– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that a father and son were arrested
today on charges that they used the construction
companies they own and operate to defraud
clients and a bank in connection with a
$2.1 million condominium project in Jersey
to Director Taylor, David E. Garsia Sr.,
70, of North Haledon, and his son, David
J. Garsia Jr., 42, of Glen Rock, were arrested
today on charges of conspiracy (1st degree),
money laundering (1st degree), theft by
deception (2nd degree), securities fraud
(2nd degree), misapplication of entrusted
property (2nd degree), and misconduct by
corporate officials (2nd degree). The complaint
filed against the Garsias also charges their
companies: Metro North Construction Group
LLC, Metro Design Construction Group LLC,
Electrosys Systems Inc. (doing business
as Electrosyst), 237 Group Inc., and Great
Falls Industrial Park Inc.
Garsias were arrested by state detectives
as a result of an investigation by the Division
of Criminal Justice Major Crimes Bureau.
They are being held in the Morris County
Jail. Superior Court Judge Philip Maenza
set bail for each defendant at $500,000
and ordered them to surrender their U.S.
April 2006 through February 2008, Metro
North was hired by Vincent Paragano, owner
of 140 Grant Avenue Associates LLC and Raritan
Bay Associates, to work on a project at
18-20 Park Street, Jersey City, involving
the renovation of an existing building and
construction of 19 condominium units. It
is alleged that the defendants made misrepresentations
to deceive Paragano into hiring them, and
likewise deceived Unity Bank in Clinton,
N.J., which provided draw-down construction
financing for the project. The defendants
allegedly performed substandard work on
the project and failed to complete it. It
is further alleged that the Garsias unlawfully
diverted funding from the project and laundered
it through their companies.
defendants used Metro North and the other
four companies named in the complaint, all
of which have offices at 70 Spruce Street
in Paterson, to create the illusion that
subcontractors were not necessary because
the companies could provide all construction
services “in-house,” including
architecture, engineering, electrical work,
plumbing, masonry, carpentry, windows and
roofing. It is alleged that to secure the
contract, the Garsias supplied information
to Paragano and his companies that falsified
the assets, financial health, solvency,
credentials, and experience of Metro North
and its parent company Great Falls Industrial
Park. The Garsias allegedly fraudulently
represented that Garsia Jr. was a licensed
engineer and architect.
the construction mortgage closing on Nov.
29, 2006, Garsia Jr. allegedly signed and
delivered documents representing himself
as the engineer and licensed architect for
Metro North, when he held no such licenses.
Those representations induced Unity Bank,
140 Grant Avenue Associates, Raritan Bay
Associates, and Paragano to fund the work
on the project.
is alleged that the defendants subsequently
supplied false expenditure information and
fraudulent work reports on their construction
draw-down applications to Unity Bank. For
example, Garsia Jr. and Metro North certified
in several construction draws that building
insulation, fire proofing, ventilation systems
and sprinkler systems had been installed,
when in fact they had not been installed.
Additionally, the defendants allegedly certified
that expenditures had been made for sewer
lines and foundation underpinnings when
they had not been made.
the course of the project, the defendants
allegedly received approximately $2 million
from Unity Bank, 140 Grant Avenue Associates,
Raritan Bay Associates and Paragano based
on false representations that work was completed.
The defendants allegedly failed to use the
money for legitimate business expenses,
such as payment of subcontractors and purchase
of materials for the project. Instead, the
defendants allegedly laundered over $500,000
by making cash and debit/ATM card withdrawals,
making credit card payments, converting
funds to other projects, and using money
for personal expenses such as furs and jewelry.
is alleged that Garsia Jr. repeatedly issued
checks to subcontractors for amounts in
excess of available funds, and in an alleged
effort to defraud creditors, listed a debt
of $800,000 payable to Great Falls Industrial
Park, when no such debt existed. As creditors,
including Paragano and 140 Grant Avenue
Associates, sought relief and initiated
civil litigation, the assets of Metro North
were allegedly co-mingled and shifted into
237 Group Inc.
Division of Criminal Justice has filed a
civil forfeiture action to seize and restrain
assets of all of the individual and corporate
defendants, alleging the assets are proceeds
and instrumentalities of criminal conduct.
Abraham A. Aquino and Deputy Attorney General
Francine S. Ehrenberg are assigned to the
investigation for the Division of Criminal
Justice Major Crimes Bureau. Deputy Attorney
General Michael McCormick is handling the
civil forfeiture action for the Major Crimes
Bureau. They were assisted by Deputy Attorney
General Michael Rappa, Lt. John Jespersen,
Detective Cheryl Smith, volunteer attorney
Derek Miller, and Christine M. Marshall,
an intern for the Division of Criminal Justice.
crimes carry a maximum sentence of 20 years
in state prison. The first-degree money
laundering charge carries a criminal fine
of up to $500,000. Second-degree crimes
carry a maximum sentence of 10 years in
state prison and a criminal fine of $150,000.
charges are merely accusations and the defendants
are presumed innocent until proven guilty.
Because they are indictable offenses, the
charges will be presented to a state grand
jury for potential indictment.