DEVELOPING STORY: Kearny Board of Education vice-president John Leadbeater arrested on mortgage-fraud charges

Observer File Photo John Leadbeater
Observer File Photo
John Leadbeater

Updated at 1:15 p.m. on Saturday, March 23, with comments from Kearny Mayor Alberto G. Santos.


The vice-president of the Kearny Board of Education, who is also a former town councilman, alleged to be involved in a $13 million mortgage fraud scam that used phony documents and straw buyers to make illegal profits on overbuilt condos at the Jersey shore, has been arrested and charged in connection with the scheme, U.S. Attorney Paul J. Fishman announced earlier today.

John Leadbeater, 54, of Kearny, who served on the Kearny Town Council throughout the 1990s as a Republican representative of the 4th Ward, along with Daniel Cardillo, 49, of Wildwood, are each charged in a superseding indictment with conspiracy to commit wire fraud, the U.S. Attorney’s Office says.

Leadbeater is also charged with conspiracy to commit money laundering, reports say.

In addition to being a current member of the Kearny Board of Education, Leadbeater has, numerous times, run for mayor unsuccessfully.

He is retired from a job with the Port Authority of New York and New Jersey, where he was an operator on the PATH train system.

Leadbeater surrendered to special agents of the FBI this morning and was to appear this afternoon before U.S. Magistrate Judge Ann Marie Donio in Camden federal court, reports say.

According to the indictment, unsealed today:

Leadbeater and his co-conspirators are alleged to have located for purchase ocean town condominiums overbuilt by financially distressed developers in Wildwood and Wildwood Crest, and recruited straw buyers, including Cardillo, to purchase those properties.

The indictment says the straw buyers allegedly had good credit scores, but lacked the financial resources to qualify for the mortgage loans.

The conspirators, the indictment says, created false documents such as fake employment records, W-2 forms and investment statements to make the straw buyers appear more credit-worthy than they actually were in order to induce the lenders to make the loans.

To prepare the straw buyers’ false loan applications, Leadbeater and his conspirators allegedly caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false, attributing to the straw buyers inflated income and assets, according to the indictment.

Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings on the properties, Leadbeater and his conspirators took a portion of the proceeds, having funds wired or checks deposited into various accounts they controlled, the indictment says.

They also allegedly distributed a portion of the proceeds to the other members of the conspiracy for their respective roles, reports say.

Some previously charged co-conspirators have already pleaded guilty in connection with the scheme.

The wire fraud conspiracy charge carries a maximum potential penalty of 30 years in prison and a $1 million fine and the money laundering conspiracy charge carries a maximum potential penalty of 10 years in prison and a $250,000 fine, the U.S. Attorney’s Office says.

Fishman says special agents of the FBI, under the direction of Acting Special Agent in Charge David Velazquez in Newark, and special agents from IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen in Newark, were responsible for the investigation leading to today’s charges.

Though not specifically mentioned in the indictment, there are posts listed as far back as 2009 on a local website and chat board that took Leadbeater to task for a company he is believed to have run, called Lead 1 Investments. It is not known whether these posts led to the investigation.

One of the posts, dated Oct. 31, 2009, accuses the board vice-president of dealings that helped him “make money off innocent investors.”

“Yup, Leadbeater keeps bringing up Santos’ job for the freeholders but won’t discuss his own job as CEO of Lead 1 Investments,” the post reads. “Leadbeater made money off of innocent investors by pitiching (sic) a get-rich scheme based on flippng (sic) real estate. He called it a ‘game’ and ‘trick’ to make easy money. The statements on his website are exaggerated sales pitches that sound fraudulent. Yet silence from Mr. Leadbeater on this. Not once does he mention Lead 1 Investments in his ads or on this site. Not once does he mention Lead 1’s failure. Not once does he mention how many people lost money. Not once does Leadbeater mention how much he pocketed as CEO.”

Kearny Mayor Alberto G. Santos, who ran several times against Leadbeater for mayor, and who served on the council with him in 1999, says the charges against his former colleague and opponent “surprised” him.

“John has been very active and involved in the Kearny community for many years, most notably with Little League for over three decades and his past service on the town council for 10 years,” Santos said. “Like many others, I am surprised by the charges and wish him and his family strength at this time.”

Requests for comment have been made to Kearny Superintendent of Schools Frank Ferraro.

Leadbeater could not be reached for comment.

Please check back for more on this developing story. We will provide updates as they become available.

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