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Mayor Fined & gets probation


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Ex-Kearny mayor gets probation, fine for embezzling fundsFriday, May 26, 2006

BY GUY STERLING

Star-Ledger Staff

A former mayor of Kearny was sentenced to two years' probation and fined $10,000 by a federal judge in Newark yesterday for diverting campaign funds to his personal use.

Leo Vartan, 63, also will have to pay a substantial amount in back taxes to the Internal Revenue Service on the money he pocketed from his political war chest. The exact figure has not been finalized but should fall between $80,000 and $90,000, defense lawyer Lawrence Lustberg said.

U.S. District Judge Joel Pisano said he wanted all back taxes, penalties and interest paid up by the time Vartan's term of probation ends.

Kearny's two-term mayor from January 1994 until the end of 1997, Vartan, a Republican, was accused of embezzling $48,000 and filing false financial reports with the state Election Law Enforcement Commission.

A lawyer by trade, he also served as an assistant prosecutor in Hudson County for three years and was a municipal judge in Kearny from 1973-83.

Authorities were not able to say what the diverted funds were used for, but Vartan admitted to Pisano yesterday that he had a gambling problem. Pisano ordered him to undergo treatment for the addiction as part of his sentence, if it is recommended by probation officials.

Vartan's gambling troubles were not included in his pre-sentence report but were mentioned in a letter sent to the court by Raymond McDonough, Harrison's mayor.

"How much do you gamble?" Pisano asked.

"Too much," replied Vartan, who still lives in Kearny.

Later, Vartan apologized to his family and the court for his mistake, saying to the judge: "I don't think I can live long enough to tell you how truly sorry I am. I did wrong and I deserve to pay the price for what I did."

In the pre-sentence report, Vartan said he took the money because he suffered financially from serving as Kearny's mayor, a claim that struck Pisano as highly unusual.

In November 2002, Vartan was charged in a pre-indictment accusation known as an information with two counts of mail fraud and two counts of tax evasion in connection with his embezzlement.

He pleaded guilty to one count each of mail fraud and tax evasion the same day and faced a maximum punishment of more than two years in prison under federal sentencing guidelines.

But Pisano gave him a break for the cooperation he provided federal authorities in several cases, most notably the successful prosecution of former Hoboken mayor Anthony Russo. Both Lustberg and Assistant U.S. Attorney Ricardo Solano told the judge that leniency was appropriate.

Authorities said Russo was responsible for getting Vartan a legal consulting job with the Hoboken Board of Education that paid him $18,000 in 1998 while Russo was given $1,500 in payoffs in return. When Vartan came clean about the arrangement, he "was able to provide documentation that corroborated his story," Solano said after the hearing.

Last year, Pisano sentenced Russo, who took a plea rather than go to trial, to 30 months behind bars for accepting hundreds of thousands of dollars in kickbacks from a city contractor while serving as Hoboken's mayor for eight years.

The judge called Vartan's crime "foolhardy" but maintained his assistance had been invaluable, saying investigators did not previously have the information he gave them.

"It's clear to me that Mr. Vartan's testimony hanging over Mr. Russo's head was a determining factor in Mr. Russo's decision to plead guilty," Pisano said.

In seeking mercy, Lustberg argued that Vartan had been a good mayor, involving more women and minorities in public life, cleaning up local government in Kearny and lowering taxes.

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HARRISONS MAYOR RAYMOND MCDOUGHNA IS THE ONLY PERSON RESPONSIBLE FOR WHAT IS HAPPENING IN HARRISON, THIS GUY THINKS HE CAN DO WHAT HE WANTS WITH OUR TAXPAYERS MONEY WITHOUT EVEN HAVING MEETINGS WITH THE PEOPLE THAT ELECTED HIM. OH NO HE WAS APPOINTED IN RIGHT? RAYMOND YOU HAVE TO KNOW BY NOW THAT YOU NEED TO GO YOU HAVE DONE ENOUGH DAMAGE.

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Ex-Kearny mayor gets probation, fine for embezzling fundsFriday, May 26, 2006

BY GUY STERLING

Star-Ledger Staff

A former mayor of Kearny was sentenced to two years' probation and fined $10,000 by a federal judge in Newark yesterday for diverting campaign funds to his personal use.

Leo Vartan, 63, also will have to pay a substantial amount in back taxes to the Internal Revenue Service on the money he pocketed from his political war chest. The exact figure has not been finalized but should fall between $80,000 and $90,000, defense lawyer Lawrence Lustberg said.

U.S. District Judge Joel Pisano said he wanted all back taxes, penalties and interest paid up by the time Vartan's term of probation ends.

Kearny's two-term mayor from January 1994 until the end of 1997, Vartan, a Republican, was accused of embezzling $48,000 and filing false financial reports with the state Election Law Enforcement Commission.

A lawyer by trade, he also served as an assistant prosecutor in Hudson County for three years and was a municipal judge in Kearny from 1973-83.

Authorities were not able to say what the diverted funds were used for, but Vartan admitted to Pisano yesterday that he had a gambling problem. Pisano ordered him to undergo treatment for the addiction as part of his sentence, if it is recommended by probation officials.

Vartan's gambling troubles were not included in his pre-sentence report but were mentioned in a letter sent to the court by Raymond McDonough, Harrison's mayor.

"How much do you gamble?" Pisano asked.

"Too much," replied Vartan, who still lives in Kearny.

Later, Vartan apologized to his family and the court for his mistake, saying to the judge: "I don't think I can live long enough to tell you how truly sorry I am. I did wrong and I deserve to pay the price for what I did."

In the pre-sentence report, Vartan said he took the money because he suffered financially from serving as Kearny's mayor, a claim that struck Pisano as highly unusual.

In November 2002, Vartan was charged in a pre-indictment accusation known as an information with two counts of mail fraud and two counts of tax evasion in connection with his embezzlement.

He pleaded guilty to one count each of mail fraud and tax evasion the same day and faced a maximum punishment of more than two years in prison under federal sentencing guidelines.

But Pisano gave him a break for the cooperation he provided federal authorities in several cases, most notably the successful prosecution of former Hoboken mayor Anthony Russo. Both Lustberg and Assistant U.S. Attorney Ricardo Solano told the judge that leniency was appropriate.

Authorities said Russo was responsible for getting Vartan a legal consulting job with the Hoboken Board of Education that paid him $18,000 in 1998 while Russo was given $1,500 in payoffs in return. When Vartan came clean about the arrangement, he "was able to provide documentation that corroborated his story," Solano said after the hearing.

Last year, Pisano sentenced Russo, who took a plea rather than go to trial, to 30 months behind bars for accepting hundreds of thousands of dollars in kickbacks from a city contractor while serving as Hoboken's mayor for eight years.

The judge called Vartan's crime "foolhardy" but maintained his assistance had been invaluable, saying investigators did not previously have the information he gave them.

"It's clear to me that Mr. Vartan's testimony hanging over Mr. Russo's head was a determining factor in Mr. Russo's decision to plead guilty," Pisano said.

In seeking mercy, Lustberg argued that Vartan had been a good mayor, involving more women and minorities in public life, cleaning up local government in Kearny and lowering taxes.

"I will not tolerate corruption in my administration," said Harrison's Mayor, who hired Vartan to be part of Harrison's legal staff after he was arrested.

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