On appeal from an Order of the New Jersey Casino Control Commission.
Matthews, Furman and Havey. The opinion of the court was delivered by Matthews, P.J.A.D.
From June to September 1982, the Casino Control Commission conducted hearings to determine whether certain officials of the Hotel and Restaurant Employees and Bartenders International Union Local 54 were disqualified under Section 86 of the Casino Control Act, N.J.S.A. 5:12-1 to N.J.S.A. 5:12-152 (the act). Pursuant to Section 93(a) of that act, Local 54 had filed an annual registration statement with the Commission. N.J.S.A. 5:12-93(a). The Division of Gaming Enforcement was then requested to review the credentials of the Union and its personnel as mandated by N.J.S.A. 5:12-94(a).
On May 11, 1982, the Division submitted a letter report to the Commission in which it urged that Section 93 sanctions be imposed against several union members. Among the individuals said to be disqualified by the act were the President, Frank Gerace, and Business Manager, Frank Materio. On April 30, 1982, the Division filed another report in which it cited two additional union employees, Eli Kirkland*fn1 and Karlos LaSane, as disqualified under the act.
On September 28, 1982, the Commission issued a determination in which it found Gerace and Materio disqualified under Section 86(f), and LaSane disqualified under Section 86(c). The Commission applied Section 93(b) which prohibits the Union
from receiving dues from its employees or from administering pension or welfare funds if any of its officers, agents or principal employees is disqualified by Section 86 of the act. N.J.S.A. 5:12-93(b).*fn2 Frank Gerace, Frank Materio, Karlos LaSane and the union have appealed the adverse decision.
Local 54 represents approximately 14,000 hotel workers, 10,000 of whom are employed in casino hotels in Atlantic City. The Local's members are employed in non-gaming positions including waiters, kitchen workers, bartenders, and porters.
In 1979 Frank Gerace was elected as President of Local 54, and was re-elected to that position in June 1982. As chief executive officer, Gerace was authorized to hire and discharge business agents, oversee daily union activities, and engage in collective bargaining on behalf of the Local's members. Frank Materio became an employee of Local 54 in mid-1978. On June 30, 1978, pursuant to a motion made by Gerace, Materio was accepted by Local 54's Executive Board as a union organizer. Materio was appointed to the Executive Board as trustee on January 16, 1979. Karlos LaSane was employed by Local 54 on May 4, 1981 to represent union members at grievance hearings. LaSane also was designated by Gerace as Local 54's affirmative action officer.
Section 86, of the act, N.J.S.A. 5:12-86, sets out the criteria under which an applicant will be denied a license. Among those criteria pertinent here are subsections c and f. N.J.S.A. 5:12-86(c) mandates the disqualification of any applicant who has been convicted of certain enumerated crimes under New Jersey law. N.J.S.A. 5:12-86(f) disqualifies any applicant identified as a "career offender or a member of a career offender cartel" or one who is "an associate of a career offender or a career offender cartel in such a manner which creates reasonable belief that the association is of such a nature as to be inimical
to the policy of this act. . . ." (emphasis provided.) N.J.S.A. 5:12-86(f). However Section 93(b) also permits the Commission, at its discretion, to waive the disqualifying criteria. N.J.S.A. 5:12-93(b).
In its letter of May 11, 1982, the Division alleged that Gerace and Materio were disqualified under Section 86(f) by reason of their association with certain career offenders or career offender cartel members. LaSane was claimed to be disqualified under Section 86(c) by reason of a prior criminal conviction. Two issues were directed to the Commission with respect to Gerace and Materio: first, whether Gerace and Materio were associated with members of a career offender cartel, and second, whether that association was of such a nature so as to create a reasonable belief that it was inimical to the policy of the act and to gaming operations. The issues directed to the Commission with respect to LaSane were whether he was an officer, agent or principal employee of Local 54 within the meaning of the act, and whether the Commission should waive his disqualification as permitted by N.J.S.A. 5:12-93(b).
The Division presented extensive evidence to suggest a relationship between Gerace and Materio and career offenders, especially one Nicodemo Scarfo. Testimony at the 1982 hearings concerned Scarfo, the Bruno crime family, and all possible implications between Scarfo and Local 54 members. At the conclusion of the testimony, the Commission made detailed findings of fact regarding the possibility of a relationship between the Union officials and Scarfo, and its extent.
The Commission found that Nicodemo Scarfo has led the Bruno organized crime family since March 1981. The "Bruno family," which operates in the Philadelphia metropolitan area and southern New Jersey, including Atlantic City, was named after its former head, Angelo Bruno. Bruno was murdered in March 1980. Philip Testa assumed control of the "family" following Bruno's death, until he was murdered in March 1981.
The Commission also found that Scarfo had a lengthy history of criminal involvement, beginning in March 1950 when he was convicted of setting up an illegal lottery. He entered a plea of guilty to involuntary manslaughter in 1964, and most recently, was convicted of possession of a firearm by a convicted felon in 1981. The Commission concluded that Scarfo is a career offender and an active member of a career offender cartel.*fn3
The Commission evaluated the evidence concerning the relationship between Gerace and Materio and Scarfo. It found six areas in which an association between Scarfo and Local 54's officers is evidenced.
The Division first submitted a telephone list as indicative of Scarfo's association with Gerace and Materio. The telephone list was seized from Scarfo in December 1979 following his arrest for the murder of Vincent Falcone. Some of the names on the list were aliases and many of the numbers were encoded. After deciphering the code, the law enforcement officers determined that several encoded names and numbers related to associates of Scarfo who have been linked to organized criminal activity. Other names and numbers listed in the book were not encoded, such as dentists and attorneys.
The Commission determined that five employees of Local 54 were listed in Scarfo's phone book under aliases. Frank Gerace was listed under the name "Percy," and his number was in code. Gerace's mother was listed as "Percy Mom," and Susan Holland, Branch Manager of William L. Meyers, Inc., Administrator of Local 54's Health and Welfare Fund, was listed as "Percy Girl." Both women were listed with coded numbers. Materio's number was also on Scarfo's phone list. However, Materio was listed by his proper name and his numbers were uncoded. In addition, Robert Lumio, Secretary-Treasurer of Local 54 from September 1979 to June 1981, and Frank Lentino,
Business Agent for Local 54 since 1981, were listed under aliases.
In December 1979, the police found another piece of evidence indicative of Scarfo's interest in Local 54. During their investigation of the Falcone murder, the police seized a piece of paper from Scarfo's dresser drawer containing the words:
KIS-POTS-GON ALL OUT BACK TO 54 ST. BEFORE FEB.
The Commission found that the note referred to Thomas Kissick, Ernest Potts, and Thomas "Goony" Walsh, and their removal as union officials when Local 491 merged with Local 54 in September 1980. The Commission held that the paper evidenced both Scarfo's interest in the unions, and his advance notice of the unions' activities.
The third basis on which the Commission disqualified Gerace and Materio involved the events leading to Scarfo's arrest for the Falcone murder. Shortly after their arrest, Scarfo and his two associates, Leonetti and Merlino, were released on $92,000 cash bail. Twenty thousand dollars of that amount was provided by Gerace's mother. At the hearing, the Division presented documentary evidence that half of Lillian Gerace's contribution was supplied by appellant Frank Gerace.
In addition, after their release, Materio put up his house as property bail for Leonetti and Merlino, so that part of the cash bail could be released. Despite this, Materio testified that he did not know Leonetti and Merlino personally and that he agreed to use his home for bail as a favor to Scarfo's mother, a personal friend. Materio further testified that he had known Scarfo for 25 years, although he had only seen him 6 to 7 times in the prior 5 years.
The Commission next relied on the immunized testimony of Joseph Salerno. Salerno is the principal witness against Scarfo, Leonetti and Merlino in their trial for the murder of Vincent Falcone. Salerno was a plumber in New Jersey. In 1978, when he encountered financial problems, Salerno approached Leonetti for a loan. In June 1979, Salerno had marital problems and
Leonetti allowed him to stay at his premises. From September 1979 to December 1979, Salerno resided at 26-28 North Georgia Avenue, in Atlantic City. During that time, Salerno had frequent contact with Scarfo, Leonetti, Merlino, and Lumio, who was then the Secretary-Treasurer of Local 54.
On several occasions Salerno overheard Scarfo indicate that he controlled the unions. Salerno testified, for example, that on one occasion Scarfo told Lumio that: "I got you your job and I got that other big fat j-o his job and don't you forget it." Salerno also testified that during his stay at 26-28 North Georgia Avenue, he saw Gerace in Scarfo's company 11 or 12 times. Salerno stated that three to four meetings were held at Scarf, Inc., a company owned and operated by Scarfo. Meetings between Gerace and Scarfo were also held at Scarfo's apartment and outside the premises of 26-28 North Georgia Avenue. Salerno stated, however, that he never overheard Gerace and Scarfo's conversation and never heard them say anything to each other regarding Local 54 and union business.
The Commission also heard evidence about Local 54's dealings with Scarfo associates and cited Robert Lumio, Albert Daidone, Joseph Erace, and Frank Lentino, in addition to Gerace and Materio, as present or former employees of Local 54 who are connected to Scarfo.
Robert Lumio was appointed by Gerace to fill the office of Secretary-Treasurer in August 1979. As previously mentioned, Salerno testified with respect to Lumio's ties to Scarfo. In addition, State agents testified they saw Lumio in the company of Scarfo and Leonetti on several occasions. Albert Daidone became Local 54's business agent for the Camden office in December 1980. Less than four months later, Gerace appointed Daidone to the Executive Board of Local 54. In June 1981, Daidone was appointed Vice President of Local 54 following the death of Robert Lumio. Daidone was an admitted friend of Natale and Angelo Bruno. Natale was described by FBI
agents as "a major distributor of illegal drugs" and "a very close associate of Angelo Bruno."
The Commission found that Joseph Erace was the third member of Local 54 with connections to Scarfo. On December 14, 1981, Gerace appointed Erace to the Executive Board of Local 54. Donna Savarese, lounge manager at the Tropicana Casino Hotel, testified to the Commission that on February 6, 1982, Erace approached her and stated that he wanted to introduce her to a friend named Nick Scarfo.
Frank Lentino is the last Local 54 employee with alleged ties to Nick Scarfo. On June 8, 1981, Gerace appointed Lentino as Camden County Office Manager. Lentino appears on the Scarfo telephone list, previously described, under the name Frank Gray, with a coded number. Lentino is also a proposed alibi witness for Scarfo in connection with the Falcone murder. Thus, the Commission found that there are six present or former employees of Local 54, Gerace, Materio, Lumio, Daidone, Lentino, and Erace who are connected to Scarfo or other members of the Bruno crime family.
The Commission also found connections between Local 54's business dealings and persons or firms tied to Scarfo. The Division first presented evidence that a company hired by Local 54 to perform union headquarters renovation work was connected with Scarfo. In January 1979, Local 54's Executive Board approved a renovation of the union headquarters and authorized the officers to seek the best union contractors for the job. Toro Construction Company became the general contractor for the renovations. Toro is a legitimate company and was one of four or five contractors recommended to Gerace by John Rich, business agent for Local 33. Although there is no evidence of any irregularity in the way Toro obtained contracts or performed work for Local 54, Toro had contributed $44,000 in cash to the bail for Scarfo, Leonetti and Merlino following their arrest for the Falcone murder. In addition, Rick Casale, roofing
contractor who did the roofing work on the renovation of Local 54 headquarters, is a "very close associate of Scarfo."
In 1979 Local 54 sold its headquarters building for $175,000. Part of the real estate commission was earned by one Vincent Sausto, an insurance broker and real estate agent who handles insurance policies for Scarfo and his relatives, and who has been seen on the premises of Scarf, Inc.
The Division also produced evidence concerning business dealings between Affiliated Leasing Systems, Inc. and Local 54. In March 1979, Affiliated Leasing Systems, Inc. leased a car to Philip Leonetti. On December 18, 1979, Robert Wayne, an account executive with Affiliated, had occasion to go to the offices of Scarf, Inc. to deliver a vehicle. While at Scarf, Inc. headquarters, Scarfo suggested to Wayne that he contact Local 54 with regard to the possible leasing of other vehicles. As a result, Affiliated leased two vehicles to Local 54.
Testimony also was presented on behalf of Gerace and Materio. Sixteen witnesses, including Joseph Menardy, Business Manager of Local 334, Charles Marciante, President of the New Jersey AFL-CIO, and William G. Rosenthal, Esq., of Shaw & Rosenthal, testified that Gerace was a dedicated and responsible union leader. The Commission found that the testimony on the behalf of Local 54 was uncontradicted.
The Commission found, however, viewing the record as a whole, that the association of Gerace and Materio with Nicodemo Scarfo was inimical to the policy of the act and to gaming operations. The Commission further held that once the influence of a career criminal such as Scarfo has been shown, the State need not wait for its detrimental effect on the union to become manifest. Materio and Gerace were, thus, disqualified under Section 86(f) of the act.
The Division also presented evidence for the disqualification of Karlos LaSane. LaSane has been employed with Local 54 since May 4, 1981. LaSane represents union members employed
at Bally's Park Place and Caesar's Boardwalk Regency at grievance hearings. LaSane testified that he attends grievance hearings, speaks on behalf of union members and attempts to resolve whatever problems exist between the employees and management. LaSane has also been designated as Local 54's affirmative action officer. The Commission found that LaSane is an "agent within the meaning of N.J.A.C. 19:41-12.1."
The Division sought to disqualify LaSane on the basis of his prior criminal record. LaSane was convicted in the United States District Court for the District of New Jersey on May 21, 1973, of interference with commerce, aiding and abetting and conspiracy in violation of 18 U.S.C.A. § 1951. From May 21, 1968, until the time of his indictment, LaSane was, as a Commissioner of the City of Atlantic City, Director of Parks and Public Property. According to the indictment, LaSane obstructed and delayed the construction of public projects, purchases of goods, and the licensing of firms which sought to do business with the City of Atlantic City. The offense for which LaSane was convicted is equivalent to a violation of N.J.S.A. 2C:20-5(d). This offense is listed as a disqualifying offense in Section 86(c)(1) of the Casino Control Act. N.J.S.A. 5:12-86(c)(1). The Commission found that LaSane was acting in his official capacity as Commissioner of the City of Atlantic City when he committed the acts which constituted the federal crime. The Commission chose to disqualify LaSane based on his prior conviction, pursuant to N.J.S.A. 5:12-86(c).
Appellants do not dispute that Scarfo is a career offender or that Gerace had a social relationship with Scarfo at one time. They contend, however, that the circumstantial evidence before the Commission did not support a finding of influence "inimical" to the policies of the act within the meaning of N.J.S.A.
5:12-86(f). The State*fn4 contends the evidence amply supports the Commission's finding that Gerace and Materio operate Local 54 under Scarfo's influence and that the inimical criterion is therefore satisfied.
The standard of reviewing the Commission's factual findings was established in In re Boardwalk Regency Casino License Application, 180 N.J. Super. 324 (App.Div.1981), aff'd as mod., 90 N.J. 361 (1982), app. dism. sub. nom., Perlman v. Attorney General, 459 U.S. 1081, 103 S. Ct. 562, 74 L. Ed. 2d 927 (1982). We held that an appellate court is obligated to determine whether the findings of fact:
could reasonably have been reached on sufficient credible evidence present in the record, considering the proofs as a whole, with due regard for the opportunity of the Commissioners who heard the witnesses to judge of their credibility. [180 N.J. Super. at 333].
The appellate review calls for a careful and principled consideration of the agency's record and findings resting upon a determination of the worth, plausibility and consistency of that record. Mayflower Securities Co. v. Bureau of Securities, 64 N.J. 85 (1973). As we stated in Boardwalk Regency, if it appears that the Commission's findings might reasonably have been reached from sufficient credible evidence,
[W]e will not disturb them even in cases in which, had we been doing it, we would have done it differently. Proper respect for the obligation of the agency to accomplish its statutory obligations and consideration for implementation of the legislative intent in the manner designed by the Legislature causes us to proceed with especial restraint in agency matters. [180 N.J. Super. at 334].
The essential question before the Commission was whether the association between Scarfo and members of Local 54 was "inimical" within the meaning of Section 86(f), N.J.S.A. 5:12-86(f). Webster's Third New International Dictionary defines inimical as "harmful or adverse." Webster's Third New International Dictionary, G. & C. Merriam Co., (1971).
Thus, if the Commission had "reasonable belief" that the association between appellants and Scarfo was adverse to the policy of the act and gaming operations, it was obligated to disqualify the labor organization under Section 93. N.J.S.A. 5:12-86(f); N.J.S.A. 5:12-93(b).
The public policy of the State as expressed in the act, necessitates a strong state regulatory interest in all aspects of casino activities. N.J.S.A. 5:12-1(b)(6). The State's interest extends to those labor organizations which represent state-licensed or registered casino hotel workers. N.J.S.A. 5:12-93. Of paramount concern to the Legislature was the exclusion from participation in the gaming industry of all persons with known criminal records, habits or associations. N.J.S.A. 5:12-1(b)(7). Because labor organizations have the power to involve themselves materially in the operation of casino hotels, regulatory supervision of such organizations was deemed critical. The State Commission of Investigation, in advocating the adoption of what is now Section 93, noted that there were:
few better vehicles utilized by organized crime to gain a stranglehold on an entire industry than labor racketeering. [ Report and Recommendations on Casino Gambling by the New Jersey State Commission of Investigation (April 1977) at 1-14]
The Legislature intended by enacting Section 93, to enable the Commission to regulate labor organizations and, thus, prevent members of organized crime from affecting the casino industry through labor unions. See Brown v. Hotel and Restaurant Employees and Bartenders International Union Local 54, 468 U.S. , - , 104 S. Ct. 3179, 3182-3184, 82 L. Ed. 2d 373, 379-380 (1984).
In view of the legislative background, a properly supported finding of influence by Scarfo over Gerace and Materio would be sufficient to disqualify the two union members under N.J.S.A. 5:12-86(f). Appellants concede a showing of actual influence would disqualify them. They contend however, that the Commission's conclusions are not supported by sufficient
evidence that either Gerace or Materio were subject to the influence of Scarfo.
The evidence cited by the Commission to support its conclusion that Scarfo influenced Gerace and Materio includes: (1) Scarfo's phone list; (2) the fact that appellants helped Scarfo obtain his release on bail in 1979; (3) the testimony of Joseph Salerno; (4) union appointments with alleged ties to Scarfo; and (5) business dealings between Local 54 and Scarfo associates. Appellants contend this evidence does not support the Commission's findings that Scarfo exerted actual influence over them. With respect to the telephone list, the Commission concluded:
It can be inferred that the persons on the list are those who Scarfo had occasion to speak with or anticipated that he might have an occasion to speak with on the telephone. In view of the constant attention he receives from the police, it can further be inferred that he kept certain numbers in code because he did not want evidence of his association with those persons to fall into the hands of the authorities. The appearance of five Local 54 employees on the list is evidence of Scarfo's interest in the Union and access to its leaders . . .
Appellants argue that the phone list demonstrated nothing more than Scarfo's interest in Local 54 and should be disregarded. The State admits that the phone list, by itself, is not conclusive as to Scarfo's influence over Gerace and Materio, however, the State contends that it is not without value.
Similarly, appellants allege the coded message confiscated from Scarfo in 1979 is not indicative of Scarfo's influence over Gerace and Materio. The message did not refer to either appellant Gerace or Materio. Appellants, however, do not challenge the Commission's conclusion that the message evidenced Scarfo's interest in the union.
The Commission secondly points to bail money posted by Gerace and Materio for the release of Scarfo, Leonetti and Merlino after their arrest for the murder of Vincent Falcone. Gerace contends he supplied Scarfo with $10,000 at his mother's request. Gerace further contends the Commission found that the transaction was open and legitimate. The Commission concluded, however, that Gerace would not risk a major portion
of his savings for an organized crime figure unless "motivated by some strong sense of obligation or loyalty."
Materio also claimed that he put up his house as property bail for Leonetti and Merlino as a favor to Scarfo's mother. Materio testified that he knew Scarfo casually, Leonetti only by sight, and that he did not know Merlino at all. The Commission found Materio's explanation unconvincing. The Commission concluded:
We cannot believe that [Materio] would put up his house, over the objection of his wife, as bail for people he barely knew. Even if he thought he was putting up bail for Scarfo, or as a favor to Catherine Scarfo, we cannot believe he would do so if his relationship with these people was as casual as he claims.
The Commission also relied on the testimony of Joseph Salerno as evidence of Scarfo's influence over Gerace and Materio. Salerno had frequent contact with Scarfo, Leonetti, Merlino and Lumio. Salerno testified that Scarfo indicated he owned the unions and that he placed Lumio and Gerace in their jobs. Salerno also testified that Gerace was a frequent visitor of Scarf, Inc. and that Scarfo and Gerace had many private conversations. The Commission found Salerno to be a credible witness and, therefore, took his testimony into consideration.
Appellants argue that Salerno, a confessed "gangster," is not a credible witness. They point out that Salerno perjured himself in testimony before the United States Senate Subcommittee on Investigation regarding Gerace's meetings with Scarfo. Salerno testified before the Senate Subcommittee that he overheard Gerace and Scarfo discuss affairs of Local 54. It was not until he was cross-examined by Gerace's counsel that Salerno admitted he never overheard any conversation between Gerace and Scarfo and had merely assumed they discussed union business. Appellants urge this court to discredit Salerno's testimony on the basis of his prior perjured testimony.
The State argues that Salerno's credibility could only be judged by the Commissioners who were present during the proceedings, and who found Salerno's assumption that Gerace and Scarfo ...