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State v. Merlino

Decided: January 15, 1987.

STATE OF NEW JERSEY, DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, PETITIONER-RESPONDENT,
v.
LAWRENCE MERLINO, RESPONDENT-APPELLANT. STATE OF NEW JERSEY, DEPARTMENT OF LAW AND PUBLIC SAFETY, DIVISION OF GAMING ENFORCEMENT, PETITIONER-RESPONDENT, V. PHILIP LEONETTI, RESPONDENT-APPELLANT



On appeal from a final decision of the New Jersey Casino Control Commission.

Petrella, Bilder and Scalera. The Opinion of the Court was delivered by Scalera, J.A.D.

Scalera

[216 NJSuper Page 581] Appellants, Lawrence Merlino and Philip Leonetti appeal from a final order of the Casino Control Commission placing them on a list excluding them from the premises of any licensed gambling casino in the State. We affirm.

In November 1982 the Division of Gaming Enforcement (Division) filed with the Casino Control Commission (Commission) petitions seeking to place appellants, Philip Leonetti and Lawrence Merlino, on the Commission's list of persons to be excluded from admission to licensed casinos. Each petition alleged substantially the same facts, namely, that each was an associate of Nicodemo Scarfo, a known "career offender", and that each was reputed within the law enforcement community to be both a "career criminal offender and an associate of career criminal offenders," thereby making his presence in a licensed casino inimical to the interests of the State of New Jersey and to licensed gaming. The two petitions were consolidated and a hearing was conducted before an Administrative Law Judge (ALJ) in May and August 1983.

In December 1983 the ALJ issued his initial decision in which he ruled that the Division had not sustained its burden of proving that Merlino and Leonetti should be placed on the exclusion list. In reaching his conclusion the ALJ opined that the so-called residuum rule, requiring that hearsay evidence be supported by competent evidence, was applicable to the Commission exclusion proceedings. Further, he declined to draw any adverse inferences from appellants' invocation of the Fifth Amendment privilege against self-incrimination. However, he rejected a complaint that the failure to initiate a hearing within 30 days of a request for a hearing was a jurisdictional bar and also declined to decide their constitutional attacks on the exclusion criteria.

By order issued May 1, 1984, the Commission rejected the ALJ's ruling regarding the residuum rule, the Fifth Amendment and the propriety of the decision that he had jurisdiction to entertain the issue of the constitutional attack on the applicable statute. On May 25, 1984 the Commission issued a written explanatory decision with one of the five commissioners dissenting. The majority opinion remanded the matter to the ALJ for a new hearing with instructions that adherence to the residuum rule was not required, allowing the drawing of adverse inferences

from appellants' invocation of the Fifth Amendment, and declining to rule on the constitutional questions.

On remand the only new evidence offered was a recent indictment against Leonetti and a related indictment against former Atlantic City Mayor Michael Matthews. The ALJ issued another decision in January 1985. This time he found that the Division had failed to prove that appellants were career criminals, that they were associates of career criminals, or that Merlino's presence in a casino would be inimical to the State's interest. However, he did find that the Division had proved that Leonetti's presence would satisfy the "inimical" test. He specifically based that conclusion on the September 1984 federal court indictment charging Leonetti "with being a leading associate in an organized crime cartel and with being responsible for the efforts of that cartel to control and influence the government of Atlantic City." (At oral argument we were advised that this indictment has since been dismissed). Accordingly, he recommended that the petition to exclude Merlino be denied but that the petition to exclude Leonetti be granted pending the outcome of his indictment. At its public meeting on August 15, 1985 the Commission voted 3-2 to reject the ALJ's analysis and by final order of September 17, 1985 directed that both Leonetti and Merlino be excluded from casino premises.

On November 18, 1985 the Commission issued a second written decision detailing its reasons for the exclusion order. With regard to the two evidentiary issues, the Commission ruled that it was proper to draw adverse inferences from appellants' invocation of the Fifth Amendment in refusing to answer questions about their criminal associations, and that although the residuum rule was generally applicable to administrative proceedings, it did not apply to proceedings under the Casino Control Act. Addressing the merits of the case, the Commission concluded that the proofs were sufficient to establish the exclusion criteria with respect to both appellants. One commissioner filed a dissenting opinion in which another commissioner

joined. Appellants' separate appeals were consolidated by order of this ...


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