Assemblyman and former Perth Amboy Mayor Joseph Vas, who was indicted by the State Attorney General’s Office earlier this year, now faces an 11-count federal indictment involving his sale of an apartment building that he flipped for a huge profit.
Vas, a 54-year-old Democrat, is charged with mail fraud for allegedly misusing his position as mayor to misappropriate Council on Affordable Housing (COAH) funds in connection with the sale of an apartment building he owned to a contractor in 2006. He then allegedly used about a quarter of his profit to finance his congressional primary campaign against U.S. Rep. Albio Sires (D-West New York).
Vas’s aide, Melvin Ramos – who faces charges from the state as well – was also indicted by the feds.
“Once again, we have an entrenched, powerful politician who used his power and status and insider knowledge to game the system to his illicit advantage,” said Acting U.S. Attorney Ralph Marra. “Through these corrupt acts that we allege, the taxpayers were victimized, a program intended to benefit the city was ripped off, and the voters who supported Vas were fooled. This is a classic betrayal of trust by a public official.”
The indictment charges that Vas bought a 12-unit apartment building on DeKalb Avenue in December, 2005 for $660,000 – well below its assessed value of $955,000. Five months later, the U.S. Attorney alleges, Vas flipped the property for $950,000, inducing a contractor to buy it by promising public money – including Regional Contribution Agreement (RCA) funds—to help pay for the building’s renovation. He then allegedly instructed city employees to submit a resolution to the council that would provide $360,000 in RCA funds for the property. It was approved in June, 2006.
Even before COAH approved the payment, Vas allegedly jumped through bureaucratic hoops to make sure the contractor got a $90,000 advance on the funds. On January 11, 2007, the feds charge, Vas coerced the city’s Assistant Personnel Officer to approve that advance, naming him Acting Business Administrator so he would have the authority to do so. The city’s regular Business Administrator was absent that day.
The indictment spells out a sordid tale of alleged conflicts of interest involving Vas, Ramos, an unnamed city councilman and the contractor.
According to the document, the relationship between Vas and the contractor began in August, 2005, when Vas met him and the councilman at City Hall. The contractor informed Vas that he was interested in buying city properties that could be rehabilitated using RCA funds. Vas, indicating interest, instructed the contractor to talk to Ramos.
Ramos, upon communicating with the contractor, gave him a list three to five properties available for purchase, one of which was the DeKalb Avenue apartment building that Vas was then under contract to purchase. The councilman then showed several properties to the developer, including the DeKalb Avenue building.
While still under contract to purchase the apartment building, Vas met with the contractor at City Hall to discuss buying it from him. The contractor, however, was reluctant because of the building’s “deplorable” condition, and said he couldn’t afford to buy and rehabilitate it without the help of public funds. Vas then induced him by telling him that public funds would indeed be available, and that he would introduce him to contractors that were doing work in the city.
In December, Vas bought the apartment building with a balloon mortgage from a bank where a relative worked as a branch manager. Just one month later, he entered into contract with the contractor to sell the building at a huge profit. Just before the purchase was finalized, Ramos told the contractor that he would get $360,000 in RCA funds and that his rehabilitation project would be processed by the city immediately.
The U.S. Attorney’s Office also charges that $75,000 of the profit Vas made from the sale of the apartment building went towards his congressional campaign.
Vas is also charged with lying to federal investigators about his past contact with the contractor who bought his property.
Ramos, for his part, is charged with creating straw donors to funnel money into Vas’s congressional campaign. He was charged with similar offenses by State Attorney General Anne Milgram in March.
Vas was mayor of Perth Amboy since 1990, and is widely credited with the development of the city’s waterfront. He lost his seat to current mayor Wilda Diaz last year.
Vas pleaded not guilty to state indictments earlier this year charging him with misappropriating about $5,000 city funds to pay for personal expenses – including sportswear and his son’s basketball camp – and for rigging a housing lottery in favor of an aide.
Although Vas remains in the Assembly, he has been stripped of his leadership titles and is not seeking reelection this year.
Vas and Ramos are scheduled to appear in court at 11:30 this morning before U.S. Magistrate Judge Madeline Cox Arleo at the Martin Luther King Jr. Federal Courthouse in Newark. Marra has scheduled a press conference for 12:30pm.
Perth Amboy Mayor Wilda Diaz, who defeated Vas in last year’smuncipal election,said in a statement, “My administration continues to remain focused on taking those steps that are needed to address the fiscal and quality of life issues impacting our residents.The City of Perth Amboy, more than ever, deserves no less.We will continue to cooperate fully with law enforcement authorities throughout their investigations.”