2007-10-03 / Front Page

Merla brother pleads to money-laundering charge

Federal complaint says family's two bars were used in scheme
BY KAREN E. BOWES Staff Writer

FILE PHOTO On Feb. 22, 2005, Joseph "JoJo" Merla, at left in the backward baseball cap, escorts older brother John Merla to his car in Newark after John Merla was charged with accepting bribes and other acts of corruption. Now Joseph Merla also faces jail time, having recently ad- mitted to money laundering in federal court. FILE PHOTO On Feb. 22, 2005, Joseph "JoJo" Merla, at left in the backward baseball cap, escorts older brother John Merla to his car in Newark after John Merla was charged with accepting bribes and other acts of corruption. Now Joseph Merla also faces jail time, having recently ad- mitted to money laundering in federal court. KEYPORT - Former Mayor John Merla and little brother Joseph "JoJo" Merla now share more than a common gene pool. Both are admitted felons, each caught in the act by the very same undercover FBI witness, Robert "Duke" Steffer.

On Sept. 24, Joseph Merla, 43, admitted in U.S. District Court to one count of money laundering. According to the complaint, he laundered some $75,000 for a 10 percent fee, accepting "collections" from "Duke" Steffer. Steffer is the same undercover witness who helped nab older brother John Merla for the FBI on bribery charges as part of the February 2005 Operation Bid Rig sting.

Steffer made a name for himself in 2005 when it was revealed that he posed for several years as a businessman involved in various shady enterprises, such as offering bribes in exchange for demolition work, illegal loan sharking and other criminal endeavors. Steffer used his position with the FBI as a means to record conversations with various Monmouth County government officials, catching several on tape as they accepted cash in exchange for official favors.

Joseph Merla was also caught on tape. According to the complaint, at least six conversations regarding illegal loan sharking were recorded between March 2003 and March 2004.

According to the plea agreement, Joseph Merla was also charged with "the unlawful purchase and sale of liquor and tobacco products from in or about March 2003 to in or about December 2004, of which Joseph Merla has informed this office." As part of the plea deal, these charges were dropped.

The money laundering was done at two Merla family establishments, the Uptown Bar & Grill, Broad Street, and at the Bulkhead Bar & Grille, West Front Street, according to the FBI. Both Joseph and John Merla work as bar managers at the establishments.

Part of the plea process involved answering a series of questions prepared by the FBI during which Joseph Merla admitted that an associate with the initials LR was his "partner" in the laundering.

Michael Pappa, the attorney representing both brothers on their charges, had no comment.

Keyport Police Capt. Thomas Mitchell has been instrumental in the federal cases against the Merla brothers. In the fall of 2002, Mitchell tipped off the federal authorities to suspected illegal activity stemming from a garbage removal service and then-Mayor John Merla. Mitchell suspected that Merla was receiving services from the garbage company, he said on Monday.

"Once I went to the FBI, they sent in their informants to the Merlas," Mitchell said. "Basically, that's what started this whole thing going."

In April and then again in June, Mitchell testified against the Merla brothers during a public hearing for an application to expand their liquor license at the Uptown Bar & Grill. While under oath, Mitchell testified that the Uptown Bar & Grill was the subject of more than one investigation and should therefore not be issued the liquor license expansion.

"When I had spoken about investigations taking place, that was one of them," Mitchell confirmed on Monday. "Yes, that was part of it. That was the one main part of it.

"I knew about their whole investigation," Mitchell said, referring to the FBI case. "It was their operation."

So, is this the end of the Merla legal saga in Keyport?

"Time will tell," Mitchell said lightheartedly.

Joseph Merla is scheduled to be sentenced on Dec. 7. He faces a maximum sentence of 20 years and a maximum fine of $250,000. Brother John Merla is scheduled to be sentenced Oct. 23 and faces an estimated 24 to 30 months in prison after admitting Jan. 17 to accepting a total of $24,500 in bribes. Per the terms of his plea agreement, he will only be sentenced for accepting one $2,500 cash bribe.

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