FBI sting: Business got too good

A fake insurance company set up by the FBI in a political-corruption sting that brought down 11 New Jersey public officials this month sought business in at least three other states, sources said, targeting municipal officials in similar cash-for-contract schemes.

What started as a probe of the problem-plagued Pleasantville Board of Education in Atlantic County last year quickly expanded into a corruption investigation that stretched across New Jersey and then beyond.

Contacts and connections developed during the undercover operation eventually sent investigators to Michigan, Connecticut, and a national school board conference this year in San Francisco, according to law enforcement sources familiar with the case.

No charges have been filed in those jurisdictions, but federal authorities say the investigation is continuing.

Neither the U.S. Attorney's Office in New Jersey nor the FBI would comment about the status of the probe.

The corruption investigation, revolving around an FBI front company called Coastal Solutions, grew so rapidly in the spring that authorities did not have enough resources to pursue all their leads, one source said.

In New Jersey, 12 individuals, including two state assemblymen and nine other public officials, were arrested Sept. 6 in what federal authorities said was a wide-ranging investigation centered on allegations of bribery, extortion and cash-for-contract deals.

Many of the transactions, including the alleged payments of cash bribes, were picked up on audiotape and video.

More arrests are expected.

An official in Detroit confirmed in a telephone call last week that he had met with representatives of Coastal Solutions this year. Andre Cunningham, executive assistant to Detroit Mayor Kwame Kilpatrick, said Coastal representatives had discussed insurance and development projects with him. He said that no agreements had been reached, and nothing improper had taken place.

An official in New Haven who, according to sources familiar with the probe, also met with Coastal could not be reached for comment.

Wayne Smith, mayor of Irvington in North Jersey, confirmed that he had met with Coastal officials who sought city contracts. Smith said he had been offered, but refused, cash from a company representative seeking a construction contract.

The FBI created Coastal Solutions L.L.C., based in a small office complex off the Black Horse Pike in Egg Harbor Township, in 2006 as part of a sting targeting municipal officials who were willing to take cash in exchange for steering contracts to the firm.

In the New Jersey phase of the investigation, cooperating witnesses and FBI agents posing as Coastal representatives met with municipal officials in city hall offices, at bars and restaurants, in parking lots, and in casino hotel rooms wired for sound.

Dozens of meetings were secretly recorded on audiotape and, in some cases, video. These included meetings in which schemes were hatched and money exchanged hands.

Whether those tactics were used when the investigation moved to other jurisdictions could not be determined.

In Detroit, Cunningham said he had agreed to meet with Coastal representatives after a "friend from college" recommended the firm.

He said that representatives had visited Detroit around March and discussed development projects and insurance contracts.

"We tried to do some stuff, but they couldn't meet our needs," he said. "Nothing ever came of it."

In April, Coastal had its "team" in place in San Francisco for the annual conference of the National School Boards Association. The firm had a hospitality van, stocked with liquor, that it used to transport about a dozen school board members from different states to a dinner at a restaurant where Coastal picked up the tab and made a pitch for business, according to sources familiar with the investigation.

The dinner meeting was set up to establish contacts. One source said the FBI could not follow up because the investigation was expanding so quickly in New Jersey that the bureau did not have enough resources to pursue every lead.

Three targets of the probe, including Jason Adams, a former president of the Pleasantville school board, were hired to work for Coastal after the firm opened an office in the English Creek Business Center last fall.

Adams was one of five current or former Pleasantville board members arrested this month.

The two other individuals who worked for Coastal have not been charged, but remain part of the investigation, according to a source familiar with the case.

Those three unwittingly supplied the FBI with contacts and referrals to other municipal officials who were also willing to take bribes, according to authorities.

In announcing the arrests, the U.S. attorney for New Jersey, Christopher J. Christie, described the relationship as a network of corruption that extended across the state.

At least one of the Coastal employees, who has not been charged or identified, had contacts outside the state and paved the way for Coastal's attempts to get contracts in New Haven and Detroit.

Last week, the Coastal office, a two-room suite on the second floor, was abandoned. Carpet had been pulled up, and just two desk chairs and a filing cabinet occupied the front room.

The door to the office, and a large sign at the entrance to the business center, listed the Coastal Organization and its subsidiaries: Coastal Solutions, Coastal Development Partners, and Coastal Funding Group.

All were part of the FBI fiction.

In a phone conversation Thursday from his mayoral office in Irvington's City Hall, Smith recalled meeting this year with representatives of the firm who wanted to discuss construction and insurance contracts.

Among other things, Smith said, there was discussion about his going to work as a broker for Coastal. Nothing came of that, he said. Nor did Coastal win any contracts with the city.

Smith said he couldn't remember the names of those he had met or who had set up the meeting.

"I see everybody," he said.

Smith said they had talked construction and insurance, and that the "construction guy . . . what happened was, the guy offered some cash to me. . . . People are ignorant."

Smith indicated he was unsure whether the individual who made the offer was naive or corrupt. He said he had turned down the offer.

He said that Coastal had asked about insurance contracts, but never followed up on formal proposals required by the city.

"They were up here," Smith said. "We did everything based on procedure. . . . I think we did everything appropriately. At the end of the day, we did the right thing."