05-24-06 -- Cart, Charles W. -- Guilty Plea -- News Release
Former Sussex County Party Chairman Pleads Guilty, Admits Embezzling from Union He Founded
NEWARK – Former Sussex County political party chairman Charles W. Cart pleaded guilty today to two counts of conspiracy, admitting that he used his health benefits management company to pilfer from and ultimately bankrupt the labor union he once founded, U.S. Attorney Christopher J. Christie announced.
The schemes to which Cart admitted playing a critical role enriched him, as well as his co-conspirators, who included his father-in-law, Charles H. Wiener and Susan Donato, the former president of Local 16 of the United Service Workers of America in Newton. Also benefitting from the fraud was co-defendant Marvin Rafael, who received $7,000 monthly payments – at Cart’s direction – from the union’s Health Fund for “consulting services” that Rafael never performed.
Cart’s is the latest and final guilty plea from all of the defendants in the fraud that led to the bankrupting of Local 16 and its health fund. Cart, Wiener and Rafael were indicted on Feb. 23, 2005. Donato pleaded guilty the month before and was cooperating in the government’s investigation of Cart and his co-conspirators.
Wiener, of Boca Raton, Fla., pleaded guilty on April 21, and is scheduled for sentencing on Aug. 3. Rafael pleaded guilty on April 19 and is scheduled for sentencing on Aug. 2. Cart’s sentencing is scheduled for Sept. 5, and Donato’s for July 7.
Under Cart’s plea agreement with the government, he faces a potential range under the U.S. Sentencing Guidelines of between 18 and 30 months in prison, depending on certain findings by U.S. District Judge Dennis M. Cavanaugh at sentencing. The Sentencing Guidelines are advisory only, however, and the judge can sentence above, below or within the recommended guideline range. There is no parole in the federal system.
“Those involved in corruption, whether it be public corruption or union corruption, will be detected, prosecuted and imprisoned as appropriate,” said Christie. “Mr. Cart has been held to account, despite his strenuous earlier denials.”
Cart, 56, of Newton, is a former Sussex County political party chairman as well as the founder and former President of Local 16. He was also the CEO of Health Choice, Inc, a third-party health benefits administrator, also located in Newton, which was employed by the union in 1997 to manage the payment of medical expenses of the union membership, which paid per-member rates for Health Choice’s services.
During his guilty plea before Judge Cavanaugh, Cart admitted conducting two schemes to embezzle from the union and its health fund. Cart admitted that between May 2000 and November 2001, he directed payments of as much as $11,500 per month to his father-in-law, under the guise of consulting fees to Wiener’s company, “People’s Consulting.” In fact, as Cart admitted, and as Wiener admitted previously, Wiener performed no legitimate services for the Local 16 Health Fund.
Cart admitted that the second scheme was set up in July 2000, when he met with Rafael and Donato in Florida. At that time, Cart said, he agreed to give Rafael a $7,000-per-month consulting contract even as Rafael was not expected to perform any work for the money. Cart admitted that Rafael received $84,000 from the fraudulent arrangement but that he, Cart, received half of it himself in the form of a $42,000 discount on a purchase of a Florida condominium from Rafael.
At their respective guilty pleas, Wiener and Rafael admitted conspiring to receive the payments for the bogus consulting deals.
Donato pleaded guilty on Jan. 18, 2005, to embezzling union funds and is scheduled to be sentenced on July 7 before the U.S. District Judge Joseph E. Irenas in Newark.
Christie credited Special Agents from the Department of Labor, OIG, under the direction of Marjorie Franzman, Special Agent in Charge. Christie also credited Special Agents from the Labor Department’s Employee Benefit Security Administration, Regional Director Jonathan Kay, with assisting in the investigation.
The case is being prosecuted by Assistant U.S. Attorney V. Grady O’Malley, Senior Litigation Counsel, and Assistant U.S. Attorney Judith Germano, both of the U.S. Attorney’s Office in Newark.
-end-
Defense Counsel:
Cart: Alfred DeCotiis, Esq. Teaneck
Wiener: Samuel Moulthrop, Esq. Morristown
Raphael: Frank Arleo, Esq. Hackensack
Donato: Sanford Roy Oxfeld, Esq., Newark