Part One - Feb. 27, 2007 A Tidal Wave of Corruption

Part Two - Feb. 28, 2007 Take Down at the Borgata and The Consultants

Atlantic City and 'Operation Steal Pier'
The Tidal Wave of Corruption Continues

This is part 1 of a multi-part series documenting the corruption probe in Atlantic City by the Atlantic Daily Sentinel. The stories includes four years of coverage that was gathered and held for publication while the FBI completed their work in Atlantic City, Camden, Philadelphia and Texas.

By Virginia McCabe
Published Feb. 27, 2007

“The bottom dropped out,” said Callaway, “but I also had a sense of relief. “I said o.k., you guys got me, what do you want?” - Craig Callaway to FBI Agents on the day he was caught

Craig Callaway sat in the Atlantic City McDonald's restaurant on Dec. 14, 2006 recounting
the FBI's sting operation that sidelined his run for mayor and resulted in a series of bribes that would send Callaway to prison for a relatively short period of time. Now, Callaway's fate hangs in the balance as he awaits sentencing in the federal court on March 13.

Events Callaway allegedly engineered or participated in since his Aug. 2006 guilty plea could earn him significantly more time in prison, but the possibility exists that Callaway will be able to serve multiple prison terms at the same time as part of a plea negotiation worked out with the government. Callaway had been a highly productive cooperating witness for the FBI.

During the last several years the FBI painstakingly put together the framework for Operation Steal Pier. The public often wondered why Callaway was getting away with so much in the city, but once the federal government stepped in, the dominos began falling and a long line of corrupt individuals had to be investigated. When they turned over a rock in the investigation, they found a criminal who pointed to another rock where other criminals were lurking.

The vast network of criminal activity stretched to development committees, boards, advisory panels, real estate agencies, state agencies under local control, developers, planners, consultants, street gangs and elected officials. The FBI believed it was worth keeping Callaway on the street and working as an operative.

‘Angels of Atlantic City’
Much of the operation will not be exposed and nearly all of the agents, will never be given credit for their work in Operation Steel Pier. They must remain under cover so they can continue to fight crime. However FBI Special Agent Edward Corrigan and his partner surfaced during the investigation as one witness called them, the "Angels of Atlantic City." Their ability to gain the trust of witnesses and criminals allowed them to move between the criminal world and the straight world. They were known for keeping their word, being fair minded and working hard to bring people to justice, according to people who worked with them. Both are described as hardened FBI Agents, but they did not use their power gratuitously. They eased into the community and the lives of those they would send to prison. Criminals and witnesses interviewed for these stories spoke in admiring terms about the two most visible FBI Agents. Corrigan will be leaving for his next assignment, far from New Jersey. His partner who is still working can not be identified for the purposes of this story.

Time for Prison
The federal sentencing date has drawn near but that did not stop Callaway from expressing his frustration at the postponement of his sentencing from December to March. He said he was ready to go to prison and serve his time. As of January 2007, Callaway was still maneuvering with the FBI to get out from under another crime he allegedly engineered involving blackmailing city councilmen. The FBI cracked the case but Callaway will be prosecuted by the state making the deal even more difficult to craft and far more dicey for Callaway as other agencies get involved.

In the weeks following Callaway’s imprisonment, a new layer of corruption will be revealed. In the meantime, Callaway is waiting to start his sentence.

"I just want to get this over with and get it behind me," said Callaway speaking of his prison term.

Callaway is spending much of his time looking forward to his release from prison and his future plans, which he will not share. Despite his troubles, Callaway was taking time out for family matters and was pacing outside of the maternity ward on Tuesday morning waiting for the birth of another grandson. He has given up his attention to some of his cohorts in crime and those who helped him along the way, like Edward DeNicholantonio.

Eddie DeNick – Walking a Crooked Line
For years the pressure mounted as Callaway lived a double life. He spent his time walking the halls of power in City Hall as the council president and hobnobbing with influential businessmen. He was equally at home in the economically depressed 3rd ward of the city. He gathered hundreds of loyal supporters to his side. He ran a major absentee ballot campaign that put his supporters in office. At the same time, he was a cooperating witness, wired by the FBI and working to bring others into the snare the federal authorities had laid. Along the way Callaway had a powerful street-wise tutor in a local businessman and former police offier who would later be caught up in the FBI sting operation. Edward "Eddie DeNick" DeNicholantonio, began wearing a wire for the federal government. He is due to plead guilty in federal court as soon as his attorney and the government hammer out the plea agreement.

DeNick allegedly acted as a consultant for two developers that wanted to do business in the city, according to law enforcement. The U.S. Attorney will release the exact nature of the charges in a few weeks. Denick taped powerful people and one powerful state legislator. Callaway became a king maker in Atlantic City under the tutelage of DeNick using absentee ballots.

Robin in the "Hood" and DeNick
For years, Callaway was thought to be a renegade criminal turned politician working in a vacuum with his family. “DeNick” taught the Callaway Clan how to succeed at culling an enormous amount of votes from their constituents. Political supporters of Callaway began to profit from their association. Callaway was a high flying, public figure. DeNick, after years of law enforcement experienced, maintained a low profile and operated under the radar. Together they worked out at the gym and imagined what they would do with the power they had gained.

“He showed us the value of the absentee vote,” said Callaway. “We knew about it, but we didn’t realize the full value of it. We had a whole lot more to work with in our wards. We had people who don’t get involved, for whatever reason, in the system. We could use what our opponents didn’t have. Eddie bought me a membership to a local health club and helped me with my physical health.”

Callway's activity combined with DeNick’s instructions on absentee ballots began to divide the city by loyalties. Callaway’s antics ran from hardcore criminal activity to mischief that was unbefitting an elected official. He was convicted of throwing a brick at a political rival, a conviction he claims is false. He also has a sordid history of gang involvement, drug activity and he was tried for a shooting that left a man in a wheel chair. The jury returned a not guilty verdict and Callaway went back to his daily business.

Callaway's supporters were undaunted by his checkered history and the image of a black man making his way up the ladder of real political power gave them hope. They applauded his "success at any price," attitude and they loved the personal attention he paid to everyone under his watch.

Callaway’s detractors made a cottage industry out of bashing him on the local talk radio circuit ever day. Everybody was making money out of Calloway and his raucous political plays His supporters saw him as a martyr for the cause of advancing those who could not help themselves, a sort of Robin Hood from the Hood, but his motivations were not always altruistic.

Callaway began setting up his family members in good paying jobs in government to shore up his family empire during his stay in prison. Legislation was introduced to double his salary as council president. More perks and salary increases were in the works for his cronies. It was the tipping point for Callaway. A public outcry against the legislation brought the media and public down hard on City Hall. Mayor Bob Levy refused to use his veto power over the legislation despite his disapproval of the increases. Callaway hit a brick wall with the public and his plans began to slowly unravel. Callaway was hobbled but not entirely crippled. He boldly continued to seek benefits for his family at every turn.

The First Bribe – The Second Wife
As part of his deal with the FBI, Callaway shielded his second wife in Muslim marriage, Waheedah and other Callaway family members from prosecution. Waheedah had actually accepted the first cash bribe from undercover FBI Agent Mike Garabaldi who posed as a New York financier with a large bank roll to spread around on behalf of his friend Atlantic City Contractor Terry Jacobs..

The FBI had heard stories that Jacobs had been bragging about his ability to pay off local officials for city projects. This was a watershed moment for the FBI and they opened the investigation. Garabaldi was chosen to play the part of the money man from New York. He was slick looking, according to Callaway and had a very smooth and polished manner. Callaway was suspicious, but the lure of money was too great for him to walk away.

Garabaldi initially tried to give the $10,000 "campaign contribution" to Callaway at a party Jacobs threw at the Taj Mahal Casino during the League of Municipalities Convention. Callaway motioned to Waheedah and said Garabaldi should give the contribution to her. Callaway said he did not know how much money was in the envelop until later.

The money was a bribe to steer more construction contracts to Jacobs. Jacobs had already been arrested by the FBI with five kilos of cocaine in a shipment to Camden from Texas. Jacobs in an effort to get out from under a long prison term brought Camden City Councilman Ali Sloan El and Callaway to the FBI. The bureau was already aware of their criminal activity and Jacobs provided the vehicle to capture them. Jacobs set up the sting.

Waheedah escaped prosecution for her part in the bribery sting due to a plea agreement, but the FBI later threw her back on the table as a bargaining chip when they caught Callaway in another alleged crime after he pleaded guilty to taking bribes. By all accounts, Callaway is devoted to Waheedah and would do anything for her or to protect her. The FBI found his Achilles heal.

When push came to shove, Callaway blinked and once again bent to the will of the FBI to protect the woman he loved. People have asked if Waheedah knew she was breaking the law at the time she accepted the envelop of cash. The answer came out of her own mouth and was captured on tape. It was a statement that made the FBI agents sit up and take notice. As Garabaldi spelled out in uncertain terms what the cash was for and what he wanted to get in return, an impatient Waheda moved the conversation along for the sake of brevity.

"Yeah, we get the picture," said Waheedah.

Gormley Becomes a Target of Callaway and DeNick
Councilmen Gibb Jones and Ramon Rosario were stung. Terry Jacobs and Ali Sloan El were also in the bag. "DeNick" had become a cooperating witness and was looking to bag another player in Atlantic City. Two more men, Operator Businessman 2 and Operator Political Man 3, who will be identified later in this series, were working the business circuit for their prey. Callaway was now free to turn his attention to Senator William Gormley, the relationship between the two had gone dodgy over land deals.

Callaway and DeNick made several tapes of Gormley using their body wires.
Those familiar with the investigation said there are high legal standards for wiretapping suspects when no parties involved know of the tapping. However, body wires, or consensual taps, are another story and the hurdle to taping these conversations is not as high.

Callaway began taping Gormley during their talks about land deals in Atlantic City, according to those involved with the legal case. DeNick did the same. Those with knowledge of the FBI investigation required that all conversations be recorded and that selective recordings were not acceptable. The agents also had to interface with the U.S. Attorney when political figures came under the gun. After many taped conversations, nothing significant was caught on tape involving Gormley. At this point, the U.S. Attorney's office told the FBI agents to stop taping the Senator. The agents were reportedly dismayed and extremely angry.

Since Gormley had been taped many times with no results and the lawyers became itchy. Agents wanted to continue to tape the Senator to prove or disprove his involvement with alleged crimes.
The taping was stopped dead cold and news of Operation Steel Pier was leaked to the media.
It effectively brought the investigation to a screeching halt. For months after the stories surfaced, cooperating witnesses had to tell their friends and family members that they were not involved and that the news reports were nothing but rumor. This made it extremely difficult for the operators who eventually had to tell their families that not only were they in trouble with the law and facing prison, they had also lied to their loved ones.

One suspect said that he and the FBI agents believe that Christopher Christie tipped Gormley off to the investigation and they leaked the operation to the media. Christie and Gormley have a strong friendship between them. However, there is no direct evidence that any of this happened, only the opinion of the suspects and the FBI agents, according to a source familiar with the legal case.

Those who are close to Gormley and have known him for years said that he was an honest man. They also added that he was a smart man and crafty lawyer who would not fall prey to investigative tactics.

When reached for comment, Gormley said he had "no comment" on the story and he added that he was enjoying his retirement from the Senate which came two weeks ago.

The tapings were reported to be about Bader Field, Garden Pier, Garwood Mills projects and future votes in the city. In an interview with Callaway taken last year he explained his relationship to Gormley.

"We were never friends," said Callaway of Gormley. "He used me and I used him."

Callaway said that during one court challenge he was involved in, Gormley sent him a free attorney.

"I beat out Stephanie Dixon by a handful of votes and the election contests began," said Callaway regarding his early rise to power. "Bill Gormley wanted to make a good show in Atlantic City during his next election. He sent me a lawyer named Jack Carbone. He showed up in court and asked me for a $1 bill. He tore it in half and he became my lawyer. I still have the other half.

Callaway said he saw Gormley as a means to an end. He was committed to bringing down Gormley as revenge for what Callaway perceived was Gormley’s desire to control the Bader Field and Garden Pier projects.

Callaway added in an interview last summer that he was worried that many of the white-collar criminals would escape justice. Things have changed since that interview. Callaway will now witness some of the white power brokers in business be brought before the bar of justice.