NEWARK (CN) – The former president of Encap Golf Holdings was charged Monday with conspiring to extort $100,000 from a financial consultant.
A federal grand jury returned an 11-count indictment against William H. Gauger III.
“Gauger allegedly hired his brother-in law Craig Groce, who was originally charged along with Gauger … in July 2011, and the financial consultant, to provide services on various redevelopment projects in New Jersey,” the Manhattan U.S. Attorney’s Office said.
Manhattan U.S. Attorney Preet Bharara was named acting U.S. attorney for the case after the recusal of the U.S. attorney in Newark. Bharara’s office did not say why the New Jersey U.S. attorney was recused.
Citing the indictment in Newark, Bharara’s statement said: “In August 2006, the financial consultant received ‘success fees’ of approximately $881,500 for his services in arranging two loans of $69.4 million and $26.3 million for a redevelopment project in Asbury Park, New Jersey. Gauger allegedly demanded that the financial consultant pay a portion of those fees – $100,000 – to his brother-in-law, threatening him with the future loss of business if he did not comply. The financial consultant made the payment to Groce in September 2006, even though he had not provided any services to the financial consultant.
“Although Gauger allegedly told the financial consultant that the $100,000 payment was for his brother-in-law, Gauger was actually the beneficiary. Gauger had Groce make payments for Gauger’s benefit using the money allegedly extorted from the financial consultant. The payments included: $5,506 for a personal computer and high-definition, liquid crystal display television; $6,250 for season hockey tickets; $6,000 for a donation to a private school attended by one of Gauger’s children; a $10,000 donation to a soccer club in which Gauger’s children were members; a $10,000 payment to Gauger’s father; and a $2,232 payment for a laptop computer.”
Encap won a contract in 2000 from the New Jersey Meadowlands Commissions to cover and close four landfills and sell the land for residential, commercial and recreational developments, including golf courses. Encap received more than $300 million in publicly sponsored bond financing in 2005, and more than $200 million in loans from the New Jersey Environmental Protection Trust, prosecutors said. Encap filed for bankruptcy in 2008 and never completed the project.
Gauger, 51, of Morrisville, N.C., is charged with mail fraud, wire fraud, conspiracy and extortion. Each charge is punishable by up to 20 years in prison and a $250,000 fine.
The extortion charge against Groce “remains pending,” the U.S. Attorney’s Office said.