Solomon Dwek, key witness in N.J. corruption probe, expected to plead guilty to bank fraud charges, source says
By Josh Margolin/Statehouse Bureau, October 19, 2009, 11:03PM
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NEWARK - Solomon Dwek, the key witness in the massive federal corruption and money laundering sting that rocked the state’s political landscape, is expected to plead guilty Tuesday to charges in connection with a $50 million bank fraud in 2006 that first brought him to the attention of authorities.

Dwek, 36, is to appear first in federal court. Later in the day, he is expected to be in Superior Court in Monmouth County to plead to similar state charges, according to a source familiar with the investigation who did not want to be identified because he was not authorized to speak about the matter.

Full Star-Ledger coverage of the New Jersey corruption probe

Officials at the U.S. Attorney’s office issued an advisory saying only that "a central figure" in the July 23 arrests of 43 people on public corruption and money laundering charges would appear in federal court Tuesday before U.S. District Judge Jose L. Linares in Newark. A spokesman for the office declined to answer questions and Dwek’s attorney did not return calls to his office.

Dwek was initially arrested on the fraud charges in May 2006 after he deposited a bogus $25.2 million check into a closed PNC Bank account he controlled. According to the original criminal complaint, Dwek went to a drive-in window at the bank’s Eatontown branch. The check was drawn on an account he controlled, but the account had been closed and had no money in it.

Dwek assured a reluctant PNC employee that "corporate" had agreed to reopen the account and that funds to cover the check would soon arrive by wire transfer, the complaint alleged.

With those assurances, Dwek was allowed to deposit the check into a second account he controlled.

The next morning, he began spending the money, even though the promised wire transfer to cover the check had never been made, according to the complaint. He made four payments totaling $22.8 million. The largest was made to HSBC Bank to cover a loan in the name of Dwek and a fellow investor.

When PNC discovered the fraud, they called authorities.

Following his arrest, Dwek apparently spent 29 months as a cooperating witness, setting up rabbis and others in the religious community, as well as mayors, political candidates and public officials in an undercover sting operation that prosecutors have called unprecedented in its scope.

Dwek is described in nearly every criminal complaint and every indictment as a "cooperating witness who had been charged with bank fraud" but his name never appears. And he has not appeared publicly in court since the sting broke.

In a two-tiered investigation, Dwek used his connections with the rabbis to launder millions of dollars he claimed to be hiding from the banks in the bankruptcy that came after his arrest. Talking of "schnookie deals," he told them he was involved in a new counterfeiting scheme involving knock-off high fashion bags. According to prosecutors, he wrote checks to yeshivas and other religious institutions and got back cash, minus a percentage that would be taken for the transaction.

With the politicians, Dwek took on an assumed name and the persona of a fast-talking real estate developer looking to facilitate approvals for projects in Jersey City, Hoboken, Secaucus and elsewhere. He paid off dozens of officials with cash.

Even more bizarre were the charges against a Brooklyn man, caught on surveillance tape arranging a black market kidney transplant, in a deal with another FBI undercover operative that was set up by Dwek.

Dwek disappeared when the investigation resulted in the arrests of five rabbis, three mayors, two legislators and dozens of others.

To date, seven people have entered guilty pleas in the case. The first trial is not scheduled until January, but Dwek is expected to be the main witness in the case and any cooperation agreement would likely be the focus of vigorous grilling by defense attorneys.

Two of those charged in the case, brothers Louis and Ronald Manzo, were the latest to be arraigned last Thursday, following their indictment on charges they took $27,500 in payoffs from Dwek.

Louis Manzo, a former Democratic state assemblyman, ran unsuccessfully in the recent Jersey City mayoral election this past May. His attorney, John D. Lynch, said his client was being smeared by "untrue and unfair" allegations.

"How does Mr. Dwek get the starring role in this government production?" Lynch asked, following the brief appearance before U.S. District Judge Jose L. Linares in Newark. "We know he’s been charged with stealing $50 million. So how does he get placed in Hudson County, where he has no ties? It’s an interesting question."

Josh Margolin and Ted Sherman/Statehouse Bureau