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State v. Schenkolewski

April 23, 1997

STATE OF NEW JERSEY, PLAINTIFF/APPELLANT,
v.
YISROEL SCHENKOLEWSKI, ABRAHAM PENZER, AND MARTIN BUCKLEY, DEFENDANTS/RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Ocean County.

Approved for Publication May 8, 1997.

Before Judges Landau, Wallace and Kimmelman. The Opinion of the Court was delivered by Wallace, Jr., J.A.D.

The opinion of the court was delivered by: Wallace

The Opinion of the Court was delivered by WALLACE, JR., J.A.D.

The State appeals from the dismissal of its indictment against three defendants for bribery, official misconduct, and conspiracy. The indictment alleged that defendant Martin Buckley gave a substantial sum of money to defendant Rabbi Yisroel Schenkolewski, purportedly in exchange for the latter's agreement to support a controversial cogeneration facility that Buckley's company was proposing to build in the town of Lakewood. Defendant Schenkolewski was a religious leader in the community who wielded considerable political influence among his constituents, the Orthodox Jewish population of Lakewood. He was also chairman of Lakewood's zoning board. According to the indictment, Buckley's company paid $500,000 to a private religious school of which the Rabbi was the principal in exchange for the promise that the Rabbi would use his influence to have town council approve the sale of land for the project. Defendant Abraham Penzer was Rabbi Schenkolewski's lawyer and confidant in this transaction.

The indictment was dismissed because the Law Division Judge found that the evidence before the grand jury did not present a prima facie case of either bribery or official misconduct. In addition, the Judge found that the prosecutor had committed various acts of misconduct during the grand jury proceedings, which would have necessitated a dismissal of the indictment on two additional independent grounds.

The State contends that the indictment properly charged the crimes of conspiracy, bribery, and official misconduct and that there was no prosecutorial error in the grand jury proceedings to justify dismissal of the indictment We hold that the evidence was sufficient to support the indictment for conspiracy, bribery and official misconduct. However, the prosecutor's failure to present information respecting possible bias of several grand jury members to the Assignment Judge mandated dismissal of the indictment. We therefore affirm the judgment dismissing the indictment.

Defendant Schenkolewski is a rabbi and the principal of a girls' religious high school in the town of Lakewood (Township) He was the chairman of the Zoning Board of Adjustment of Lakewood (Zoning Board) and also served as liaison to the Mayor on matters between the Zoning Board and the Planning Board of Lakewood (Planning Board).

In the spring of 1988 the Lakewood Industrial Commission (Industrial Commission), a community organization overseeing the development of the Lakewood Industrial Park, agreed to sell a parcel of land in the park to Edmund Bennett of Airport Associates Bennett in turn had an agreement to sell the land to Lakewood Cogeneration, (Cogen), a limited partnership made up of CNG Energy a subsidiary of Consolidated Gas of Pittsburgh, and Hydra-Co Enterprises (Hydra-Co), a subsidiary of Niagara Mohawk Power. Cogen intended to build a cogeneration facility on the land, which would transform natural gas into electricity through the use of turbines and would also generate steam. Jersey City Power & Light (JCP&L) *fn1 had agreed to purchase power from Cogen's facility. However, as the land in question was actually owned by the Township, only the Township Committee (Committee) had the ultimate power to authorize its sale.

On December 6, 1988, Cogen filed an application with the Planning Board seeking site plan approval for its proposed project and received approval on February 26, 1989. A contract of sale between the Industrial Commission and Airport Associates for the purchase of the land for $3,676,713.50 was executed on June 23, 1989.

Meanwhile, Cogen tried to gain support for the project. Originally, it was CNG Energy's job to perform the necessary public relations. Kenneth Cuccinelli of CNG Energy met with various groups. Although Cuccinelli did not authorize any contributions, CNG Energy bought a table at a local fundraiser and tickets to Scout dinners, and purchased advertisements in local magazines. In addition, CNG Energy donated $12,500 to the United Way to fund a study to evaluate whether handicapped workers could work in the proposed greenhouse to be located on the property.

Cuccinelli spoke with the president of the Lakewood Residents' Association, who mentioned that Rabbi Schenkolewski was the leader of a large voting bloc and was very influential. Cuccinelli then met with Rabbi Schenkolewski in January 1990 and discussed the benefits of the project to the Township's tax base. Cuccinelli did not sense any opposition by Rabbi Schenkolewski to the project and asked him for whatever support he could give.

Cuccinelli also spoke to each of the Committee members, Robert Singer, Jerry Greenberg, Jose Alonso, John Franklin, and Richard Work, whose votes were needed. Singer, who was also a State senator, told Cuccinelli that the issue was really a political one for him because his constituents were opposed to what they viewed as a trash-burning facility.

Richard McClelland, a civil engineer for CNG Energy, coordinated the engineering aspects of the proposal. He suggested to Cuccinelli that Rabbi Schenkolewski should meet with Singer since the Rabbi influenced a major voting bloc in town.

As part of the requirements for the approval of a Cogen facility, it was necessary to identify a purchaser for the steam generated by the facility. In this regard, Cogen had secured a grower of hydroponic tomatoes to be the potential purchaser of its steam. Around the same time, the tomato grower filed a variance application with the Zoning Board for approval of this agricultural use on the property. On February 2, 1990, Airport Associates filed an application with the Planning Board for preliminary and final site plan approval for a horticultural production facility.

The Committee rejected the transfer of the land to the Industrial Commission on April 26, 1990 by a vote of 3 to 2, with Singer, Greenberg, and Franklin voting no. On May 17, 1990, Airport Associates filed suit in the Superior Court against the Township seeking to compel transfer of the land.

Although CNG Energy decided not to spend any more money on the project after the Committee's decision, defendant Martin Buckley of Hydra-Co began to take a more active role. Buckley was responsible for developing the Cogen project. He had broad authority to engage in contract negotiations, community relations, and financing.

In early June 1990 Cuccinelli and Buckley met with Rabbi Schenkolewski and defendant Abraham Penzer, who described his role as that of "assistant" to the Rabbi. Rabbi Schenkolewski and Penzer said they would think about ideas to move the project forward. Penzer stressed that Rabbi Schenkolewski was quite influential in the community.

A few days later at a Hydra-Co board meeting, Buckley mentioned the community opposition to the project and his meeting with Rabbi Schenkolewski. Irvin Mermelstein, vice president and general counsel of Hydra-Co, offered to meet with Rabbi Schenkolewski because Mermelstein had a cousin who had been head of a rabbinical college in Lakewood. At that time, Mermelstein did not know that Rabbi Schenkolewski was a member of the Zoning Board.

In preparation for Mermelstein's meeting with Rabbi Schenkolewski, McClelland drafted a memo with possible "Discussion points." He noted specific questions that Mermelstein should ask the Rabbi, including what avenues could be used to influence the Township to settle, whether the Rabbi would be willing to be in a position to broker negotiations for a foundation or building fund, whether the Rabbi believed the Township would appeal if it lost the lawsuit, what the viability of the Township Committee would be after the next election, and who was influencing Committee member Greenberg.

Mermelstein met with Rabbi Schenkolewski on June 13, 1990. He solicited information from the Rabbi about the community and its views towards the project. Rabbi Schenkolewski told Mermelstein about the large population of Orthodox Jews and senior citizens. According to the Rabbi, the Jewish population was neutral-to-positive about the project, but the senior citizens and the neighboring citizens of Brick Township were opposed to it. Rabbi Schenkolewski advised Mermelstein to contact the senior citizens directly to address their health concerns and to meet with the Township Committee. Rabbi Schenkolewski did not ask Mermelstein for any compensation, and the subject of contributions was never discussed.

The hearings before the Zoning Board on the tomato grower's variance application continued. Rabbi Schenkolewski, as chairman of the Zoning Board, participated in these hearings. On June 14, 1990, the Zoning Board approved the variance application, conditioned upon the tomato grower's agreement not to purchase steam from Cogen. Rabbi Schenkolewski voted in favor of this resolution.

In September 1990, Thomas Kelaher was contacted by John Halleran, counsel for Cogen, regarding a possible settlement. Because the Township's attorney Dominick Manco had a conflict of interest, Kelaher had been selected to represent the Township in defending against Airport Associates' complaint. On September 6, 1990, the Township Committee, the Mayor, Township Manager Thomas LaPointe, Manco, Halleran, Cuccinelli, and defendant Buckley met to discuss possible settlement.

There was Discussion about Cogen making a "seven-figure" contribution to the Township as a "capital project need," and a separate monetary contribution being made to the residents of Original Leisure Village and Leisure Village East. Kelaher thought that there was nothing illegal about the contribution to the Township because it was considered a "host community benefit." Township Manager LaPointe explained that a "host community benefit" was one that accrued to the benefit of the entire population of the Township. He stressed that such a contribution would have to be made publicly following the passage of a resolution and that all conditions for its acceptance would have to be spelled out. Halleran thought that the monetary offer would be legal, as part of the price of settling litigation. Cogen also offered to make certain physical modifications to its proposed facility. The Township ultimately rejected Cogen's offer.

In coordinating a meeting with the residents of both Leisure Villages, Rabbi Schenkolewski assisted Mermelstein, and as a good faith gesture, Mermelstein offered a gift of $5,000 to the charity of the Rabbi's choice. The Rabbi gave Mermelstein the name of a religious school attended by his son to be the recipient of the gift. Mermelstein did not ask Rabbi Schenkolewski for anything in exchange for the contribution. On November 2, 1990, the designated school, Yeshiva Tiffereth Torah, received a $5,000 check from Hydra-Co.

At about this time, Buckley offered $300,000 to Rabbi Schenkolewski to use for his Bais Kaila School. Rabbi Schenkolewski and Penzer suggested the amount should be $1,000,000. At a subsequent meeting, Buckley agreed to increase his offer to $500,000 in exchange for Rabbi Schenkolewski's and Penzer's agreement to secure the necessary government approval for the project. A promissory note was prepared at the request of Penzer. Later Mermelstein revised the note to make the offer of payment expressly conditioned upon the transfer of the land that was the subject of the law suit.

On November 14, 1990, Buckley sent an internal memo to the other principal players in the project via a routing slip so that a memo "of this nature" would not be left "floating around." He noted that the company's consultants believed that the company's "local contact with a 'religious leader' [was] already paying off" because, for the first time no one at the town council meeting made any statement opposing the project. Buckley stated that it was "a sign to many that he has already had some Discussions."

On December 7, 1990, McClelland received a memo from Bill Keisling, a public relations consultant, cautioning the company:

Although you believe it unlikely that it would ever become public knowledge that one of the religious/civic leaders in the community is actively working for township approval of the project, if it does become known, you could have an unholy mess on your hands. It will be important that he and you can honestly say that he is but exercising his right as a citizen to take an interest in a public-policy question. Certainly, he is not being paid to do so. Any contribution the project may be making to a cause which that leader happens to hold dear, should be structured in such a way that there is no quid pro quo between his activities and the contribution.

In January 1991, the Township was granted partial summary judgment in the lawsuit brought by Airport Associates. The Law Division Judge concluded that the Township was not obligated to convey the property to Airport Associates, but left open the estoppel issue. According to Kelaher, settlement negotiations between the Township and Cogen continued.

On February 25, 1991, Cuccinelli wrote a memo to Buckley suggesting arguments for Rabbi Schenkolewski to use in gathering support for the project. This memo may have been prompted by a newspaper article detailing the Township's budgetary problems. Cuccinelli felt that the cogeneration facility, a significant tax ratable, could be offered as the solution.

On March 19, 1991, Buckley wrote to the Rabbi asking to meet with him on March 21, 1991 to discuss the settlement meeting. On March 22, 1991, Halleran sent a two-page letter to Rabbi Schenkolewski, enclosing (1) a complete set of the amended site plans for the cogeneration project pending before the planning board; (2) a copy of a tax analysis prepared by Township Manager LaPointe addressing the revenues to be generated by the facility; and (3) a copy of the original settlement agreement previously rejected by the Township in September 1990. Halleran informed the Rabbi that his client was prepared to guarantee the Township a minimum payment in lieu of taxes and to create an oversight committee with advisory and review functions. Further, Cogen was investigating ways to decrease reliance on oil as a backup fuel.

Halleran sent these materials because the Rabbi needed the information to explore with the individual Township Committee members the basis for settlement. Buckley did not tell Halleran about any money being offered to the Rabbi, and Halleran believed that the Rabbi was involved because he was a man of influence and enjoyed being in the center of things. Halleran never received any response from the Rabbi and never had any conversation with him.

On March 25, 1991, Halleran wrote a letter to his client and all the other principal players in the cogeneration project. This letter brought the parties up to date on the agenda for April. Halleran concluded his letter by stating that, "the most immediate date of April 1st may be appropriate to adjourn based upon the Rabbi's involvement in connection with our settlement proposal." Halleran claimed that he was not aware of any money being paid to the Rabbi when he wrote this letter. Nevertheless, Halleran admitted that during the months of March and April, he was aware of consistent and continuing communications between Rabbi Schenkolewski and Buckley.

Trial on the estoppel issue in the lawsuit was scheduled for April 29, 1991. Prior to that date, Kelaher was away on vacation in Virginia. When he called his office, he was told to call Penzer. Kelaher called Penzer, who told him that the case might be settled and asked if Kelaher objected to an adjournment. Kelaher said he did not. Penzer said he would talk to the Judge handling the case. Ultimately, Penzer succeeded in getting a one-week adjournment. Kelaher assumed that Penzer was speaking on behalf of the entire governing body.

According to Halleran, Buckley had spoken to Rabbi Schenkolewski, and the Rabbi agreed to speak to the members of the Township Committee regarding a settlement. Buckley did not tell Halleran about any money being offered.

Of the five Committee members, Franklin was opposed to the facility "no matter what," while the Mayor and Committee member Work were disqualified from voting because of their employment with JCP&L. Since three out of five votes were needed, the settlement could not be reached unless Committee members Singer, Greenberg, and Alonso all approved it. Singer previously had voted against the land transfer because of his constituents' environmental concerns.

The Rabbi claimed that he had talked to Singer and that he was proposing to create a new legislative district for Singer so that Brick Township, where many opponents to the project resided, would no longer be included in Singer's district. Apparently, that effort was successful.

Around that time, Rabbi Schenkolewski and Penzer were given code names: Rabbi Schenkolewski was "The Lone Ranger" and Penzer was "Tonto." On April 24, 1991, McClelland wrote to Buckley explaining that there were "some serious gaps in . . . Plan A strategy" by the "Lone Ranger," which needed to be straightened out. In particular, he noted that the "current Plan A as likely understood, and promised, by the Lone Ranger does not seem consistent with the promised ...


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