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Page last updated at 03:14 GMT, Friday, 24 July 2009 04:14 UK

Informant leads FBI sting operation

FBI agents lead arrested suspects from their headquarters, July 23, Newark, NJ
Those arrested included three mayors, two state legislators and several rabbis

A major FBI operation in New Jersey has ensnared more than 40 people - including mayors, lawmakers and rabbis - in a massive corruption scandal.

The investigation began two years ago into the sale of black-market kidneys and fake Gucci handbags, reports say.

But it soon became a sweeping probe of political corruption on a scale that has shocked many in New Jersey, a state with a rich history of graft.

Federal prosecutors said investigators at first probed a suspected money-laundering network based in New York and New Jersey with alleged links to Israel.

The network is alleged to have laundered tens of millions of dollars through Jewish charities with the help of rabbis, mostly from the insular Syrian Jewish community based in Deal, a wealthy oceanfront borough of New Jersey.

Prosecutors used an informant - a former real estate developer charged with bank fraud three years ago - to pose as a crooked businessman.

The man allegedly approached the rabbis claiming to be bankrupt and in need of hiding his assets.

He then convinced them to accept payments made out to various charities they oversaw, which they then cashed and handed back to him, keeping a portion of the proceeds as their cut.

Millions are alleged to have been laundered in this way, with much of the money coming from Israel and a Swiss banker, prosecutors say.

The New York Times says negotiations often took place in parking lots, diners and boiler rooms, with thousands in cash being stuffed into cereal boxes before being passed on.

Political bribes

But the investigation took on a more sinister turn when one of the men in the money-laundering network introduced the informant to a building inspector in Jersey City, who in turn referred him to a series of corrupt politicians who were known as "players".

The informant then adopted a new approach, assuming a fake identity and pretending he wanted to build real estate projects in their city or county.

He would then offer to pay $5,000 to $10,000 (£3,000 to £6,000) - either as a campaign contribution or a direct bribe - if his projects got favourable treatment.

He would sometimes allegedly pull the money out of the trunk of his car, or promise to deliver it via a middleman.

It is unclear whether the informant actually owned any buildings or if any of the developments he proposed were ever built.



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