Feds charge BOE veep with fraud

Observer file photo John Leadbeater
Observer file photo
John Leadbeater


By Ron Leir
Observer Correspondent


The vice president of the Kearny Board of Education A Kearny school has been linked to a multi-million dollar mortgage fraud enterprise which, federal law enforcement agents allege, used fake documents and “straw buyers” to extract profits from Jersey Shore condominiums.

John Leadbeater, 54, a former town councilman, is charged with conspiracy to commit wire fraud and conspiracy to commit money laundering.

A federal grand jury sitting in Camden issued an indictment dated March 20 alleging that Leadbeater and Daniel Cardillo, 49, of Wildwood, conspired with others to profit from the sale of waterfront condominiums “overbuilt by financially distressed developers in Wildwood and Wildwood Crest … by obtaining mortage loans for unqualified borrowers, using fraudulent loan applications, HUD (U.S. Department of Housing & Urban Development)-1 Settlement Statements, and other documents” between May 2006 and August 2011.

The indictment says their actions “caused more than thirteen million dollars of losses to various lenders….” According to the indictment, Leadbeater and his co-conspirators recruited “straw purchasers” who had good credit scores but lacked the criteria needed to qualify for mortage loans for which they’d pay no deposits or closing costs, no monthly mortgage fees and get an upfront payment after the closing.

Meanwhile, the indictment alleges, the conspirators falsified buyers’ earnings form, tax returns and rental agreements to make the buyers seem more credit worthy to get the loans from lenders.

The indictment says the conspirators “took proceeds from the fraudulent mortgage loans by having funds wired or checks deposited into various accounts that they controlled [and] the Straw Purchasers … were paid a portion of the funds.”

The allegedly illegal transactions involved 11 condominium units in Wildwood and 15 units in Wildwood Crest.

As part of the scam, the indictment says, Leadbeater “located a real estate property to purchase, typically from a real estate developer, and purchased the property “dry,” meaning that little to no funds were produced for that transaction” and then recruited a straw buyer “to purchase the same property … [which] Leadbeater had purchased “dry” at a substantially increased sales price.”

That hiked up price, the indictment alleges, was designed “… to cover a pay-out to … Leadbeater and/or [two] co-conspirators.”

“Title companies … distributed proceeds of the fraudulently-obtained mortgage loan to the conspirators by wire transferring funds into an account controlled by … Leadbeater, or [by] issuing a check made payable to … Leadbeater’s companies, such as BCJL Enterprises or Lead 1 Investments,” the indictment says.

The indictment says that if Leadbeater is convicted, the government will compel Leadbeater to forfeit $2,961,518 “… representing the amount of proceeds obtained as a result of the offense, for which [Leadbeater] is … liable.”

The U.S. Attorney’s Office said that Leadbeater surrendered to the FBI on Saturday, March 23, and was expected to appear that day before U.S. Magistrate Ann Marie Donio in Camden Federal Court.

Leadbeater is being represented by Jersey City attorney Thomas J. Cammarata.

Kearny BOE President Bernadette McDonald, reached on Saturday, said that BOE Attorney Kenneth Lindenfelser is reviewing the situation to determine if the federal accusation will impact Leadbeater’s status on the board.

It appears that the criminal allegations have no bearing on Leadbeater’s involvement with the Kearny school system, she said.

“I talked to [Leadbeater] this morning and he told me he’s coming to the [BOE] budget hearing Monday [March 25],” McDonald said.

After she read news accounts of her colleague’s plight, McDonald said, “I was stunned. I got up and said to my husband, ‘Did I dream that?’ I really didn’t believe that.”

“I’ve known him since I ran for the board 12 years ago [when] he supported me,” McDonald said. “But we had a falling out after he came on the board two years ago. I thought we had an understanding that he was supposed to support me for [BOE] president but he supported someone else. He stabbed me in the back.”

But McDonald said that was water under the bridge.

“I do feel for his family – his three boys, one in college and two out, and his wife Kathy,” she said.

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