Jury Convicts Former Newark Mayor of Fraud in Land Sales Scam

A federal jury today convicted the former longtime mayor of Newark, Sharpe James, of fraud for conspiring to sell city-owned properties to a former girlfriend, who quickly flipped them and earned hundreds of thousands of dollars in profits.
On the sixth day of deliberations, the jury found Mr. James, 72, guilty on all five counts he faced. His former girlfriend, Tamika Riley, 39, was convicted on the same fraud and conspiracy charges as well as eight others for numerous tax violations in connection with what the authorities said was her failure to file income tax returns for her public relations firm.

Under federal guidelines, prosecutors say the two face up to about eight years in prison. For now, both are free on bail and will face sentencing on July 29. Mr. James’s lead attorney, Thomas Ashley, said he intended to appeal the verdict.

Mr. James stood stony-faced and Ms. Riley appeared stunned as the jury foreman delivered the verdict, then quickly left the courtroom. Mr. James then took an elevator to the first floor of the federal courthouse, where he kissed his wife, Mary, on the cheek. They drove away with Mr. Ashley.

It was a precipitous and somewhat tawdry fall from grace for Mr. James, who was the powerful Democratic mayor of New Jersey’s largest city for 20 years, until 2006, and a state senator from 1999 to 2008.

It was a major victory for the United States attorney for New Jersey, Christopher J. Christie, who in six years in office has won indictments against Republicans and Democrats alike and has obtained convictions or guilty pleas against more than 125 public officials without losing a case.

“Justice has finally been done,” Mr. Christie said in a news conference outside the courthouse. “Justice for the city of Newark.”

Mr. Christie said that Mr. James had acted in a “grossly inappropriate way.”

“For 36 years, Sharpe James has reigned over this city and today he is taught the lesson,” Mr. Christie said.

That lesson, Mr. Christie said, was that for an elected official who betrays the public trust, “the only place for you is federal prison.”

The case centered on the purchase of nine city-owned properties that Ms. Riley bought through a special program to help revitalize Newark’s struggling South Ward. She bought the parcels in three separate transactions for a total of $46,000 then sold them for a profit of more than $600,000.

Prosecutors also said that Ms. Riley did not report the income she earned from the sale of the properties.

Prosecutors argued that Mr. James improperly used his influence to steer the properties to Ms. Riley. But defense lawyers said that Mr. James had made no extraordinary or unlawful efforts on her behalf. They also countered that Mr. James had limited ability to control the program because all sales had to ultimately be approved by the Municipal Council.

Several crucial prosecution witnesses —including the city’s former housing director, Basil Franklin, and a councilman who voted to approve the sales, Augusto Amador —said that Mr. James did not pressure them to sell the properties to Ms. Riley, a businesswoman from Jersey City who ran a public relations firm and once owned a clothing store in Newark.

For her part, Ms. Riley’s lawyer, Gerald Krovatin, acknowledged on the first day of arguments that she and Mr. James had had an extramarital affair that lasted about six months in 2002. The timing was significant, Mr. Krovatin said, because by the time their relationship had turned romantic most of the property sales had been completed.

But prosecutors tried to establish that the relationship between Mr. James and Ms. Riley had continued long after 2002. Witnesses testified that as recently as 2006 Mr. James and Ms. Riley had traveled together to the Dominican Republic.

Even before opening arguments began on March 4, the prosecution said that its case would produce little in the way of courtroom fireworks or star witnesses and that their presentation would rely on the dense paper trail left by Ms. Riley’s purchase of the properties.

Through 16 days of testimony from 33 prosecution witnesses, the six-man, six-woman jury appeared attentive and patient. Federal District Judge William J. Martini tried to keep the trial moving at a steady pace, and kept boredom to a minimum by sometimes dismissing jurors in midafternoon or giving them the day off entirely.

When it was the defense’s turn to try to rebut the prosecution’s case, lawyers for Mr. James called just two witnesses — two former councilwomen who tried to bolster the assertion of Mr. James that he could not approve property sales unilaterally.

Ms. Riley’s defense consisted of about a half-dozen witnesses, including two lawyers who handled the sale of her properties. The lawyers for Ms. Riley contended that she had not been aware that she had to file income tax returns for her public relations firm, and that she had received bad legal advice about satisfying requirements for buying the property from the city.

One lawyer who testified, James Ezeilo, said that he had almost no experience dealing with real estate sales before handling Ms. Riley’s transactions.

Witnesses also testified that at the same time Ms. Riley was selling city property she was improperly receiving about $27,000 in federal housing subsidies for her apartment in Jersey City.

Deliberations began on April 9, and in what provided some indication about the verdict, jurors asked Judge Martini to clarify that neglecting to file tax returns was not necessarily an indication that someone intended to willfully refuse to file them.

For Mr. James, Wednesday’s verdict means that his legal odyssey is only halfway over. He still faces a federal corruption trial — which has yet to be scheduled — on charges that he improperly used city-issued credit cards to incur more than $58,000 in travel and other expenses for trips that he took with Ms. Riley and other women.