Take Down at the Borgata
& Garwood Mills 'Consultants'

Part 2 of a multi-part series documenting the FBI 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
Feb. 28, 2007

Craig Callaway had a strange feeling as he made his way to the Borgata Casino for an early morning meeting with New York financier Mike Garabaldi who was really an undercover agent for the FBI. Callaway had been tense after previously accepting five cash bribes from the “really smooth man” from New York. His brother had also asked for money as a consultant fee at a pervious meeting, according to Callaway.

The first bribe came during the League of Municipalities in Atlantic City, the second bribe came in a posh hotel in New York. Now the FBI was ready to take down Callaway at the final meeting at the Borgata. They set up hidden cameras and audio equipment to capture the transaction. Agents sat in an adjacent room listening, watching, waiting.

“At a previous meeting in a casino, my brother and a man named Jose Perez asked Mike Garabaldi for a $150,000 hit of cash,” said Callaway. “It was going to my brother in the form of a consultant fee. There was no money exchanged at this meeting but there was at the Borgata.”

Craig arrived at the Borgata and set aside his gut feeling that something was wrong. He made his way to the suite where Garabaldi was waiting. He entered the room and nothing appeared to be out of place. Callaway let down his guard and relaxed. Garabaldi greeted him warmly and they talked. Callaway was at ease when he accepted the third and final bribe. After the smooth transaction, Garabaldi called for room service.

“We just sat there talking,” said Callaway. “Then there was a knock at the door and room service arrived.”

Room service turned out to be FBI Special Agent Edward Corrigan and his partner. Other agents were present to make sure the bust went smoothly. The agents were not sure if Callaway had a gun on him or how he would react.

Callaway was calm. The shock of seeing the agents was tempered by Callaway’s relief that he had faced his worst nightmare. The agents still had more work to do. They had to flip Callaway and turn him into an operator. He still had the cash in his pocket and he "squirmed" until he handed it back to them."

"Here, I guess you guys want this back," said Callaway.

They spoke quietly but firmly to Callaway and told him they had him on tape taking the bribes. They told him how much time he was facing in federal prison, up to 20 years on each charge, Callaway quickly learned that he could enter into a plea agreement with the government and act as a cooperating witness for less prison time.

Flipping a criminal into an operator is an art form. The agents have to gain the trust of the person they will spend the next months and sometimes years working with on the case. The first moments after the bust are critical. Smart agents treat the person with respect, they lay out the options calmly, they give them an out. Each agent has their own style and smart agents know they have to gain the trust of their operators.

Callaway felt he had few choices as he thought about his family. He would go to prison for a few years. He would get out in time and life would go on. Callaway made the decision and flipped.

A strange relationship begins to develop between the criminals and the agents. They work closely together to attain the same goal. The criminals become savvy, almost quasi-law enforcement figures. Some agents grow close and feel protective of the people they flip and they have concerns for the family members who are left behind when somebody goes to prison. An unusual intimacy develops and some agents describe the relationship as a friendship, albeit not a normal friendship.

Callaway who was at that moment a candidate for the mayor’s office in Atlantic City would drop out of the race like a thunder clap. He claimed he had health problems. Nobody in his camp knew the announcement was coming. His supporters, campaign staff and even the Democratic Party Chairman Jim Carroll were unaware of the reason why and totally caught off guard. There were vague explanations for his change in plans, but nothing concrete to explain what happened. Rumors began to swirl that Callaway had been caught in a crime. Speculation ran rampant but no proof or inside information was yet available. Callaway clung to his story of ill health like grim death.

Reporters began hounding Callaway, probing and asking questions. One reporter for the Press of Atlantic City sat in a car with him talking about why he dropped out of the race, Callaway was emotionally overcome and said that he screwed up. He didn’t reveal the full story, he wasn’t ready, not yet.

The Consultants
Three years before Callaway was busted there were several hot land deals on the horizon in Atlantic City. The Garwood Mills tract of land in the inlet section of the town was heating up. The site was named after a department store that served the community in the 60s. It was prime waterfront property and worth millions to developers. The sale of Bader Field and Garden Pier was also a choice prize.

Major developers were interested in the region and began eyeballing the land. City council members saw a golden opportunity to direct contracts and make sure that work went to local people. Jobs with benefits is the mother’s milk of local politicians. Whoever controlled the flow of work would increase their power base and influence. There was also an opportunity to stuff a lot of tax-free money in their pockets in the form of bribes.

People flocking to the trough included developers who stood to make millions on choice property, consultants who garnered enormous monthly fees as “advisors,” Real Estate agents and property managers, lawyers who crafted the proposals and the various professionals that bring a project to completion. There was plenty of money to go around. That was the easy part. The hard part came as the power brokers competed for control. Callaway recounted how it unfolded.

“By this time Eddie DeNick was acting as a consultant for Kushner for $10,000 a month,” said Callaway. “He later worked for M&J (Jingoli) as a consultant at the behest of Senator Gormley. The two sides were competing against each other. Neither side knew what DeNick was up to. He asked me to stall the Garwood Mills project so he could collect more monthly consultant fees.”

A Request for Proposal (RFP) was crafted for the Garwood Mills site, according to Callaway. The big construction players entered the picture.

“The four companies that responded to the RFP for the Garwood Mills site were, Kushner, Hovnanian, M&J ‘Jingoli,’ which was Gormley’s financial backer in campaigns, and a company called Pulti,” said Callaway.

By then, Callaway was on the development committee tasked with selecting a developer.

“When the committee to review the projects met, (former Mayor Lorenzo Langford) Langford only allowed two of the companies to make presentations,” said Callaway. “They were Kushner and Hovnanian. I was disgusted and walked out of the presentation because all of the companies had not been allowed to present their project. I was followed by councilmen Gibb Jones, Ramon Rosario and Dennis Mason.”

DeNick was not the only consultant busted in the scheme. Another consultant has been busted by the FBI. The Atlantic Daily Sentinel will be revealing that name in the future.

Callaway said that one group had an advantage going into the project. The following is Callaway’s recollection of the conversation he had with then Senator William Gormley.

“Since Kushner’s lawyer crafted the RFP, they had a decided advantage when answering the RFP,” said Callaway. “They won the project and it set Gormley spinning. I got a call from Gormley telling me that he wasn’t mad at me or Atlantic City, but he said that ‘we really fucked him on this deal, you let that fucking criminal (Kushner) come in here.’ Callaway became very unhappy with Gormley.

Callaway believes that Gormley called on his good friend U.S. Attorney Christopher Christie and asked for an investigation of Atlantic City. Sources inside the federal government disagree with Callaway. However, Callaway’s perception of what he believed Gormley had done colored his actions in the future.

“When Gormley found out he lost the project to his arch nemesis Kushner, he contacted the feds,” said Callaway. Kushner gets sent to prison for blackmailing his brother in law by taping him with a hooker and sending the video to his wife.”

Gormley’s alleged designs on controlling the major development contracts in Atlantic City began to chaff with Callaway who said he was determined to keep the work local. He began to deeply resent Gormley.

“Gormley felt I betrayed him, (on the Garwood Mills project) but it was our town. I was not going to be under Gormley’s control.”

In the next installment in this series, Callaway recounts a conversation with Senator Gormley after a spate of shootings in the city. The plans for Bader Field and Garden Pier begin to come into focus.