Examiner won't bar Merlino family firm from A.C. work

Family ties to notorious mob figures are not enough to bar Joseph N. Merlino, his mother, and their construction company from working on Atlantic City casino construction sites, a hearing examiner for the New Jersey Casino Control Commission has ruled.

In a 67-page report released yesterday, William T. Sommeling blasted the New Jersey Division of Gaming Enforcement for presenting circumstantial evidence against the Merlinos that was "unreliable, uncorroborated and, in some instances, demonstrably false" and said he found no reason to deny the license applications filed by the Merlinos and their company, Bayshore Rebar of Pleasantville, N.J.

The division had cited past and current alleged associations between the Merlinos and the Philadelphia crime family recently led by jailed Joseph S. "Skinny Joey" Merlino as reasons to deny their license applications.

Joseph N. Merlino, 43, is the mob figure's cousin. His mother, Phyllis, is Skinny Joey's aunt.

"We're extremely pleased with the opinion," said John Donnelly, lawyer for the Merlinos.

The ruling, he said, is a "complete rejection of the claims brought by the division and lifts a cloud that has hovered over them because of their name for many, many years."

Phyllis Merlino, 60, said she and her son were "gratified" with the decision, but wanted to wait until the full Casino Control Commission voted before commenting further.

The Gaming Enforcement Division and Donnelly have 13 days to file exceptions to the decision and the report on which it is based. The commission has 45 days to adopt, modify, or reject Sommeling's ruling.

Sommeling, a former police officer and Ocean County undersheriff, sits on the five-member commission and was designated the hearing examiner for the license application.

The division will contest his decision, said Peter Asseltine, a spokesman for the state Attorney General's Office, which oversees the division.

"We disagree with the findings," he said, "and plan to file exceptions challenging this decision with the full Casino Control Commission."

The Merlinos' battle stretches back more than two decades. They and their company had twice been denied licenses, in 1989 and in 1997, because of suspected ties to organized crime.

But Sommeling found that the ties no longer existed and rejected the Gaming Enforcement Division's argument that the Merlinos were unqualified because of "continuing inimical associations with organized crime members and associates."

Phyllis Merlino and her son testified during the licensing hearing, which included 14 sessions over two months. Both said they had been victimized in a rush to judgment based on their family name.

Phyllis Merlino is the ex-wife of the late Lawrence "Yogi" Merlino, a mob leader in the 1980s who became a cooperating government witness.

Joseph N. Merlino is one of five children from that marriage. Phyllis Merlino divorced her husband and raised her five children largely on her own, she testified.

Lawrence Merlino was the brother of Salvatore "Chuckie" Merlino, the mob underboss during the bloody reign of Nicodemo "Little Nicky" Scarfo.

Joseph S. "Skinny Joey" Merlino, Salvatore Merlino's son, is serving a 14-year sentence on racketeering charges.

Insisting that they never had any connection with the mob, Phyllis Merlino and her son testified that their family had decided to sever all ties with the Merlino side of the family after Skinny Joey was arrested on racketeering charges in 1999.

The Division of Gaming Enforcement used phone records and Philadelphia police surveillance reports to challenge those assertions, but Sommeling said the division's evidence was less than conclusive.

Most of the surveillance reports that placed them in the company of organized crime figures, the Merlinos said, were from social gatherings such as weddings and funerals.

Sommeling also rejected the division's contention that Joseph N. Merlino had ties to a South Philadelphia plumber who was an alleged mob associate.

He said law enforcement reports were contradictory and failed to establish that the individual, Anthony Giraldi, had ties to the mob or, as the division alleged, was a bookmaker.

There was "overwhelming evidence" that some of the division's allegations about Giraldi "were patently false," Sommeling noted.

In his report, he also referred to "serious misrepresentations" by the division before the hearing and "inconsistencies in its myriad arguments."

Donnelly countered the allegations against his clients with testimony from three former FBI agents and a former Justice Department official, all of whom said there was no credible evidence to link Joseph N. Merlino, his mother, or their company to organized crime.

Sommeling's report cited the Merlinos for their candor and "credible" testimony and noted that while Bayshore had been barred for 20 years from casino work, it had built a positive reputation in the construction industry.

Bayshore lays the steel reinforcement rods needed before cement can be poured.

Sommeling cited nearly a dozen construction projects requiring governmental approval on which the company had done work. These include airports, prison facilities, railway terminals, and parking garages.

In rejecting the division's assertions, he wrote that "there was no evidence presented that . . . organized crime has ever had any interest, direct or indirect, in any of [the Merlinos'] personal interactions of business operations."