United States v. Mosberg

• Decision Date: 09 November 2011
• Docket Number: Civil Action No. 08–0678(FLW).
• Citation: 866 F.Supp.2d 275
• Parties: UNITED STATES of America, Plaintiff, v. Edward J. MOSBERG, Defendant.
• Court: U.S. District Court — District of New Jersey

866 F.Supp.2d 275

UNITED STATES of America, Plaintiff,

v.Edward J. MOSBERG, Defendant.

Civil Action No. 08–0678(FLW).

United States District Court,

D. New Jersey.

Nov. 9, 2011.

Christopher Gramiccioni, Bradley Adams Harsch, United States Attorney's Office, Newark, NJ, for Plaintiff.

Jonathan L. Goldstein, Richard D. Shapiro, Robert B. Rosen, Hellring Lindeman Goldstein & Siegal, Newark, NJ, Peter William Till, Law Offices of Peter W. Till, Springfield, NJ, Frank C. Razzano, Pepper Hamilton, LLP, Washington, DC, for Defendant.

Opinion

WOLFSON, District Judge:

Presently before the Court is a Motion by Defendant Edward J. Mosberg (“Defendant” or “Mosberg”) to dismiss the Second Superseding Indictment (“Indictment”) pursuant to Fed. R. Crim. Pro. 12(b)(3). Mosberg, a real estate developer, is charged with the following counts, in connection with his alleged relationship with the former attorney for the Planning Board who, at times, acted as Township Attorney for Parsippany–Troy Hills (“the Attorney” or “Montefusco”): (a) conspiracy to commit honest services fraud in violationof 18 U.S.C. § 1349 (Count 1); (b) honest services fraud in violation of 18 U.S.C. §§ 1341 and 1346 (Counts 2–7); and bribery in violation of 18 U.S.C. § 666(a)(2) (Counts 8–11). Mosberg is, further, charged with aiding and abetting in Counts 2–11, in violation of 18 U.S.C. § 2.

Mosberg challenges each count of the Indictment as insufficiently plead. He, further, brings statutory and constitutional challenges to the conspiracy and honest services fraud statutes or counts. Finally, Mosberg asks the Court to conduct an in camera review of the grand jury proceedings that resulted in the instant Indictment. After thoroughly considering the parties' initial briefing, holding oral argument, and directing the parties to submit supplemental briefing, the Court denies Defendant's motion to dismiss as to all counts, with the exception of the aiding and abetting charges linked to Counts 8–11. I, further, deny Mosberg's request for in camera review of the grand jury proceedings. The reasoning underlying my decision follows.

I. BACKGROUNDA. The Alleged Scheme to Defraud

The Indictment alleges that Mosberg engaged in a several-year long bribery-based honest services fraud scheme, and conspiracy to defraud, with Montefusco, the Attorney for the Parsippany–Troy Hills Planning Board (“Planning Board” or “the Board”) and, at times, attorney for Parsippany–Troy Hills Township (“the Township”). As a commercial and residential real estate developer, Mosberg oversaw his development entities' business involvement with the Township, including efforts to obtain various development approvals and resolutions from the Planning Board.¹ Count 1, ¶¶ 1a, 1d. Mosberg was also involved in various legal disputes with the Township. Id. at ¶ 1d. These disputes revolved around several different matters, including Mosberg's affordable housing obligations to the Township and the portion of sewer and water collection fees Mosberg was required to pay to the Township. Id. The disputes involved “[m]illions of dollars in judgments, settlements, and legal fees....” Id.

The Attorney served as the Planning Board's legal advisor, rendering advice on pending development applications and representing the Board concerning all litigation. Id. at ¶ 1e. At times, the Attorney also represented the Township concerning litigation between the Township and Mosberg. Id. at ¶ 1f. From 1996 through 2003, the Attorney served on the mediation team for the Council of Affordable Housing, which team was assembled to mediate affordable housing disputes between the Township and Mosberg, among other developers. Id. The Attorney, further, participated in settlement negotiations regarding the sewer and water fee disputes.

According to the Indictment, from 1997 through 2007, the Attorney used his position as Planning Board attorney and, at times, on behalf of the Township directly, to “assist MOSBERG with development-related business and litigation involving the Township and the Planning Board, without the public's knowledge, as specific opportunities arose.” Count 1, ¶¶ 3, 4. For example, in 1998, the Attorney represented the Township in litigation involving another developer who sought to develop a residential property known as Mazdabrook. Count 1, ¶ 10c. After the Township prevailed in that litigation, “Mosberg received a secret recommendation from the Attorney that Mosberg purchase Mazdabrook and apply to build houses rather than apartments.” Id. The Attorney knew that the Township would approve that type of application. Mosberg heeded the Attorney's advice and, upon receipt of the development application, the Attorney allegedly expedited its approval. See id.

In addition, the Indictment alleges that, from about 1997 through 2005, Mosberg was engaged in litigation with the Township over sewer-connection fees related to previously executed developer agreements between Mosberg and the Township. Count 1, ¶ 10a. Allegedly, the Attorney “endors[ed] developer's agreements between the Township and MOSBERG entities that undermined the Township's legal position in the litigation.” Id. at ¶ 10b. The applications recommended by the Attorney supported Mosberg's method of calculating sewer-connection fees rather than that of the Township, and exempted Mosberg from the payment of any fees. Id.²

Several other official actions are alleged in the Indictment. For one, the Attorney expedited development applications for Mosberg on a continuing basis. Count 1, ¶ 10c. The Attorney, further, disclosed confidential Township litigation strategy to Mosberg, to the Township's detriment. Count 1, ¶ 10d. Lastly, in 2006, Mosberg is alleged to have offered the Attorney a six-figure payment in exchange for the Attorney's official assistance in “resolving outstanding litigation and obtaining Planning Board approval to build additional housing units at Parkside Gardens,” one of Mosberg's developments. Id. This transaction was never completed, however, because the grand jury's investigation became public before any payment was made. Id.

The Indictment alleges that, beginning in 2002, Mosberg engaged in favorable real estate deals with several of the Attorney's family members as a means of rewarding the Attorney for his assistance. Count 1, ¶¶ 5, 6a. These deals included, inter alia, discounted purchase prices, free property upgrades, lenient settlement dates, and the waiver of contract contingencies. Id. Certain of the properties purchased by the Attorney's family members were “flipped,” i.e., purchased and then quickly resold, which resulted in a profit for the family member.

One such real estate transaction earned the participating family member a profit of $58,955, before capital gains tax. Id. at ¶ 6a(ii) (“Property # 3”). According to the Indictment, Mosberg facilitated this transaction by allowing the family-member, in May of 2002, to enter into a contract to purchase the property for $275,000. That contract provided that the family-member purchaser was to close on the property “upon issuance of a certificate of occupancy....” Id. at ¶ 5b. When the certificate of occupancy was issued in November of 2002, Mosberg did not enforce that contract provision and, instead, allowed the family-member purchaser to close three months later in February of 2003. Id. at ¶ 6a. A few months later, in June of 2003, the property was sold to a third party for $360,000, resulting in the $58,955 profit. Id.

Importantly, the Indictment further alleges that some of the Attorney's family members transferred a total of $36,000 of the sale proceeds to the Attorney's bank account. Count 1, ¶ 8. The deposits to his bank account were not directly transferred there, but were “concealed and transferred through various bank accounts held by certain members of the Attorney's family.” Id. In short, the Indictment alleges that, by “allow[ing] the Family Members to successfully flip residential properties and derive substantial proceeds from their sales,” Mosberg provided monies and personal benefits, both directly and indirectly, to the Attorney. Id. at ¶ 7.

Despite receipt of certain of the real estate sale proceeds, the Attorney did not disclose his relationship with Mosberg, and/or the real estate transactions involving Mosberg and the Attorney's family members, to the Township or Planning Board. Count 1, ¶ 9. He, further, failed to disclose any receipt of monies or benefits from the real estate transactions on his annual Local Government Ethics Law Financial Disclosure Statements filed in 2004 and 2007. Id.; Count 5 and 7. Under New Jersey's Local Government Ethics Law, “local government officers” must file an annual financial disclosure statement specifying “[e]ach source of income, earned or unearned, exceeding $2,000 received by the local government officer or a member of his immediate family during the preceding calendar year.” N.J.S.A. 40A:9–22.6(a)(1).³ In addition to disclosing income, each local government officer must also disclose “[e]ach source of gifts, reimbursements or prepaid expenses having an aggregate value exceeding $400 from any single source ... received by the local government officer or a member of his immediate family during the preceding calendar year.” Id. at (a)(3). Further, the officer must disclose “[t]he address and brief description of all real property in the State in which the local government officer or a member of his immediate family held an interest during the preceding calendar year.” The Indictment alleges that the Attorney's failure to disclose on his financial disclosure forms the benefits and monies he and his children received was done in an attempt to conceal the bribery-based conspiracy. Id. at Count 1, ¶ 9.

Based on Mosberg's and the Attorney's allegedly improper relationship, and the attendant, though convoluted, exchange of monies, the Indictment asserts that Mosberg and the Attorney engaged in a...