook a review of the Asset Forfeiture Unit, its policies and procedures. In consultation with the Marshals Service in Washington, new controls and procedures are in place with other revisions expected.

"I am confident that the U.S. Marshal has instituted changes that will make the asset forfeiture operation work fairly and effectively," Christie said.

The Indictment describes a conspiracy that ran from about February 1998 through October 1999, during which the co-defendants, with Dominick Russo acting throughout as chief of the Asset Forfeiture Unit, schemed to enrich themselves through the sale of properties and automobiles seized by agents of the FBI and DEA and other federal law enforcement agencies. In each case, the defendants subverted the role of the Asset Forfeiture Unit to dispose of seized property in a fair, open and competitive manner, consistent with government regulations, including the sale of property to the public.

Dominick Russo also is alleged to have received a $3,500 kickback for arranging a fraudulent real estate commission.

Under rules of the Asset Forfeiture program, real property valued at less than $1 million could not be sold for less than 85 percent of market value, with prior approval needed for sales less than 85 percent of their value. Authorized methods for sale of real property included retaining a licensed real estate broker with access to the Multiple Listing Service; and a pilot program in which properties were listed for sale using the services of Fannie Mae, a nationwide network of realtors. In both scenarios, the properties are then offered for sale to the public.

In one alleged variation of the scheme, in March 1998, Dominick Russo represented in a memo to a supervisor at the Marshal's Service that a property in Waretown "was placed on the market with a broker" for a six-percent commission. He further represented that he had an offer on the property for $108,000 - 86 percent of the appraised value - a price that was just above the 85-percent threshold at which Dominick Russo would have needed special permission to sell.

Several fraudulent aspects were involved and concealed in the deal, according to the Indictment, which allowed Dominick Russo and Anthony Russo to gain a share of the fraudulent sale:

• The property was not listed for sale; the "new offer" was received from Anthony Russo, not a licenced broker.

• The property was made to appear as if it were being sold to N.A., a former girlfriend of Anthony Russo, when Anthony Russo was the actual buyer.

• A six-percent sales commission was paid to N.N., the purported auctioneer for the sale, who, in fact, was a friend of Dominick Russo. There was no auction.

In the end, Anthony Russo paid $98,000 (86 percent of market value) for the property. A deed was allegedly executed on behalf of N.A., and documents were created that allowed Anthony Russo to gain custody of the Waretown property without appearing to be the actual purchaser.

The Indictment charges that N.N. received a real estate commission of $6,480 for providing no services whatsoever. Of that amount $3,500 was allegedly paid to Dominick Russo as a kickback.

Another fraudulent transaction described in the Indictment involved a waterfront property in Ocean City. Dominick Russo allegedly informed a friend, K.E. that the Marshal's Service had a seized property and told a representative of the U.S. Attorney's Office in Philadelphia that he might have a cash buyer for $700,000. Ultimately, the property was listed for $650,000 but sold to K.E. for $465,000 cash, with a $27,900 commission paid to Patricia Eichelsdoerfer's realty firm. Of that commission, Eichelsdoerfer, an employee of the firm, received a $15,310 commission. The property was not listed on the MLS or offered for sale to the public.

The Indictment also describes an Atlantic City property sold in a similarly fraudulent way.

The Indictment describes the fraudulent sale of five automobiles, without a government-contracted auctioneer, by Dominick Russo, acting as chief of the Asset Forfeiture Unit, at prices far below the National Automobile Dealer Association (NADA) estimated market value:

• A 1992 Lexus LS 400 - with a NADA value of approximately $9,000, sold in June 1999, to Eichelsdoerfer's husband for $5,400 without using an auctioneer. Eichelsdoerfer's husband then sold the Lexus for $9,000.

• A 1990 Nissan Pathfinder - with a NADA value of approximately $9,000 to Dominick Russo's mother for $4,200, using W.E. as a nominee purchaser to conceal the identity of the true purchaser. The vehicle was subsequently resold for $5,000.

• A 1986 Mercedes Benz 300E, with a NADA value of approximately $7,500, to Anthony Russo for $2,100. Dominick Russo executed a U.S. government certificate of title, transferring the title to Anthony Russo, using the name Ameri-Car & Truck Sales, a company he was associated with, to disguise the identity of the true purchaser of the car.

• A 1991 Mercedes Benz 190E - with a NADA estimated value of $9,500, to Anthony Russo for $4,200. The title again transferred to Ameri-Car & Truck to disguise Anthony Russo as the true buyer. Anthony Russo bought the vehicle on June 26, 1998. He sold it one month later for $11,000.

• A 1987 Chevrolet Corvette - with a NADA value of approximately $6,000, for $4,000 to Anthony Russo on Feb. 17, 1998. On Feb. 23, 1998, Anthony Russo sold the Corvette for $8,000.

Conspiracy carries a maximum penalty of five years in prison and a $250,00; mail fraud a maximum five years in prison and $250,000 fine; embezzlement of public funds a maximum of 10 years in prison and a $250,000 fine; false statements a maximum penalty of five years in prison and a $250,000 fine; and witness tampering a maximum 10 years in prison and $250,000 fine.

Each of the defendants is charged with conspiracy. Dominick Russo is charged in every count of the Indictment. Anthony Russo is also charged with one count of mail fraud, four counts of embezzlement, and five counts of making false statements. Eichelsdoerfer is also charged with five counts of embezzlement.

Despite Indictment, every defendant is presumed innocent, unless and until found guilty beyond a reasonable doubt following a trial at which the defendant has all of the trial rights guaranteed by the U.S. Constitution and federal law.

Christie thanked the U.S. Marshals Service, under the direction of U.S. Marshal Plousis;

Office of Inspector General New York Field Office, under the direction of Special Agent in Charge Paige.

-end-

Defense Counsel:

Dominick Russo: Stephen Turano, Esq. Newark

Anthony Russo: Richard Regan, Esq. Teaneck

Eichelsdoerfer: Michael Pedicini, Esq. Morristown