Former Kearny Councilman and ex-Board of Education vice president John Leadbeater will be serving time for his role in what the feds characterized as a multi-million dollar home mortgage fraud focused on the Jersey Shore.
Last Thursday, July 7, Leadbeater, 59, was sentenced to a five-year prison term by U.S. District Court Judge Jerome Simandle, sitting in Camden.
The Kearny resident must return to court July 28 for a restitution hearing when the judge is expected to order Leadbeater to pay back money to those he was charged with defrauding.
Leadbeater, represented at court proceedings by Jersey City attorneys Thomas J. Cammarata and Jeffrey Garrigan, has been instructed to report for confinement on Sept. 19.
Where Leadbeater will serve his time will be decided by the U.S. Bureau of Prisons.
While there is no provision for parole, Leadbeater “could possibly be eligible for a small reduction” of his sentence but that will be up to the Bureau of Prisons, according to Will Skaggs, a spokesman for the U.S. Attorney’s Office.
After he finishes serving out his sentence, Leadbeater will be subject to five years of “supervised release.” How that monitoring will occur could not be readily learned last week.
Federal lawyers said that Leadbeater was the last of multiple defendants to have been charged and sentenced in a “scam that used phony documents and ‘straw buyers’ to make illegal profits on overbuilt condos in Wildwood and Wildwood Crest,” as described by U.S. Attorney Paul J. Fishman.
From the time of his indictment in 2013, Leadbeater continued to insist he was innocent of the charges against him and went to trial – after the government had successfully applied for a three-month delay to prepare evidence and arrange for witnesses’ appearances in what was expected to be a lengthy and costly trial.
But in March 2015, after the first week of testimony, Leadbeater opted to plead guilty to one count of conspiracy to commit wire fraud in return for the government agreeing to drop the money laundering charge.
Initially, he was to be sentenced June 26, 2015, but the Federal Court deferred action four times in eight months until finally Judge Simandle convened a sentencing hearing in early May. The second – and final – day of that hearing was held last week.
In its complaint, the government alleged that Leadbeater and several co-conspirators and others recruited “straw buyers” – people with good credit scores but insufficient assets – to buy oceanfront condos “overbuilt” by fiscally stressed developers in Wildwood and Wildwood Crest between May 2006 and August 2011.
Leadbeater ultimately admitted causing mortgage lenders to fund more than $4.7 million worth of mortgages for nine properties in those two communities.
The feds said that Leadbeater and his co-conspirators “transmitted by means of wire communications in interstate commerce certain writings, signs, signals, pictures and sounds” to facilitate the scam.
For their participation, the straw buyers were told they would avoid paying deposits or closing costs to acquire the properties and would avoid having to pay monthly mortgage fees.
The government said that those “buyers” were told they would get an upfront payment after the closing for allowing their names and credit information to be used in the transactions.
According to the feds, the conspirators created phony documents to show that the buyers were more creditworthy than they actually were and that they used proceeds from the fraudulent mortgage loans “by having funds wired or checks deposited into various accounts that they controlled” to make the payments to the straw buyers.
Fishman credited special agents from the FBI’s Atlantic City Resident Agency, led by Special Agent in Charge Timothy Gallagher in Newark; and special agents of IRS-Criminal Investigation in Mays Landing, directed by Special Agent in Charge Jonathan D. Larsen in Newark, for the investigation leading to Leadbeater’s sentencing.
The government was represented in Camden District Court by Assistant U.S. Attorneys Jacqueline M. Carle and Matthew T. Smith of the Office’s Criminal Division in Camden.
