Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42
Div.
of
Gaming
v.
Bayshore
Rebar
Cite
as
12
N.J.,,.R.
149
DIVISION
OF
GAMING
ENFORCEMENT,
Petitioner
V.
BAYSHORE
REBAR,
INC./
JOSEPH
N.
MERLINO,
Respondent,
and
IN
THE
MATTER
OF
THE
APPLICATION
OF
BAYSHORE
REBAR,
INC.,
FOR
A
CASINO
SERVICE
INDUSTRY
LICENSE
Initial
Decision:
December
20,
1988
Final
Agency
Decision:
May
10,
1989
Approved
for
Publication
by
the
Casino
Control
Commission:
September
22,
1989
SYNOPSIS
The
Division
of
Gaming
Enforcement
filed
a
complaint
with
the
Casino
Control
Commission
seeking
disqualification
of
respondent
Bayshore
Rebar,
Inc.
from
doing
business
with
casino
licensees
and
revocation
of
its
vendor
registration
because
of
alleged
connections
with
organized
crime.
In
addition,
the
Division
objected
to
Bayshore's
application
for
licensure
as
a
casino
service
industry.
The
matters
were
transmitted
for
hearing
to
the
Office
of
Administrative
Law,
where
the
application
case
was
consolidated
with
the
complaint.
(Hearing
on
a
third
matter
involving
criminal
charges
pending
against
respon-
dent
Joseph
Merlino
was
deferred.)
Joseph
Merlino,
who
was
president
and
sole
owner
of
Bayshore
when
the
Division's
original
complaint
was
filed,
is
the
son
of
Law-
rence
Merlino,
a
career
criminal
offender
and
associate
of
organized
crime
boss
Nicodemo
Scarfo.
At
the
time
of
the
hearing,
Joseph
Merlino
was
vice-president
and
an
employee
of
Bayshore.
His
mother,
Phyllis
Mistie
Merlino,
was
president
of
the
company,
which
operated
out
of
the
family
home.
Lawrence
Merlino
is
not
associated
with
Bayshore,
but
the
Division
alleged
he
may
have
helped
the
company
obtain
construction
jobs
from
casino
licensees.
The
administrative
law
judge
assigned
to
the
case
identified
the
main
issue
as
whether
the
Division
had
proved
that
Bayshore
and
its
officers
were
associated
wih
organized
crime
in
such
a
manner
as
to
be
inimical
to
the
policies
of
the
Casino
Control
Act.
Respondent
argued
that
the
relationship
between
Bayshore
and
Lawrence
Merlino
was
only
a
family
connection,
not
an
inimical
business
relationship.
The
administrative
law
judge
concluded,
however,
that
there
was
ample
evidence
of
Lawrence
Merlino's
involvement
with
Bayshore
to
justify
disqualification
under
N.J.S.A.
5:12-86f.
Because
of
the
dis-
qualification,
the
judge
also
concluded
that
Bayshore's
application
for
a
casino
service
industry
license
must
be
denied.
Upon
review,
this
initial
decision
was
adopted
by
the
Casino
Control
Commission.
In
discussing
the
application
of
section
86f,
the
Commission
noted
that
an
association
is
inimical
if
it
presents
the
danger
of
influence
or
control
over
a
casino-related
business
by
an
organized
crime
figure.
There
need
not
be
evidence
of
actual
criminal
behavior
by
the
associate.
The
Commission
concluded
that
the
nature
and
quality
of
the
association
between
Bayshore
and
Lawrence
Merlino
created
a
sufficient
risk
that
Merlino
might
exercise
influence
over
Bayshore.
As
to
the
father-son
relationship,
the
Commission
said
disqualification
of
the
father
does
not
alone
disqualify
the
son.
How-
ever,
the
family
relationship
cannot
be
used
to
shield
an
inimical
relationship
from
regulatory
scrutiny.
In
this
case,
there
was
sufficient
evidence
that
the
relationship
between
Joseph
Merlino
and
his
father
consisted
of
more
than
an
innocuous
family
association.
Accordingly,
the
Commission
ordered
Bayshore
disqualified
and
its
application
for
a
casino
service
industry
license
was
denied.
In
addition,
Bayshore's
qualifters--Joseph
Merlino
and
Phyllis
Mistie
Merlino--were
also
disqualified.
Stephen
J.
Cirillo,
Deputy
Attorney
Gerneral,
and
Julia
McClure,
Deputy
Attorney
General,
for
petitioner
(W.
Cary
Edwards,
At-
torney
General
of
New
Jersey,
attorney)
Francis
J.
Hartmann,
Esq.,
and
Charles
H.
Nugent,
Jr.,
Esq.
for
respondent
MURPHY,
ALJ:
STATEMENT
OF
THE
CASE
At
issue
is
whether
Bayshore
Rebar,
Inc.,
a
reinforced
concrete
construction
("rebar")
company
operating
primarily
in
Atlantic
City,
is
disqualified
under
the
Casino
Control
Act,
L.
1977,
c.
110;
N.J.S.A.
5:12-1
et
seq.,
from
doing
business
with
casino
applicants
and
licensees
because
of
the
allegedly
inimical
association
of
its
officers
with
a
member
of
organized
crime
contrary
to
N.J.S.A.
5:12-86f,
and
whether
it
should
be
denied
a
license
as
a
casino
service
industry
pursuant
to
N.J.S.A.
5:12-92c
and
N.J.A.C.
19:43-1.1
et
seq.
Both
sides
see
this
as
a
case
of
family
ties:
the
Division
of
Gaming
Enforce-
ment
(Division)
alleges
that
the
respondent
has
an
inimical
association
with
the
crime
family
ofNicodemo
Scarfo
through
one
of
its
members,
Lawrence
Merlino,
a/k/a
Lawrence
"Yogi"
Merlino,
who
is
the
father
of
Bayshore's
vice-president
and
former
president
as
well
as
ex-husband
of
its
current
president;
Bayshore
Rebar,
Inc.
(Bayshore),
claims
that
its
only
association
with
Lawrence
Merlino
is
purely
incidental
to
Constitutionally
protected
family
bonds
formed
through
blood
and
marriage
and
that
these
alone
may
not
provide
a
basis
for
disqualification
or
denial
of
a
license
under
the
Casino
Control
Act
and
Commission
regulations.
PROCEDURAL
HISTOR
Y
The
Division
filed
its
initial
complaint
in
this
matter
with
the
Casino
Control
Commission
(Commission)
on
January
6,
1987,
alleg-
ing
various
connections
between
Bayshore
and
its
officers
and
owners
and
Lawrence
Merlino,
an
admitted
career
criminal
offender
and
a
member
of
a
career
offender
cartel
headed
by
Nicodemo
Scarfo.
Joseph
Merlino,
former
president
of
Bayshore,
requested
a
hearing
on
February
11,
1987,
and
the
matter
was
transmitted
to
the
Office
of
Administrative
Law
on
March
5,
1987,
for
hearing
as
a
contested
case
pursuant
to
N.J.S.A.
52:14F-1
et
seq.
The
Division
filed
an
amended
complaint
with
the
Commission
on
May
6,
1987,
seeking
to
disqualify
respondent
Joseph
N.
Merlino
from
vendor
registration
under
N.J.S.A.
5:12-104b
because
of
his
indictment
on
March
17,
1987,
in
Atlantic
County
on
charges
of
aggravated
assault,
aggravated
assault
with
a
deadly
weapon,
and
possession
of
a
deadly
weapon
for
unlawful
purposes.
These
criminal
charges
are
still
pending.
The
parties
initially
agreed
to
hold
proceedings
on
the
amended
complaint
in
abeyance
pending
resolution
of
the
criminal
charges,
but,
as
these
charges
were
not
rapidly
resolved,
it
was
determined
to
be
more
advisable
to
proceed
to
hearing
on
the
allegations
of
the
original
complaint,
and
a
prehearing
to
this
end
was
held
on
November
17,
1987,
with
a
prehearing
order
issued
the
next
day.
Decision
on
the
unrelated
criminal
charges
was
deferred,
pursuant
to
N.J.S.A.
5:12-86d,
during
the
pendency
of
that
charge.
The
hearing
on
the
original
complaint
was
scheduled
for
January
7,
1988,
but
this
date
was
adjourned
at
the
respondent's
request
due
to
the
unavailability
of
counsel.
The
hearing
was
conducted
on
March
14,
March
29
and
March
31,
1988.
After
the
completion
of
the
hearing,
additional
documentation
was
submitted
by
respondent
on
April
7,
1988,
with
a
ten-day
reply
period
allowed
to
the
Division.
Before
expiration
of
the
time
period
for
submission
of
an
initial
decision,
the
Division
advised
that
it
intended
to
move
to
reopen
and
supplement
the
record
by
submission
of
a
sworn
affidavit
by
Thomas
A.
DelGiorno.
Bayshore
filed
a
letter
brief
in
opposition
on
July
5,
1988.
On
July
22,
1988,
the
record
was
reopened
and
the
Division
was
ordered
to
produce
Thomas
A.
DelGiorno
for
testimony;
the
respondent
was
directed
to
have
Lawrence
Mefiino
testify.
Because
of
a
pending
Federal
criminal
matter
in
which
both
men
were
involved,
this
could
not
be
arranged
and
it
was
determined,
on
August
19,
1988,
to
admit
the
proposed
affidavit
from
Thomas
DelGiorno.
Bayshore
was
also
given
an
opportunity
to
submit
an
opposing
affidavit
from
Lawrence
Merlino,
and
did
so.
On
July
29,
1988,
Bayshore
applied
to
the
Commission
for
licensure
as
a
casino
service
industry
pursuant
to
N.J.S.A.
5:12-92c
and
N.J.A.C.
19:43-1.3
et
seq.
The
Division
objected
and
argued
that
the
applicant
was
disqualified
on
the
grounds
of
its
association
with
Lawrence
Merlino,
as
well
as
the
indictment
of
Joseph
N.
Merlino
and
by
what
the
Division
characterizes
as
misrepresentations
by
the
applicant's
principals
in
the
course
of
the
hearing
in
this
matter.
The
matter
of
the
application
was
transmitted
to
the
Office
of
Adminis-
trative
Law
for
hearing
as
a
contested
case
with
a
request
that
it
be
consolidated
with
the
pending
matter
in
OAL
DKT.
CCC
1445-87.
Consolidation
was
granted
and
the
parties
rested
on
the
evidence
introduced
in
the
previously-filed
casino
control
matter,
which
had
been
heard
in
March.
On
September
7,
1988,
Bayshore
submitted
an
affidavit
by
Law-
rence
Merlino,
responding
to
that
previously
submitted
by
Thomas
DelGiorno.
On
September
21,
1988,
the
Division
submitted
an
af-
fidavit
of
Division
Agent
Barbara
Friese
and
excerpts
from
reports
of
the
Pennsylvania
Crime
Commission.
On
November
4,
1988,
Bayshore
forwarded
sections
of
a
transcript
from
a
trial
in
United
States
District
Court,
Eastern
District
of
Pennyslvania,
entitled
United
States
of
America
v.
Nicodemo
Scarfo,
et
al,'
in
which
the
testimony
of
Thomas
DelGiorno
as
to
Bayshore
and
Lawrence
Merlino
was
featured.
The
Division
submitted
a
responsive
argument
on
November
21,
1988,
and
the
record
as
to
the
consolidated
matter
was
closed
on
that
date.
The
matter
of
the
indictment
pending
against
Joseph
Merlino
remains
to
be
determined
through
criminal
proceedings
and
is
not
dealt
with
in
this
decision.
FINDINGS
OF
FACT
The
following
material
facts
are
not
in
dispute.
Bayshore
stipu-
lated
that
Lawrence
Merlino
is
a
career
criminal
offender
within
the
meaning
of
N.J.S.A.
5:12-86f
and
N.J.A.C.
19:48-1.1,
as
well
as
an
associate
of
career
criminal
offenders
and
a
member
of
a
career
criminal
offender
cartel.
Specifically,
Lawrence
Merlino
is
an
associate
of
Nicodemo
Scarfo,
the
acknowledged
head
of
an
organized
crime
family
operating
out
of
Philadelphia
in
southern
New
Jersey
and
the
Atlantic
City
area.
Official
notice
is
taken
that,
on
November
19,
1988,
Lawrence
Merlino
was
convicted
on
a
number
of
Federal
criminal
charges
in
the
matter
of
United
States
of
America
v.
Nicodemo
Scarfo,
et
al.,
U.S.
District
Court
Criminal
No.
88-003.
Also
convicted
were
Lawrence
Merlino's
brother
Salvatore
Merlino;
his
nephew,
Phillip
Leonetti;
Nicodemo
Scarfo,
and
others.
The
Merlino
brothers
are
known
to
be
members
of
the
Scarfo
crime
family,
with
Salvatore
Merlino
functioning
as
an
underboss,
and
Lawrence
Merlino
and
Phillip
Leonetti
serving
as
soldiers
within
that
organization.
Lawrence
Merlino's
association
with
Nicodemo
Scarfo
goes
back
to
at
least
1979
when
the
two,
along
with
Philip
Leonetti,
were
charged
with
the
murder
of
Vincent
Falcone,
an
Atlantic
City
cement
contractor.
The
three
were
subsequently
acquitted.
Lawrence
Merlino
also
has
worked
as
president
and
part
owner
of
Nat
Nat,
Inc.,
a
construction
company
in
Atlantic
City.
He
has
also
worked
for
Scarf,
Inc.,
a
construction
company
owned
by
Nicodemo
Scarfo's
nephew,
Phillip
Leonetti.
Be-
cause
of
his
status
as
a
career
offender
and
an
associate
of
a
career
offender,
Lawrence
Merlino
was
barred
from
casino
premises
by
the
Commission
and
this
exclusion
was
affirmed.
See,
State
v.
Lawrence
Merlino,
216
N.J.
Super.
579
(App.
Div.
1987),
affirmed,
State
v.
Merlino,
109
N.J.
134
(1988).
Lawrence
Merlino
is
currently
in-
carcerated
in
Pennsylvania
awai.
ting
trial
on
other
charges.
There
is
also
no
dispute
that
Lawrence
Merlino
was
president
of
Nat
Nat,
Inc.,
a
reinforced
steel
construction
company,
at
the
time
of
the
incorporation
of
Bayshore
Rebar
in
December
of
1985.
He
had
incorporated
a
company
called
Bayshore
Rebar,
Inc.,
in
Florida
prior
to
that
time,
which
corporation
was
involuntarily
dissolved
on
No-
vember
1,
1985,
for
failure
to
file
its
annual
report.
Prior
to
1985,
Nat
Nat
operated
out
of
offices
at
28
North
Georgia
Avenue,
Atlantic
City,
which
was
the
same
address
used
by
Scarf,
Inc.,
a
construction
company
headed
by
Phillip
Leonetti,
nephew
of
Nicodemo
Scarfo
and
a
career
offender,
as
discussed
above.
The
operations
of
Nat
Nat
were
later
moved
to
a
home
located
at
15
North
Decatur
Avenue
in
Margate,
which
Lawrence
Merlino
had
purchased
for
his
former
spouse
and
children.
Lawrence
Merlino
did
not
at
any
time
reside
at
that
address
but
occasionally
visited
his
children
there,
as
well
as
to
check
on
the
affairs
of
Nat
Nat,
which
were
being
handled
by
his
daughter,
Kimberly.
Joseph
N.
Merlino
is
the
son
of
Lawrence
Merlino
and
is
currently
21
years
old.
At
the
time
of
the
filing
of
the
Division's
original
complaint,
he
was
designated
as
president
and
sole
owner
of
Bayshore
Rebar,
Inc.
By
the
time
of
the
hearing
in
this
matter
he
no
longer
held
that
office,
which
had
been
assumed
by
his
mother,
although
he
was
still
vice-president
and
was
principally
employed
by
it
in
the
construction
rebar
business.
His
ownership
share
had
also
been
re-
duced
to
twenty-five
percent,
with
his
mother
holding
the
rest.
The
"rebar"
business
involves
the
placing
of
steel
rods
at
building
con-
struction
sites
prior
to
the
pouring
of
concrete
so
that
the
building
cement
structure
will
be
reinforced
with
steel.
Bayshore
has
worked
on
a
number
of
casino
sites
in
Atlantic
City.
Lawrence
Merlino
holds
no
office
in
the
company
and
there
is
no
evidence
that
he
holds
any
interest
in
it
or
that
he
has
been
employed
by
it
in
any
capacity.
There
is
also
no
evidence
that
Lawrence
Merlino
has
received
any
monies
from
Bayshore
or,
for
that
matter,
from
Joseph
Merlino
or
Phyllis
Mistie,
his
former
spouse
and
the
mother
of
his
five
children.
The
Division
also
has
offered
no
evidence
showing
any
payments
by
Bayshore
or
Joseph
Merlino
to
Nicodemo
Scarfo,
Salvatore
Merlino,
Phillip
Leonetti
or
anyone
else
associated
with
the
reputed
Scarfo
crime
family,
nor
has
any
other
evidence
been
offered
to
demonstrate
business
or
personal
dealings
between
Bayshore
or
its
principals
and
Scarfo,
Leonetti,
and
Salvatore
Merlino,
beyond
Joseph
Merlino's
prior
employment
with
Scarf,
Inc.,
and
Nat
Nat,
Inc.
There
is
no
dispute
as
to
the
above
facts
and
I
so
FIND.
The
Division
offered
an
affidavit
signed
by
one
Thomas
Albert
DelGiorno,
an
acknowledged
former
member
of
the
Scarfo
crime
family
who
has
testified
against
its
members,
including
Lawrence
Merlino,
in
a
number
of
proceedings.
DelGiorno
states
in
his
affidavit,
which
I
set
forth
in
full,
that:
1.
I
am
currently
in
protective
custody
in
an
undisclosed
location.
I
currently
face
criminal
charges
for
various
criminal
offenses
and
have
testified
for
the
federal
government
and
the
States
of
New
Jersey
and
Pennsylvania
in
various
criminal
matters
of
which
I
have
knowledge.
It
is
my
understanding
that
I
will
be
provided
no
favorable
treatment
as
a
result
of
the
information
provided
in
this
affidavit,
nor
have
I
been
provided
any
other
inducement
for
the
provision
of
this
information,
such
as
a
reduced
sentence,
deferral
or
dismissal
of
charges,
or
any
other
promised
act
in
my
benefit.
2.
I
first
met
an
individual
known
as
Lawrence
Merlino
in
1972.
Lawrence
Merlino
was
also
known
to
me
and
others
as
Lawrence
"Yogi"
Merlino.
Since
that
time,
I
have
met
with,
and
engaged
in
matters
of
mutual
interest
with
Lawrence
Merlino
on
numer-
ous
occasions.
To
my
knowledge,
Lawrence
Merlino
is
currently
in
a
Pennysylvania
.jail
awaiting
trial.
3.
I
was
a
fully-initiated
member
of
an
Organized
Crime
family
headed
by
an
individual
known
as
Nicodemo
Scarfo.
I
was
ini-
tiated
into
this
organization
in
January
1982.
Furthermore,
I
also
know
that
Lawrence
Merlino
is
a
fully-initiated
member
of
the
Scarfo
Organized
Crime
family.
Lawrence
Merlino
was
initiated
in
the
Scarfo
Organized
Crime
family
in
the
spring
of
1980.
Lawrence
Merlino
was
promoted
to
the
rank
of
captain
in
the
Scarfo
Organized
Crime
family
in
1982.
4.
During
the
approximate
period
1982
through
1986,
Lawrence
Merlino
spoke
with
me
directly
and
personally
on
numerous
oc-
casions
concerning
various
developments
in
certain
business
interests
hem
by
Lawrence
Merlino,
including
the
construction
activities
of
certain
rebar
companies
operating
in
Atlantic
City,
New
Jersey.
Lawrence
Merlino
is
the
father
of
an
individual
known
as
Joseph
Merlino
of
Atlantic
City.
Lawrence
Merlino
informed
me
of
a
rebar
company
operating
in
the
Atlantic
City
area
by
the
name
of
Bayshore
Rebar,
which
was
the
first
mention
of
that
company
I
heard.
5.
With
regard
to
rebar
construction
contracts,
Lawrence
Merlino
informed
me
that
it
was
his
practice
to
obtain
various
rebar
jobs
in
and
around
Atlantic
City
and
to
utilize
Bayshore
to
actually
perform
the
work
and
to
receive
payment
for
the
work.
Lawrence
Merlino
also
informed
me
that
he
shared
the
money
obtained
from
the
Bayshore
Rebar
operations
with
Bayshore.
6.
Lawrence
Merlino
informed
me
that
he
conducted
operations
in
the
above-described
manner
with
Bayshore
because
he,
Lawrence
Merlino,
felt
he
couM
not
operate
in
his
own
name
in
Atlantic
City
due
to
his
reputation
as
a
member
of
Organized
Crime.
Lawrence
Merlino
informed
me
that
he
believed
the
authorities
wouM
never
allow
him
to
operate
directly
with
casinos
and
other
companies
due
to
his
reputation
as
a
member
of
Organized
Crime.
For
this
reason,
Lawrence
Merlino
also
believed
that
he
couM
not
operate
in
the
name
of
his
own
company,
Nat
Nat,
Inc.
For
these
reasons,
Law-
rence
Merlino
tom
me
he
utilized
Bayshore
Rebar.
I
make
this
affidavit
at
the
request
of
the
New
Jersey
Division
of
Gaming
Enforcement,
which
agency
I
understand
has
charged
that
Lawrence
"Yogi"
Mefiino
is
associated
with
Bayshore
Rebar,
Inc.,
and
persons
within
that
company.
It
is
my
testimony
here
that
Lawrence
"Yogi"
Merlino
is
associated
with
Bayshore
Rebar,
Inc.,
as
I
have
set
forth
above
(emphasis
added).
Bayshore
submitted
an
opposing
affidavit
from
Lawrence
Merlino,
which
is
also
set
forth
in
full:
1.
I
have
read
the
affidavit
of
Thomas
Albert
DelGiorno
in
support
of
the
Division
of
Gaming
Enforcement's
application
for
suspension
of
Bayshore
Rebar,
Inc.,
and
make
this
affidavit
in
response
to
the
allegations
contained
within
Mr.
DelGiorno's
affidavit.
2.
In
regard
to
the
allegation
of
Mr.
DelGiorno
that
I
discussed
with
him
a
rebar
company
operating
in
the
Atlantic
City
area
by
the
name
of
Bayshore
Rebar,
Inc.,
I
had
never
discussed
such
company
with
Thomas
DelGiorno.
Further,
I
never
informed
Mr.
DelGiorno
that
it
was
my
practice
to
obtain
various
rebar
jobs
in
and
around
Atlantic
City,
nor
did
I
inform
Mr.
DelGiorno
that
I
actually
utilized
Bayshore
Rebar
to
actually
perform
the
work
and
to
receive
payment
for
the
work.
Also,
I
have
never
received
or
shared
in
any
monies
obtained
by
Bayshore
Rebar
operations
with
Bayshore
or
Joseph
Merlino.
3.
Nor
have
I
ever
informed
Mr.
DelGiorno
that
I
conducted
oper-
ations
using
Bayshore
Rebar
because
I
felt
that
I
could
not
operate
in
my
own
name
due
to
my
reputation.
4.
Those
allegations
of
Mr.
DelGiorno
regarding
Bayshore
Rebar
are
not
true,
and
I
submit
this
affidavit
in
response
to
the
affidavit
of
Mr.
DelGiorno.
I
further
d(savow
and
deny
any
association
with
Bayshore
Rebar,
Inc.,
other
than
that
Joseph
Merlino
is
my
natural
born
child
(emphasis
added).
At
the
recent
trial
in
the
matter
of
United
States
of
America
v.
Nicodemo
Scarfo,
which
resulted
in
the
conviction
of
Lawrence
Merlino,
Salvatore
Merlino,
Phillip
Leonetti
and
Nicodemo
Scarfo
on
various
federal
criminal
charges,
Thomas
DelGiorno
testified
on
behalf
of
the
government
and
was
questioned
concerning
the
above
affidavit.
The
following
excerpt
of
transcript
is
taken
from
the
cross-
examination
of
Thomas
DelGiorno:
Q.
Mr.
DelGiorno,
I
return
to
you
the
affidavit
that
I
asked
you
to
read
yesterday;
did
you
have
an
opportunity
to
read
it
yester-
day
before
we
broke
for
the
day?
A.
Yes.
Q.
I
had
started
to
ask
you
some
questions
with
respect
to
the
procedure
and
the
circumstances
under
which
you
took
this
af-
fidavit.
You
may
be
repeating
some
answers,
but
would
you
please
tell
the
members
of
the
jury,
under
what
circumstances
it
came
about
that
you
were
asked
to
take
this
affidavit
and
how
was
the
affidavit
formulated?
A.
It's
whoever
they
are
from
the
State
of
New
Jersey--
Q.
I'm
sorry.
Could
you
speak
a
little
clearer.
A.
I
said,
whoever
took
this
from
the
State
of
New
Jersey
asked
me
about
Larry's
involved
in
Nat-Nat.
Qo
Well,
let
me
see
if
I
understand
something
and
correct
me
if
I'm
wrong.
Somebody
from
the
State--and
you've
already
told
us
that
you
were
escorted
by
Federal
authorities
to
a
meeting
with
some
people
from
the
State
of
New
Jersey;
is
that
correct?
Correct.
Qo
And
those
people,
whoever
they
are,
was
it
one
person
or
more
than
one
person?
I
think
there
was
more
than
one.
They
interviewed
you
and
asked
you
to
tell
them
what
you
knew
about
Larry,
meaning
Lawrence
Merlino,
correct?
Right.
mo
Involvement
with
a
company
in
Atlantic
City
by
the
name
of
Nat-
Nat,
that
Lawrence
Merlino
had
something
to
do
with;
is
that
correct?
Correct.
Qo
Okay,
and
you
told
them,
I
gather
from
the
answer
that
you
gave
me,
that
you
told
them
information
about
what
you
knew
about
Lawrence
Merlino's
involvement
with
Nat-Nat;
is
that
correct?
A.
Correct.
Did
they
ask
you
any
specific
questions
or
did
they
just
say
tell
us
what
you
know
about
Nat-Nat?
How
did
it
come
about?
What
were
the
questions,
if
you
recall?
I
can't
recall.
Well,
the
affidavit
was
notarized
in
June
of
1988.
I
can
read
it,
...
see,
the
June
25th,
that's
about
three
or
four
months
ago,
is
it
your
testimony
that
you
can't
recall
today
what
you
were
asked
three
or
four
months
ago?
This
looks
like
a
summary
of
it.
It
looks
like
a
summary
of
it?
Yes.
Is
it
signed?
Yes.
Didn't
you
read
it
before
you
signed
it?
Yes.
All
right.
Now,
before
I
ask
you
any
more
questions,
I
want
you
to
read
the
affidavit
to
the
jury.
Why
don't
you
read
it?
There's
a
lot
of
big
words
there
I
can't
pronounce.
Q.
Okay,
fine.
All
right.
I'll
read
it
and
if
I
misstate
anything--I
didn't
mean
to
embarrass
you
but
if
I--
A.
You
didn't
embarrass
me.
It's
just
that
it
will
be
faster
that
way.
[The
affidavit
is
read
into
the
record.]
In
that
affidavit,
and
as
I
understand
by
your
testimony
that
you
read
this
before
you
signed
it;
is
that
correct?
Yes.
Did
you
actually
dictate
the
words
or
was
it
after
a
conversation
that
you
had
with
whoever
from
the
New
Jersey
Division
of
Gaming
Enforcement,
that
they
prepared
the
affidavit
and
brought
it
back
to
you
for
your
signature?
The
prepared
it
and
brought
it
back.
Now,
you
told
us
that--the
members
of
the
jury,
a
few
moments
ago,
in
response
to
one
of
my
questions,
that
they,
whoever
the
representatives
were
from
the
State
of
New
Jersey,
asked
you
about
Nat-Nat;
is
that
correct?
A.
Yes,
yes.
Q.
Well,
this
entire
affidavit
is
about
Bayshore,
isn't
it?
A.
Yes.
Q.
Would
it
surprise
you--now,
did
you
also
understand
from
the
people
from
the
State
of
New
Jersey
who
spoke
with
you,
that
the
reason
they
wanted
this
affidavit
is
so
that
Bayshore
Con-
struction,
Bayshore
Company,
the
company
of
Joseph
Merlino,
the
son
of
Lawrence
Merlino,
could
not
engage
in
casino
con-
struction,
did
they
tell
you
that's
the
reason.
A.
They
said
to
me,
I
explained
to
them
that
Larry
had
this
place
Nat
Nat
and
he
used
other
companies
to
get
work
down
the
shore,
and
that's
all
I
explained
to
them.
Okay.
Q.
Well,
did
they
explain
to
you,
as
paragraph
seven
suggests,
that
the
reason
they
wanted
to
talk
to
you,
I
mean,
this
wasn't
really
a
law
enforcement
agency,
in
that
nature
of
that
word,
that
they
were
investigating
Bayshore--
A.
Excuse
me,
I
thought
they
were
a
law
enforcement
agency.
Q.
Okay.
All
right.
They
were
a
law
enforcement
agency.
I'll
agree
with
you,
that
their
purpose
was
to
get
you
to
take
an
affidavit
that
Lawrence
Merlino
was
somehow
involved
with
Bayshore
and
was
somehow
getting
money
from
Bayshore
so
that
Joseph
Merlino,
the
owner
of
Bayshore,
could
not
engage
in
business
with
casino
industry,
did
they
explain
that
to
you?
A.
No,
they
didn't
explain
it
that
way.
Q.
Did
you
understand
that?
A.
No.
They
didn't
explain
it
to
me
that
way.
Q.
They
didn't
explain
that
to
you.
A.
I
tom
them,
as
far
as
I
knew,
Joseph
Merlino,
Larry
son,
had
nothing
to
do,
except
was
a
worker,
when
I
knew
them.
I
don't
know
what
he
does
now.
Q.
Well,
is
it
the--
A.
That's
what
I
explained
to
them.
Qo
Would
you
agree
that
this
entire
affidavit--
They
came
back
with
this.
--and
your
indication
in
there,
that
you
had
spoken
with
Law-
rence
Merlino
from
1982
through
1986,
leaves
one
who
reads
it
to
believe
that
it
has
to
do
with
Lawrence
Merlino's
involvement
with
Bayshore?
[The
court
rules
on
an
objection.]
Somebody
wrote
the
affidavit
and
you
signed
it?
Yes.
Did
you
make
any
attempt
to
correct
any
of
it?
When
I
gave--
[The
Court
rules
on
another
objection.]
THE
WITNESS:
I
explained
that--again,
I'll
explain
that
I
only
knew
what
Larry
did.
I
had
no
knowledge
of
what
Joseph
Merlino
did.
The
only
thing
I
knew
about
Joseph
Merlino
is
that
he
worked
in
a
company.
When
I
read
this
affidavit,
to
me
it
doesn't
say
that
Joseph
Merlino
did
anything
wrong.
It
says,
that
Larry
was
involved
in
construction
and
that's
what
I
thought
I
was
signing,
Larry.
Joseph
Merlino,
as
far
as
I
know,
worked
in
a
rod
company.
He
was
a
young
kid
and
he
never
did
anything
wrong.
I
don't
know
what
that's
supposed
to
mean.
I
know
what
I
took
it
to
mean.
Well,
did
you
know--did
you
tell
them
that
you
knew
about
Bayshore
from
1982?
No,
I
said
that
he
used
various
companies,
I
said,
one
of
the
companies
he
used
was
a
brother-in-law,
and
ex-brother-in-law
and
I
didn't
remember
the
name.
,4
nd
they
said,
was
it
Bayshore?
I
said,
it
could
be
Bayshore.
I
wasn't
sure.
,4gain,
I
said,
I
did
not
know
what
Joseph
Merlino
did
and
this
doesn't
say
that
Joseph
Merlino
did
anything.
Is
it
your
testimony
then,
that
the
name
Bayshore
Construction
Company
was
a
name
that
was
sort
of
foreign
to
you
and
was
suggested
in
response
to
a
question
from
the
New
Jersey
Division
of
Gaming
Enforcement?
Was
it
the
Bayshore
you
said
it
could
have
been?
I
said,
it
could
have
been,
yes.
And
then
you
signed
the
affidavit
where
it
says,
Bayshore,
doesn't
it?
Yes.
Q.
Well,
did
you
say
to
them,
hey,
I'm
not
sure
it
was
Bayshore?
A.
I
read
this
affidavit
and
to
me
this
affidavit
doesn't
accuse
him
of
anything
only
that
he
was
in
the
Rebar
business,
and
I
don't
even
know
it
was
Rebar.
I
thought
it
was
ironwork
business.
Q.
Whatever
your
thoughts
were
as
to
whether
it
accused
anyone
of
anything,
did
you
believe
that
when
you
signed
the
affidavit,
which
you
took
under
oath,
that
what
was
conveying
in
the
affidavit,
that
you
signed
and
it
was
notarized
in
your
presence,
was
complete-
ly
100
percent
the
truth?
A.
.ds
far
as
I'm
concerned
it
was
the
truth,
yes.
Q.
You
just
said
that
you
didn't
even
know
the
name
Bayshore
until
it
was
suggested
to
you,
didn't
you?
A.
No,
I
didn't
say
that.
I
said
that
he
used
other
companies
and
they
sam
was
one
of
them
Bayshore?
I
said
it
sounds
like
one
of
them,
yes.
Okay.
Again,
I
signed
the
paper,
still--it
still
to
me
doesn't
say
that
he
did
anything
wrong
in
this
paper.
Q.
Okay,
that's
your
feeling.
Would
it
surprise
you
to
know
that
Bayshore,
the
company
in
this
affidavit,
wasn't
incorporated
until
December
of
19857
[Objection
ruled
on
by
the
Court.]
Q.
All
right.
Do
you
know
Bayshore
was
incorporated?
A.
No,
I
don't.
Q.
Do
you
know
whether
or
not
from
the
time
that
you--during
the
period
of
time
that
you
say
that
you
had
occasion
to
speak
with
Lawrence
Merlino,
whether
Bayshore
ever
obtained
a
con-
struction
job
with
the
casino
industry
or
even
more
so,
ever
received
any
funds
from
the
casino
industry?
A.
Bayshore
was
incorporated
when
I
spoke
to
Larry
Merlino.
Larry
Merlino
was
under
me
in
early
'86
and
he
had
to
explain
to
me
what
jobs
he
had
and
how
he
was
getting
them.
So,
Bayshore
was
incorporated
at
the
time
I
was
speaking
to
him.
So,
when
the
guy
said
to
'me,
is
it
Bayshore?
I
said,
it
could
be.
Larry
was
supposedly
reporting
the
job
that
he
was
doing
through
me
in
early
of
'86.
So,
yes,
if
it
was
incorporated
in
'85
then
I
heard
it
in
'85.
I
didn't
know
when
it
was
incorporated.
Q.
But
did
Larry
have
to
report
to
you
when
he
got
money
from
those
jobs
too?
A.
.ds
far
as
he
tom
me,
he
never
got
no
money
from
the
jobs.
Q.
Well,
that's
not
what
you
said
in
the
affidavit?
A.
He
didn't
get
no
money
from
the
jobs
when
I
was--when
he
was
reporting
to
me.
Larry
didn't
give
me
any
money
from
the
jobs.
Qo
Well,
will
you
look
at
paragraph
five
of
this
affidavit,
Mr.
DelGiorno,
just
look
at
it?
Do
you
want
me
to
read
it
to
you
again?
A.
No,
I'm
reading
it.
Does
it
say
in
there
that
Lawrence
Medino--[Objection
ruled
on
by
the
Court.]
[The
Court
admonishes
the
attorneys]
Q.
All
right.
I
apologize,
Mr.
DelGiorno,
but
does
it
take
a
bright
person
to
r6ad
something
and
understand
that
it's
not
100
percent
accurate?
A.
Yes
...
(emphasis
added).
As
indicated,
Lawrence
Merlino
and
the
other
defendants
were
convicted
on
November
19,
1988
of
all
charges
in
the
above
federal
matter.
The
federal
government
was
unwilling
to
release
Thomas
DelGiorno
for
testimony
in
this
matter.
Lawrence
Mefiino
did
not
testify
in
the
federal
criminal
trial.
Based
on
DelGiorno's
testimony
in
the
matter
of
U.S.v.
Nicodemo
Scarfo
et
al.,
I
FIND
as
a
matter
of
fact
that
Thomas
DelGiorno
spoke
to
Lawrence
Merlino
after
December
of
1985
and
was
advised
by
him
that
he
used
various
companies
in
Atlantic
City
to
obtain
construction
jobs.
I
further
find
that
there
is
insufficient
believable
evidence
to
find
that
Lawrence
Merlino
specifically
men-
tioned
Bayshore
Rebar
in
his
conversations
with
DelGiorno
and
also
find
that
there
is
no
evidence
whatsoever
that
Lawrence
Merlino
received
payments
from
Bayshore
or
its
principals.
Bayshore
initially
objected
to
the
admission
of
DelGiorno's
affidavit
on
the
grounds
that
he
was
a
"self-proclaimed
murderer,
perjurer,
drug
dealer,
racketeer
and
all-around
criminal"
(Bayshore's
letter
brief
of
June
30,
1988,
at
1).
Although
that
may
be
an
accurate
statement
of
DelGiorno's
resume,
Bayshore
offered
DelGiorno's
testimony
on
cross-examination
as
set
forth
above.
In
that
testimony,
DelGiorno,
while
unsure
as
to
whether
Lawrence
Merlino
had
specifically
men-
tioned
Bayshore,
did
recall
with
sufficient
clarity
that
Merlino
had
stated
that
he
used
various
construction
companies
to
get
jobs
in
Atlantic
City
and
that
he
spoke
to
Merlino
in
early
1986
after
Bayshore
was
incorporated.
I
therefore
FIND
that
DelGiorno's
state-
ments
on
cross-examination
in
the
Federal
matter
are,
read
together
with
his
affidavit,
sufficiently
credible
to
support
the
above
finding
of
fact.
The
current
president
and
75-percent
owner
of
Bayshore
is
Phyllis
Mistie,
a
former
spouse
of
Lawrence
Merlino.
The
couple
had
five
children,
separated
approximately
14
years
ago
and
is
now
divorced.
Lawrence
Merlino
purchased
the
home
at
15
North
Decatur
Avenue
in
Margate
in
response
to
Phyllis
Mistie's
request
that
he
provide
a
place
for
her
and
the
children
to
live.
She
stated
that
he
sometimes
visited
the
children
at
that
address
and
she
acknowledged
that
Nat
Nat,
Inc.
was
operated
from
the
family
home.
Lawrence
Merlino
also
obtained
work
for
his
eldest
son,
Joseph
Merlino:
first,
fiye
years
ago,
a
summer
job
in
construction
with
Scarf,
Inc.;
and
later,
regular
full-
time
employment
with
Nat
Nat,
Inc.
Ms.
Mistie
also
testified
that
her
daughter
Kimberly
worked
as
a
secretary
for
Nat
Nat
at
the
15
North
Decatur
Avenue
address
and
that
Lawrence
Merlino
trans-
ferred
Nat
Nat's
business
to
that
address
from
28
North
Georgia
Avenue
in
Atlantic
City
after
Kimberly
had
a
child.
Phyllis
Mistie
claimed
that
she
had
a
difficult
time
at
first
living
in
Atlantic
City
with
her
former
husband
and
that
she
was
something
of
a
"nervous
wreck".
She
stated
that
Joseph
Merlino
decided
to
go
into
business
for
himself;
he
incorporated
Bayshore
Rebar,
Inc.,
and
began
to
operate
the
business
out
of
the
15
North
Decatur
address.
She
ac-
knowledges
that
Bayshore
and
Nat
Nat
use
the
same
insurance
agent,
C.$.
Adams,
and
she
conceded
that
Lawrence
Merlino
had
paid
phone
bills
for
the
15
North
Decatur
address,
including
calls
made
for
Bayshore,
on
several
occasions.
Phyllis
Mistie
claims
that
prior
to
July
1986,
she
worked
briefly
as
a
secretary
for
Bayshore
but
held
no
office
or
interest.
Although
Ms.
Mistie
appeared
to
understand
the
nature
of
the
company'g
business
in
a
general
sense,
she
was
uncertain
as
to
details
of
the
work
and
unfamiliar
with
the
scope
of
the
company's
involvement
in
at
least
one
rebar
job
being
done
on
a
bridge.
Ms.
Mistie
also
claims
that
she
had
no
indication
that
Lawrence
Merlino
was
exercising
any
influence
over
Bayshore
or
Joseph
Merlino,
and
stated
that
"...
my
son
wouldn't
listen
to
anything
he
says.
His
son
knows
more
than
his
father."
Joseph
Merlino
concedes
that
his
father
did
get
him
a
summer
and
weekend
job
five
years
ago
with
Scarf,
Inc.,
which
is
owned
and
operated
by
the
nephew
of
Nicodemo
Scarfo,
Phillip
Leonetti.
Joseph
Merlino
also
admits
that
he
later
worked
for
Nat
Nat,
Inc.,
which
was
operated
by
his
father
and
formerly
by
his
uncle,
Salvatore
Merlino,
who
is
reputed
to
be
the
underboss
of
the
Scarfo
crime
family.
In
the
course
of
working
for
Nat
Nat,
Joseph
Merlino
met
Nat
Nat
foreman
Rocco
Bunodono
and
Nat
Nat's
bookkeeper,
Joseph
Golatto,
and
both
of
these
men
later
provided
professional
services
to
Bayshore.
Eve4n'
after
Bayshore
had
been
established
in
December
1985,
Joseph
Meflino
continued
to
receive
payments
from
Nat
Nat.
On
or
about
March
10,
1986,
he
received
a
$15,000
check
from
Lawrence
Merlino,
president
of
Nat
Nat,
which
check
was
characterized
as
a
1985
bonus
check.
In
1984,
he
had
also
received
another
bonus
approximately
$37,000
from
his
father
for
work
per-
formed
for
Nat
Nat.
In
March
1986,
Joseph
Merlino
purchased
a
condominium
in
Margate
from
Lawrence
Merlino,
a
condominium
which
Nat
Nat
had
previously
purchased
from
Scarf,
Inc.
Joseph
Merlino
discussed
this
purchase
with
his
father
and
claims
that
he
sought
to
acquire
the
condominium
for
investment
and
tax
shelter
purposes.
There
is
no
evidence
that
this
condominium
played
any
part
in
the
operation
of
Bayshore
or
that
the
purchase
of
the
property
was
in
any
way
improper
or
irregular.
There
is
also
no
evidence
of
any
further
bonuses
paid
to
Joseph
Merlino
from
Lawrence
Merlino
and
Nat
Nat
subsequent
to
1986.
Joseph
Merlino
also
claimed,
and
the
Division
did
not
dispute,
that
some
of
the
bonus
monies
were
used
by
him
to
repay
existing
loans
from
Nat
Nat,
and
that
part
of
the
1986
bonus
was
applied
to
the
down
payment
for
the
condominium.
After
leaving
employment
with
Nat
Nat
in
1985,
Joseph
Merlino
worked
as
a
general
foreman
in
construction
with
the
United
Carpenters
of
Glenside,
Pennsylvania,
and
later
for
G&H
Steel
and
M&M
Construction.
Bayshore
Rebar,
Inc.,
of
New
Jersey
was
incorporated
on
Decem-
ber
13,
1985,
listing
Joseph
N.
Merlino
as
incorporator
and
director,
and
it
was
located
at
15
North
Decatur
Avenue
in
Margate.
Joseph
Merlino's
sister
Kimberly
also
worked
for
Bayshore
when
the
com-
pany
was
located
at
15
North
Decatur
Avenue.
Since
that
time,
the
company,
as
well
as
the
family,
has
moved
to
a
Ventnor
address
which
was
purchased
by
Joseph
Merlino
and
in
which
Lawrence
Merlino
has
no
proven
financial
interest.
Joseph
Merlino
is
also
no
longer
president
of
the
company
but
continues
to
serve
as
vice-president
and
part
owner.
He
claims
that
this
change
was
necessary
to
enable
him
to
receive
his
journeyman
papers.
At
the
time
of
hearing,
Phyllis
Mistie
was
functioning
as
Bayshore's
president.
Rocco
Bunodono,
formerly
a
foreman
for
Nat
Nat
and
a
long-time
friend
of
Lawrence
Merlino,
has
been
Bayshore's
foreman
since
March
1986
and
has
played
an
instrumental
role
in
the
company,
including
filing
an
appli-
cation
for
a
construction
contractor's
license
on
its
behalf
in
Septem-
ber
1986
after
Joseph
Merlino's
application
had
been
rejected
because
of
his
comparatively
tender
age.
Joseph
Merlino
testified
and
confirmed
his
mother's
account
of
the
origins
and
operation
of
Bayshore,
as
well
as
his
prior
experience
with
Scarf,
Inc.,
and
Nat
Nat,
Inc.
Neither
Phyllis
Mistie
nor
Joseph
Merlino
contest
the
factual
allegations
set
forth
in
the
Division's
complaint
of
January
6,
1987,
although
they
claim,
and
the
Division
does
not
dispute,
that
Bayshore
has
since
moved
its
operations
and
changed
its
officers,
as
discussed
above.
In
a
statement
given
to
the
Division
on
November
20,
1986,
Joseph
Merlino
acknowledged
that
he
had
occasionally
consulted
with
Lawrence
Merlino
as
to
Bayshore
matters
and,
in
particular,
had
asked
him
whether
a
contractor
named
Feriozzi,
with
whom
Bayshore
was
doing
business,
was
a
"nice
guy"
who
"pays
his
bills"
and
is
"a
good
payer."
Joseph
Merlino
denies
that
Lawrence
Merlino
has
gotten
any
jobs
for
Bayshore
and
the
Division
offers
no
direct
evidence
proving
otherwise,
with
the
excep-
tion
of
the
above
testimony
of
Thomas
DelGiorno.
Phyllis
Mistie
further
denied
that
the
company
had
received
any
loans
from
Lawrence
Merlino
or
made
any
payments
to
him.
She
stated
that
the
family
moved
some
eight
months
ago
to
a
house
in
Ventnor
which
Joseph
Merlino
purchased
and
from
which
Bayshore
now
operates.
Nat
Nat
continues
to
operate
from
the
15
North
Deca-
tur
address
and
Kimberly
Metlino
is
still
employed
in
that
business.
Ms.
Mistie
testified
that
she
became
president
and
75
percent
owner
of
Bayshore
approximately
six
months
before
the
hearing
in
this
matter
because
Joseph
Merlino
wanted
to
qualify
as
a
journeyman
and
felt
that
he
was
precluded
from
doing
this
while
serving
as
president.
She
stated
that
he
was
still
serving
as
vice-president,
as
of
the
hearing.
She
also
claimed
that
an
additional
motive
for
her
assum-
ing
the
presidency
of
Bayshore
was
to
qualify
the
company
for
mi-
nority
work
under
affirmative
action
guidelines.
An
insurance
agent
for
C.J.
Adams,
Deborah
Wehran,
who
handled
insurahce
for
both
Bayshore
and
Nat
Nat,
testified
that
she
had
discussed
Nat
Nat
with
Phyllis
Mistie
whenever
her
daughter
was
absent
or
otherwise
un-
available
and
noted
that
Phyllis
was
listed
as
a
contact
for
Nat
Nat.
She
also
claimed
that
Phyllis
Mistie
had
explained
that
she
was
not
employed
by
or
part
of
Nat
Nat.
Neither
Phyllis
Mistie
nor
Joseph
Merlino
disputes
the
allega-
tions
made
by
the
Division
in
its
complaint.
Joseph
Merlino
denied
that
the
name
Bayshore
Rebar,
Inc.,
which
had
previously
been
used
by
his
father
to
incorporate
a
Florida
company,
was
adopted
at
Lawrence
Merlino's
suggestion.
One
of
the
first
construction
jobs
obtained
by
Bayshore
was
from
cement
contractor
Joseph
Feriozzi,
who
was
involved
in
construction
of
a
parking
garage
at
Resorts
International
Hotel
and
Casino
in
1986.
Ferriozzi
was
one
of
the
two
big
contractors
in
Atlantic
City
at
the
time.
Bunodono
was
working
on
the
job,
which
was
being
performed
by
C.J.S.
Co.,
a
structural
construction
firm.
Because
C.J.S.
was
not
a
rebar
company
and
consequently
was
having
some
difficulties
ade-
quately
manning
the
job,
Feriozzi
was
unhappy
with
its
performance
on
the
job.
Joseph
Merlino
claims
that
he
became
aware
of
C.J.S.'s
problems
on
the
job
through
Feriozzi's
complaints
to
a
"street
man,"
who
was
responsible
for
recruiting
workers
on
construction
projects.
Joseph
Merlino
asked
Feriozzi
if
Bayshore
could
take
over
the
job.
Rocco
Bunodono
was
present
when
this
request
was
made.
Feriozzi
agreed
and
Merlino
asked
Bunodono,
whom
he
had
known
from
working
with
Nat
Nat,
Inc.,
to
serve
as
foreman
on
the
completion
of
the
Resorts
parking
garage.
Feriozzi
agreed
to
pay
Bayshore
on
a
hi-monthly
basis,
which
was
a
somewhat
usual
arrangement
but
Feriozzi
consented
because
Bayshore
was
a
relatively
new
company.
Bayshore
offered
a
certification
from
Feriozzi,
who
also
testified,
which
stated
the
following:
8.
Bayshore
Rebar
has
been
the
low
bidder
on
a
number
of
projects
including
Bally's
Park
Place
and
the
Tropicana
Hotel
and
has
done
sub-contracting
work
on
these
projects
for
L.
Feriozzi
Con-
crete.
Additionally,
Bayshore
Rebar
has
subcontracted
at
Resorts
International
Garage
after
the
default
of
another
contractor.
9.
The
hard
work,
diligence
and
quality
of
work
exhibited
by
Joseph
Merlino
and
Bayshore
Rebar
is
exceptional.
10.
I
have
found,
through
my
dealings
with
Bayshore
Rebar,
that
Joseph
Merlino
is
a
dedicated
and
sincere
individual.
He
is
a
person
of
good
character,
honesty
and
integrity.
11.
I
have
no
perception
or
belief
that
respondent,
Bayshore
Rebar,
or
its
President,
Joseph
Merlino,
is
in
any
way
involved
or
as-
sociated
with
organized
crime
activity
or
Lawrence
Merlino.
12.
Furthermore,
I
have
no
perception
that
respondent,
Bayshore
Rebar,
or
its
President,
Joseph
Merlino,
is
a
"front"
for
or-
ganized
criminal
activity
or
Lawrence
Merlino.
Feriozzi
also
certified
that
he
has
not
been
the
subject
of
any
charges,
indictments
or
accusations
in
his
forty
years
of
doing
construction
business
in
Atlantic
City.
Nat
Nat
had
been
previously
employed
by
Feriozzi
on
a
variety
of
casino
jobs.
This
working
relationship
was
interrupted
in
1979
when
Lawrence
Merlino
was
accused,
along
with
Leonetti
and
Scarfo,
of
murdering
a
cement
contractor
named
Vincent
Falcone.
Upon
learning
of
the
murder
charges
against
Lawrence
Merlino,
Feriozzi
stated
that
he
was
a
"sick
pup,"
and
did
not
know
what
to
do
or
what
he
had
gotten
himself
into;
Merlino,
Scarfo
and
Leonetti
were
later
acquitted
of
the
charge
and
Nat
Nat
subsequently
performed
more
work
for
Feriozzi.
In
1986,
when
Joseph
Merlino
asked
if
he
could
take
over
the
C.J.S.
job
at
the
Resorts
parking
garage,
Feriozzi
asked
him
if
Lawrence
Merlino
was
his
father.
Fer-
riozzi
testified
that
he
felt
concerned
that
Lawrence
Merlino
might
become
involved.
Feriozzi
also
expressed
to
Joseph
Merlino
his
desire
that
he
not
have
anything
to
do
with
Nat
Nat,
but
later
became
confident
that
Joseph
was
working
on
his
own.
Feriozzi
denies
having
been
contacted
by
Lawrence
Merlino,
or
anyone
else
other
then
Joseph
Merlino,
concerning
Bayshore's
request
for
work.
Rocco
Bunodono's
presence
as
foreman
also
gave
confidence
to
Feriozzi,
because
of
Bunodono's
reputation
as
an
effective
foreman
who
knew
how
to
get
a
job
done.
After
agreeing
to
work
as
foreman
on
the
Feriozzi
job,
Bunodono
also
assisted
Joseph
Merlino
by
completing
an
application
for
a
construction
contractor's
license
on
September
11,
1986,
and
listing
himself
as
the
company's
superintendent.
Joseph
Merlino
had
previously
applied
but
had
been
rejected
because
of
his
age
and
relative
inexperience.
Joseph
Merlino
denies
having
asked
his
father
for
any
help
in
obtaining
work
with
Feriozzi
at
the
Resorts
garage
job
or
at
any
other
location,
but
acknowledges
that
he
asked
Lawrence
Merlino
who
Feriozzi
was
and
that
he
wanted
to
know
if
he
was
reliable
with
payments.
Rocco
Bunodono
testified
that
his
function
as
foreman
for
Bayshore
is
to
"see
that
the
job
runs
smooth"
and
indicates
that
he
has
known
Joseph
Merlino
since
the
latter
was
a
small
child.
Bunodono
has
also
known
Lawrence
Merlino
for
over
twenty
years:
they
grew
up
in
the
same
neighborhood,
and
Merlino
was
the
best
man
at
his
wedding.
He
claims
that
he
saw
little
of
Lawrence
Merlino
for
some
ten
years
after
he
left
Philadelphia
and
before
Lawrence
Merlino
became
active
in
construction
in
Atlantic
City.
When
they
renewed
their
acquaintance,
Bunodono
worked
as
foreman
for
Nat
Nat
for
at
least
six
months
while
completing
a
rebar
job
on
the
Ocean
Club,
and
thereafter
worked
with
G
&
H
Construction,
as
well
as
with
M
&
M
Construction,
a
minority
contractor.
Lawrence
Merlino,
as
president
ol
Nat
Nat,
visited
G
&
H
job
sites
on
occasion
to
talk
to
his
son
and
a
nephew
employed
by
that
company.
The
Division
offered
surveillance
photographs
taken
by
lieutenant
Edward
Hep-
burn
of
the
Atlantic
City
Prosecutor's
Office
showing
Lawrence
Merlino
and
Rocco
Bunodono
together
at
various
construction
sites
including
the
Taj
Mahal
Casino
project.
Lieutenant
Hepburn
testified
that
he
conducted
surveillance
after
receiving
a
report
that
the
M
&
M
Company
(allegedly
a
minority
outfit)
was
actually
being
run
by
Lawrence
Merlino.
The
photos
were
taken
in
April
1985
and
show
Lawrence
Merlino
and
Rocco
Bunodono
on
the
construction
site.
The
photographs
also
show
Lawrence
Merlino
on
the
steel
at
a
hotel/
casino.
Lieutenant
Hepburn
had
no
knowledge
as
to
any
involvement
of
Joseph
Merlino
in
his
father's
reputed
criminal
affiliations
with
the
Scarfo
crime
family.
Bunodono
denies
that
Lawrence
Merlino
visited
him
at
job
sites,
other
than
those
involving
Nat
Nat.
He
concedes
that
Lawrence
Merlino
visited
him
when
he
was
working
for
M
&
M,
but
states
that
he
has
never
seen
Lawrence
Merlino
on
a
job
with
Bayshore
and
that
he
has
no
knowledge
of
any
contact
between
him
and
his
son's
company.
The
Division
also
offered
copies
of
a
mortgage
and
residential
loan
application
in
connection
with
the
purchase
of
the
Ventnor
property
from
which
Bayshore
now
does
business,
which
states
that
Joseph
Merlino
was
married
at
the
time
of
application
in
1987.
This
was
not
the
case.
Joseph
Merlino
denies
having
made
such
a
represen-
tation
in
connection
with
the
mortgage
application,
but
concedes
that
he
signed
the
loan
application
forms
containing
the
false
statement.
There
is
no
dispute
as
to
the
above
facts,
except
as
indicated,
and
I
so
FIND.
ISSUES
The
issues
to
be
resolved
are:
(1)
whether
the
Division
of
Gaming
Enforcement
has
proven
by
a
preponderance
of
the
believable
evidence
that
Bayshore
is
as-
sociated
with
a
career
offender
or
a
career
offender
cartel
in
such
a
manner
as
to
create
a
reasonable
belief
that
the
association
is
of
such
a
nature
as
to
be
inimical
to
the
policy
of
the
casino
control
act
in
the
gaming
operations
within
the
meaning
of
N.J.S.A.
5:12-86f
so
as
to
disqualify
Bayshore
from
holding
a
vendor
registration
or
casino
service
industry
license;
(2)
whether
Bayshore
Rebar,
Inc.,
has
established
its
eligibility
by
clear
and
convincing
evidence
for
a
casino
service
industry
license
pursuant
to
N.J.A.C.
19:41-3.2(a)2,
including
the
requirement
that
it
establish
its
reputation
of
good
character,
honesty
and
integrity
pursuant
to
N.J.A.C.
19:43-1.3(c),
and
that
of
its
officers
pursuant
to
N.J.A.C.
19:43-1.14.
DISCUSSION
AND
CONCLUSIONS
(1)
N.J.S.A.
5:12-86f
(Inimical
Association)
The
state
of
New
Jersey
extends
strict
regulation
through
the
Casino
Control
Act
to
all
persons,
locations,
practices
and
associa-
tions
related
to
the
operation
of
licensed
casino
enterprises
and
to
all
related
service
industries.
See,
N.J.S.A.
5:12-1b(6).
The
legislative
findings
underlying
the
Act
also
provide
that:
[1legalized
casino
gambling
in
New
Jersey
can
attain,
maintain
and
retain
integrity,
public
confidence
and
trust,
and
remain
compatible
with
the
general
public
interest
only
under
such
a
system
of
control
and
regulation
as
insures,
so
far
as
practicable,
the
exclusion
from
participation
therein
of
persons
with
known
criminal
records,
habits
or
associations
...
N.J.S.A.
5:12-1b(7).
Moreover,
participation
in
casino
operations
is
deemed
to
be
a
revo-
cable
privilege
conditioned
upon
the
proper
and
continued
qualifi-
cation
of
individual
licensees
or
registrants.
The
New
Jersey
Legis-
lature
also
declared
that:
[s]ince
casino
operations
are
especially
sensitive
and
in
need
of
public
control
and
supervision,
and
since
it
is
vital
to
the
interests
of
the
State
to
prevent
entry,
directly
or
indirectly,
into
such
operations
or
the
ancillary
industries
regulated
by
this
act
of
persons
who
have
pursued
economic
gains
in
an
occupational
manner
or
context
which
are
in
violation
of
the
criminal
or
civil
public
policies
of
this
State,
the
regulatory
and
invesfigatory
powers
and
duties
shall
be
exercised
to
the
fullest
extent
consistent
with
the
law
to
avoid
entry
of
such
persons
into
the
casino
operations
or
the
ancillary
industries
regu-
lated
by
this
act
...
N.J.S.A.
5:12-1b(9).
This
paramount
concern
with
sealing
off,
to
the
extent
possible,
the
casino
industry
and
the
vital
service
industries
that
serve
it
from
infiltration
and
domination
by
organized
crime
is
effectuated
by
the
criteria
established
for
disqualification
of
applicants
seeking
casino
licenses:
The
Commission
shall
deny
a
casino
license
to
any
applicant
who
is
disqualified
on
the
basis
of
any
of
the
following
criteria
...
f.
The
identt]7cation
of
the
applicant
or
any
person
who
is
required
to
be
qualed
under
this
act
as
a
condition
of
a
casino
license
as
a
career
offender
or
a
member
of
a
career
offender
cartel
or
an
as-
sociate
of
a
career
offender
or
career
offender
cartel
in
such
a
manner
which
creates
a
reasonable
belief
that
the
association
is
of
such
a
nature
as
to
be
inimical
to
the
policy
of
this
act
and
to
gaming
operations.
For
purposes
of
this
section,
career
offender
shall
be
defined
as
any
person
whose
behavior
is
pursued
in
an
occupational
manner
or
context
for
the
purpose
of
economic
gain,
utilizing
such
methods
as
are
deemed
criminal
violations
of
the
public
policy
of
this
State.
A
career
offender
cartel
shall
be
defined
as
any
group
of
persons
who
operate
together
as
career
offenders;
N.J.S.A.
5:12-86f
[emphasis
added].
The
Casino
Control
Commission
has
defined
the
phrase
"inimical
to
the
interest
of
the
State
of
New
Jersey
or
of
licensed
gaming"
to
mean
"adverse
to
the
public
confidence
and
trust
in
credibility,
integrity
and
stability
of
casino
gaming
operations
and
in
the
strict
regulatory
process
created
by
the
Casino
Control
Act."
N.J.A.C.
19:48-1.1.
At
issue
here
is
whether
the
Division
has
proved
that
Bayshore
Rebar
or
its
officers
are
associated
with
a
career
offender
or
career
offender
cartel
in
such
a
manner
as
to
create
a
reasonable
belief
that
the
association
is
of
such
a
nature
as
to
be
inimical
to
the
policy
of
the
Act
and
to
gaming
operations
and
thereby
is
disqualified.
The
above
provision
concerning
inimical
associations
was
considered
by
the
Appellate
Division
of
the
Superior
Court
of
New
Jersey
in
a
1985
case
where
a
number
of
members
of
a
union
in
Atlantic
City
were
found
to
be
inimically
associated
with
Nicodemo
Scarfo,
within
the
meaning
of
the
act.
See,
In
the
Matter
of
the
Hotel
and
Restaurant
Employees
and
Bartenders
International
Union
Local
54,
203
N.J.
Super.
297
(App.
Div.
1985),
certif.
denied
102
N.J.
352
(1985),
cert.
denied
475
U.S.
1085
(1986).
In
the
Local
54
case,
the
Appellate
Division
upheld
the
Commission's
finding
of
disqualification
under
N.J.S.A.
5:12-86f,
where
the
Division
had
produced
evidence
illustrat-
ing
the
association
between
union
employees
and
Scarfo.
That
evidence
consisted
of.'
(1)
a
telephone
list
seized
from
Scarfo
after
his
arrest
for
the
murder
of
Vincent
Falcone
which
contained
names
and
addresses
of
several
Local
54
employees,
some
listed
in
code;
(2)
a
note
found
in
Scarfo's
dresser
drawer
on
the
same
occasion
indicating
Scarfo's
interests
in
the
activities
and
control
of
Local
54;
(3)
the
fact
that
the
bail
of
Scarfo,
Leonetti
and
Lawrence
Merlino
in
the
Vincent
Falcon?
murder
matter
was
paid
by
union
em-
ployees
and
their
relatives;
(4)
the
fact
that
one
of
the
union
employees
put
his
house
up
as
property
bail
in
connection
with
those
arrests;
(5)
the
immunized
testimony
of
Joseph
Salerno
in
the
trial
of
Scarfo,
Leonetti
and
Lawrence
Merlino
for
the
murder
of
concrete
con-
tractor
Vincent
Falcone
as
to
the
fact
that
Salerno
had
overheard
Scarfo
say
that
he
had
control
of
unions
and
had
obtained
union
positions
for
certain
persons.
Salerno's
testimony
did
not
refer
to
any
conversations
between
Scarfo
and
union
employees
which
specifically
referred
to
Local
54
by
name;
(6)
evidence
of
connections
between
Local
54
business
dealings
and
persons
or
firms
tied
to
Scarfo
(e.g.,
the
same
insurance
broker
and
real
estate
agent;
the
hiring
by
Local
54
of
a
firm
that
had
put
up
bail
for
Scarfo,
Leonetti
and
Lawrence
Merlino;
use
of
the
same
car
rental
company).
See,
203
N.J.
Super.
at
310
to
316.
The
Appellate
Division
rejected
the
argument
that
the
Division
had
failed
to
prove
the
exertion
of
any
actual
influence
over
union
affairs
by
Scarfo
and
found
that
ample
circumstantial
evidence
of
such
in-
fluence
had
been
introduced
to
support
the
conclusion
that
the
as-
sociation
was
inimical
and
thus
disqualifying.
203
N.J.
Super.
at
321.
The
New
Jersey
Supreme
Court
has
also
affirmed
that
the
Com-
mission
may
act
to
prevent
possible
inimical
influences
on
licensees
or
applicants
and
need
not
wait
until
such
influence
is
exerted.
See,
In
re
Application
of
Boardwalk
Regency,
90
N.J.
361,372
(1982).
The
Appellate
Division
also
went
on
to
reject
the
First
Amendment
free-
dom
of
association
claim
made
by
the
Iocal
54
employees
and
upheld
the
"inimical"
criterion
against
the
charge
that
it
was
void
for
vagu?-
ll?SS.
The
Local
54
case
did
not
involve
family
relationships
between
licensees
and
career
offenders.
That
issue
was
dealt
with
by
the
Ap-
pellate
Division
in
the
racing
case
of
Niglio
v.
New
Jersey
Racing
Commission,
158
N.J.
Super.
182
(App.
Div.
1978).
In
Niglio,
the
Appellate
Division
upheld
a
decision
by
the
Racing
Commission
suspending
the
racing
license
of
a
person
married
to
another
person
who
was
disqualified
from
participating
in
racing
because
of
criminal
connections.
Because
of
evidence
submitted
of
the
spouse's
extensive
association
with
the
person
disqualified,
as
well
as
of
her
financial
dependence,
the
disqualification
was
based
on
the
association
and
financial
dependence,
not
on
the
fact
of
marriage.
158
N.J.
Super.
at
186.
Another
case
dealing
with
family
ties
is
D'Ascenso
v.
Division
of
Gaming
Enforcement,
2
N.J.A.R.
92
(1980),
by
the
Honorable
Joseph
Fidler,
ALJ,
in
which
he
concluded
that
a
cocktail
waitress
licensed
by
the
Commission
was
not
disqualified
under
N.J.S.A.
5:12-86f
by
her
father's
status
as
a
career
offender,
because
she
had
had
only
infrequent
and
insignificant
contacts
with
him
since
her
childhood.
Given
the
nature
of
her
cocktail
waitress
function
at
the
casino,
this
minimal
association
was
seen
to
pose
no
appreciable
threat
to
the
proper
functioning
of
legalized
gambling.
D'Ascenso's
relationship
with
a
live-in
boyfriend
who
was
also
engaged
in
criminal
activities
was
found
to
present
no
bar
to
her
licensure
and
in
light
of
the
fact
that
the
boyfriend
did
not
exercise
any
significant
influence
or
control
over
her
and,
to
[he
contrary,
as
it
appeared
that
she
had
some
beneficial
and
restraining
effect
on
him,
as
occasionally
happens
in
these
matters.
2
N.J.A.R.
at
95.
There
is
no
evidence
of
such
a
beneficial
effect
on
Lawrence
Merlino.
The
Division
argues
in
this
case
that
it
has
shown
an
inimical
association
with
Lawrence
Mefiino
sufficient
to
disqualify
Bayshore
and
its
principals.
In
particular,
the
Division
asserts
that
the
affidavit
and
testimony
of
Thomas
DelGiorno's
provides
direct
(albeit
hearsay)
evidence
of
Merlino's
intention
to
use
Bayshore
to
get
construction
business
in
Atlantic
City.
The
Division
argues
that
DelGiorno's
state-
ments
are
credible,
despite
his
background
in
crime,
a
background
which
rivals
and
probably
exceeds
that
of
Lawrence
Merlino.
it
notes
that
no
promises
were
made
to
DelGiorno
in
exchange
or
as
a
con-
dition
for
his
testimony.
Apart
from
DelGiorno's
statements
as
to
Lawrence
Merlino's
involvement,
the
Division
conceded
that
there
was
"no
smoking
gun,"
to
use
a
phrase
that
DAG
Steven
Cirillo
borrowed
from
another
context,
but
it
argued
that
there
is
an
accumulation
of
factors
(as
in
the
Local
54
case)
adding
up
to
an
inimical
association
of
a
non-
familial
nature.
The
Division
first
notes
that
Lawrence
Merlino
has
long
been
associated
with
the
rebar
field
and
has
owned
and
worked
with
several
companies,
including
Nat
Nat
and
the
Floridian
version
of
Bayshore
Rebar,
Inc.
It
notds
that
Lawrence
'Merlino's
interests
in
the
New
Jersey
Bayshore
is
a
natural
extension
of
his
prior
activities
and
argues
that
he
has
been
seen
on
various
construction
sites
visiting
Rocco
Bunodono,
who
is
foreman
and
superintendent
for
Bayshore
and
who
was
formerly
a
foreman
with
Nat
Nat,
as
well
as
a
personal
friend
of
Lawrence
Merlino
for
many
years.
The
Division
notes
that
Bayshore
initially
operated
rent-free
from
a
home
located
at
15
North
Decatur
Avenue
in
Margate,
which
home
was
owned
by
Lawrence
Merlino
and
out
of
which
Nat
Nat
also
operated
and
continues
to
operate.
The
Division
notes
that
the
family
phone
and
utility
bill
for
the
15
Decatur
Avenue
address
were
occasionally
paid
by
Lawrence
Merlino.
The
Division
also
emphasizes
the
business
dealings
between
Joseph
Merlino
and
Lawrence
Merlino,
including
the
purchase
of
a
condominium
formerly
owned
by
Nat
Nat
and
Scarf,
Inc.,
which
purchase
was
partly
made
possible
through
bonuses
provided
by
Merlino
and
Nat
Nat.
The
Division
also
notes
that
Bayshore,
in
addition
to
adopting
the
same
name
used
by
Lawrence
Merlino
for
another
company,
relied
on
the
same
insurance
agency,
C.
J.
Adams,
and
also
utilized
the
services
of
the
same
bookkeeper
and
foreman,
who
had
previously
worked
for
Nat
Nat.
The
Division
cites
evidence
that
Phyllis
Mistie
Merlino
was,
on
some
occasions,
involved
in
the
business
dealings
of
Nat
Nat
while
living
at
the
15
North
Decatur
address.
Also
noted
is
the
fact
that
Joseph
Merlino's
sister
Kimberly
runs
the
operations
of
Nat
Nat
during
her
father's
incarceration.
The
Division
argues
that
the
relocation
of
the
Merlino
family
does
not
negate
the
various
connections
between
Bayshore
and
Lawrence
Merlino
and
Nat
Nat
in
that
the
inimical
association
between
Bayshore
and
Lawrence
Merlino
has
not
been
severed,
although
it
may
have
been
better
hidden
and
disguised.
Considering
DelGiorno's
affidavit
as
well
as
and
all
of
the
circumstantial
evidence,
the
Division
contends
that
it
has
met
the
standard
set
forth
in
N.J.S.A.
5:12-86f
for
disqualification
of
Bayshore.
Counsel
for
respondents,
Francis
Hartman,
Esq.,
sees
the
Division's
case
as
not
only
lacking
a
smoking
gun
but
also
consisting
largely
of
smoke.
He
argues
that
the
State
has,
on
the
most
tenuous
of
factual
allegations,
sought
to
darkly
cloud
the
blood
relationship
between
Joseph
Merlino
and
his
father
and
imply
an
inimical
business
association
between
them
which
has
no
basis
in
fact.
Counsel
for
respondent
argues,
first
(and
the
Division
does
not
dispute),
that
the
State
has
shown
no
de
jure
relationship
between
Bayshore
and
Law-
rence
Merlino
in
that
the
latter
holds
no
stock
or
office
in
and
has
not
received
any
payments
from
Bayshore.
As
to
the
rest
of
the
underlying
de
facto
aspects
of
the
Division's
evidence;
respondent
admits
that
Joseph
Merlino
worked
briefly
as
a
laborer
for
Scarf
Inc.,
when
he
was
16
and
argues
that
he
had
no
further
connection
with
that
company.
As
to
Joseph
Merlino's
later
job
with
Nat
Nat,
respon-
dent
claims
that
there
is
nothing
unusual
about
son
working
for
his
father
and
that
the
sins
of
the
father
should
not
fall
upon
his
children.
It
is
also
not
unusual,
respondent
argues,
for
a
person
to
start
a
business
from
his
or
her
home,
as
Joseph
Merlino
did
at
15
North
Decatur
Avenue.
Respondent
notes
that
Lawrence
Merlino
did
not
at
any
time
live
in
the
home,
and
that
the
fact
that
he
may
have
occasionally
paid
for
the
phone
and
utility
bills
is
only
incidental
to
the
fact
that
his
family
and
former
spouse
lived
in
the
home
and
he
chose
to
shoulder
some
of
their
financial
obligations.
Respondent
notes
that
Nat
Nat
was
not
originally
located
at
15
North
Decatur,
but
operated
out
of
28
North
Georgia
Avenue
in
Atlantic
City
and
was
moved
to
the
Margate
address
only
for
the
convenience
of
Kimberly
Merlino,
who
was
one
of
its
principal
employees.
As
to
Phyllis
Mistie
Merlino,
respondent
notes
that
she
had
only
minimal
involvement
in
the
affairs
of
Nat
Nat
and
does
not
have
an
amicable
relationship
with
Lawrence
Merlino.
Concerning
Joseph
Merlino's
efforts
to
get
casino
work,
respondent
argues
that
there
is
no
evidence
that
Lawrence
Merlino
at
any
time
did
anything
to
get
work
for
Bayshore.
It
characterizes
Joseph
Merlino's
efforts
to
establish
a
business
as
the
product
of
a
young
man's
desire
to
succeed
on
his
own
and
describes
the
opportunity
to
do
so
given
by
Joseph
Feriozzi
as
a
legitimate
business
transaction
in
which
Feriozzi
decided
to
give
the
young
man
a
chance.
Respondent
also
notes,
and
the
Division
does
not
dispute,
that,
beyond
the
criminal
charges
that
are
not
dealt
with
in
this
decision,
no
criminal
charges
have
ever
been
brought
against
Joseph
Merlino.
Joseph
Merlino's
purchase
of
property
from
Nat
Nat,
respondent
argues,
an
arm's-length
financial
transaction
which
was
in
no
way
unlawful
or
improper,
and
which
played
no
role
in
the
operation
of
Bayshore's
business.
Respondent
also
raises
and
dismisses
the
possibility
that
Joseph
Merlino
was
given
bonuses
and
allowed
to
purchase
property
in
order
to
shield
money
belonging
to
Lawrence
Merlino
or
Nat
Nat
from
possible
forfeiture
under
RICO,
the
federal
law
pertaining
to
racketeer-influenced
corrupt
organiza-
tions.
Counsel
for
respondent
also
deems
DelGiorno's
affidavit
as
unworthy
of
belief
and
argues
that
it
is
further
weakened
by
DelGiorno's
statements
on
cross-examination
in
the
matter
of
United
States
v.
Scarfo,
et
al.
As
to
DelGiorno's
statements,
I
note
that
hearsay
is
admissible
in
this
proceeding
and
may
provide
the
residuum
of
proof
required.
See,
N.J.S.A.
5:12-107a(6);
State
v.
Merlino,
infra.
DelGiorno's
af-
fidavit,
as
clarified
by
his
testimony,
is
credible.
Similiar
immunized
testimony
was
found
to
constitute
part
of
the
inimical
association
in
the
Local
54
case
discussed
above.
Although
DelGiorno's
testimony
in
this
case
was
uncertain
as
to
whether
Bayshore
was
specifically
mentioned
by
Lawrence
Merlino,
Salerno's
testimony
in
the
Local
54
case
also
did
not
contain
any
recollection
of
a
specific
reference
to
Local
54
by
name.
See,
203
N.J.
Super.
at
318.
Beyond
DelGiorno's
statements,
there
is
ample
evidence
of
as-
sociation
between
Lawrence
Merlino
and
Bayshore
Rebar,
Inc.,
and
its
officers
and
foreman.
Bayshore
was
formed
shortly
after
a
com-
pany
of
the
same
name
owned
by
Lawrence
Merlino
was
dissolved
in
Florida,
and
this
similarity
of
names
is
more
symbolic
than
coin-
cidental
given
the
rest
of
the
connections.
Joseph
Merlino,
who
was
Bayshore's
initial
president
and
owner,
cut
his
teeth
in
the
construc-
tion
business
with
Scarf,
Inc.,
which
has
ties
to
Nicodemo
Scarfo
through
its
owner
Phillip
Leonetti,
and
he
later
worked
at
his
father's
side
at
Nat
Nat,
Inc.
While
it
is
quite
common
for
sons
and,
more
recently,
daughters,
to
follow
their
father's
footsteps
into
business,
the
connection
between
Nat
Nat
and
Bayshore
was,
at
least
at
the
outset
of
Bayshore's
operation,
quite
close.
The
company
shared
the
same
residential
office
space,
the
same
insurance
agency,
the
same
bookkeeper,
and
Bayshore
relied
heavily
on
Rocco
Bunodono,
who
had
formerly
worked
with
Nat
Nat,
as
its
foreman.
The
importance
of
Bunodono's
extensive
role
in
this
matter
as
a
connection
between
Lawrence
Merlino
and
Bayshore
is
further
emphasized
by
the
photo-
graphic
evidence
of
the
two
men
together
at
construction
sites.
Bunodono
was
also
instrumental
in
obtaining
Bayshore's
initial
license
from
Atlantic
City,
as
well
as
one
of
its
first
substantial
construction
jobs
from
Joseph
Feriozzi,
who
testified
that
Bunodono's
presence
reassured
him
that
the
job
would
run
smoothly.
Feriozzi
also
testified
that
he
had
felt
fear,
at
least
for
his
business
if
not
for
himself,
when
he
had
earlier
learned
of
charges
lodged
against
Lawrence
Merlino
for
the
murder
of
Vincent
Falcone,
an
Atlantic
City
cement
contractor.
While
there
is
no
evidence
that
Lawrence
Merlino
inter-
vened
to
get
business
for
Bayshore,
Feriozzi
was
concerned
with
his
possible
involvement.
Joseph
Merlino
denies
having
generally
dis-
cussed
Bayshore
business
matters
with
his
father,
but
he
admits
that
he
asked
him
whether
Feriozzi
was
"a
good
payer."
Joseph
Merlino
thus
demonstrated
that
he
turned
to
his
father
for
advice
on
at
least
that
occasion
and
it
is
not
unlikely,
given
their
prior
working
rela-
tionship,
that
he
did
so
on
other
occasions.
But
this
case
does
not
rest
on
that
sort
of
speculation.
The
facts
show
that
Joseph
Merlino
consulted
with
and
dealt
with
his
father
in
other
financial
matters,
such
as
the
purchase
of
the
Margate
condominium,
which
was
made
possible
by
substantial
bonuses
given
by
the
father
to
the
son.
Although
this
real
estate
deal
was
above-board
and
regular
in
all
respects,
it
tends
to
establish
financial
dealings
between
Joseph
Merlino
and
his
father.
The
fact
that
Lawrence
Merlino
also
gave
his
son
Joseph
bonuses
which
totaled
some
$50,000
also
suggests
that
Joseph
Merlino
was,
at
least
to
that
extent,
financially
dependent
upon
his
father
and
Nat
Nat,
despite
the
fact
that
he
worked
for
United
Carpenters
and
G
&
H
Construction
and
had
started
Bayshore's
business
operations.
Was
Lawrence
Merlino
simply
trying
to
do
right
by
his
oldest
son
or
were
these
transactions
some
nefarious
attempt
to
conceal
Lawrence
Merlino's
assets
from
the
reach
of
the
federal
government?
The
proofs
submitted
do
not
supply
an
answer
to
this
question
but
the
fact
of
the
bonuses
and
the
real
estate
deal,
as
well
as
the
other
business
connections
proven,
establishes
an
association
between
Joseph
Merlino
and
his
father
which
goes
far
beyond
one
of
simple
blood
relation.
The
common
business
dealings
of
Bayshore
and
Nat
Nat
are
similar
to
those
which
were
found,
in
the
case
of
Local
54,
to
constitute
an
inimical
association.
As
stated,
the
Division's
burden
in
this
case
is
to
demonstrate
that
Bayshore,
through
its
officers
or
principal
employees,
is
as-
sociated
with
Lawrence
Merlino,
a
career
offender
and
a
member
of
a
career
offender
cartel,
in
such
a
manner
as
to
create
a
reasonable
belief
that
the
association
is
of
such
a
nature
as
to
be
inimical
to
the
policy
of
the
Casino
Control
Act
and
gaming
operations.
N.J.S.I.
5:12-86f.
The
respondents
contend
that
the
State
has
shown
much
association
between
themselves
and
Lawrence
Merlino,
but
that
none
of
it
is
inimical
because
it
is
based
on
the
natural
and
Constitutionally
protected
connection
of
family.
They
point
to
the
absence
of
any
evidence
showing
actual
influence
by
Lawrence
Merlino
over
Bayshore.
Such
an
argument
was
also
raised,
and
rejected,
in
the
Local
54
case,
where
the
Appellate
Division
found
ample
circumstantial
evidence
of
Scarfo's
influence
over
union
employees.
203
N.J.
Super.
at
321.
Even
without
DelGiorno's
statements,
there
is,
in
this
case,
ample
circumstantial
evidence
of
the
external
influence
of
Lawrence
Merlino
on
Bayshore
Rebar,
Inc.,
and
that
evidence
ranges
from
the
choice
of
name
of
the
company
to
payment
of
bills
and
rent
for
its
initial
location,
to
the
selection
of
insurance
companies,
bookkeeper
and
foreman
and
also
to
advice
given
by
Lawrence
Merlino
to
Joseph
Merlino
as
to
the
conduct
of
the
business
and
as
to
the
purchase
of
real
estate
(unrelated
to
the
business)
which
was
financed,
in
part,
by
very
generous
bonuses
provided
by
the
father
to
the
son.
Joseph
Merlino
is
not
merely
Lawrence
Merlino's
son
in
the
context
of
this
case.
Their
relationship
is
far
beyond
that.
Their
business
dealings
have
become
inextricably
linked
with
their
familial
connection.
If
Joseph
Merlino
were
not
Lawrence
Merlino's
son
but
merely
a
social
or
business
associate,
the
evidence
in
this
case
would
be
sufficient
to
support
a
conclusion
that
the
two
men
are
associated
and
that
this
association
is
of
such
a
nature
and
it
suggests
influence
and
control
of
Bayshore
by
a
career
offender
and
therefore
is
inimical.
The
fact
that
Lawrence
Merlino
is
related
to
Joseph
Merlino
by
blood
and
that
he
was
once
related
to
Phyllis
Mistie
by
marriage
should
not
be
allowed
to
obscure
the
nature
of
the
business
association
which
has
formed
between
them
or
to
put
it
beyond
the
reach
of
State
regulation
is
the
highly
sensitive
area
of
casino
operations.
Family
ties,
without
greater
association,
cannot
provide
a
basis
for
disqualification
under
N.J.S.A.
5:12-86f,
but
they
do
not
preclude
a
finding
of
disqualifica-
tion
if
other
evidence
of
an
inimical
association,
beyond
that
of
relation
by
blood
or
marriage,
is
proven.
See,
eg.,
Niglio
v.
New
Jersey
Racing
Commission.
Such
proof
is
present
in
sufficient
amount
in
this
case.
This
matter
is
also
distinguishable
from
the
case
of
D'Ascenso
v.
Div.
of
Gaming
Enforcement
because
there
the
contacts
between
the
licensee
and
her
father
were
infrequent
and
insignificant
and
posed
no
appreciable
threat
to
the
proper
function
of
legalized
gambling,
especially
in
light
of
the
licensee's
function
as
a
cocktail
waitress.
Here,
Joseph
Mer/ino's
contacts
with
his
father
are
substantial
and
ongoing,
and
while
they
embrace
the
usual
aspects
of
the
relationship
between
a
father
and
son,
they
also
are
characterized
by
extensive
business
associations
that
go
beyond
the
family
tie
and
pose
an
appreciable
threat
to
the
operations
of
a
casino
service
industry.
The
fact
that
Lawrence
Merlino
is
now
and
has
since
July
1987
been
incarcerated
awaiting
trial
on
charges
of
murder
and
racketeering
does
not
diminish
this
association.
It
is
not
unknown
for
inmates
to
control
enterprises
far
beyond
the
prison
walls.
The
fact
that
Lawrence
Merlino
is
in
jail
because
he
is
unable
to
make
bail
also
provides
a
most
compelling
incentive
and
motive
for
him
to
be
involved
in
Bayshore's
business
affairs.
As
the
respondent
notes,
there
is
no
evidence,
beyond
DelGiorno's
statements,
that
Lawrence
Merlino
is
directly
so
involved
or
that
he
has
received
any
monies
from
Bayshore
or
from
Joseph
Merlino.
However,
such
evidence
is
not
necessary
to
reach
a
conclusion
that
their
association
is
of
such
a
nature
as
to
create
a
reasonable
belief
that
it
is
inimical
to
the
policies
of
the
Casino
Control
Act
and
gaming
operations.
I
CONCLUDE
the
evidence
submitted,
including
DelGiorno's
statements,
as
to
the
association
between
Bayshore
Rebar,
Inc.,
and
Lawrence
Merlino
is
sufficient
to
disqualify
Bayshore
under
N.J.S.A.
5:12-86f
and
that
Bayshore's
ven-
dor
registration
issued
under
N.J.S.A.
5:12-104b
should
be
revoked.
(2)
Casino
Service
Industry
Application
The
remaining
issue
is
whether
Bayshore
Rebar,
Inc.,
and
its
officers
have
proven
their
eligibility
to
be
licensed
as
a
casino
service
industry
pursuant
to
N.J.S.A.
5:12-92c
under
N.J.A.C.
19:43-1.3
and
1.14.
The
Casino
Control
Act
provides
for
licensing
and
registration
of
casino
service
industries,
including
construction
companies
con-
tracting
with
casino
applicants
or
licensees:
[a]11
casino
service
industries
not
included
in
subsection
a.
of
this
section
[those
providing
goods
or
services
directly
relating
to
casino
or
gaming
activity]
shall
be
licensed
in
accordance
with
rules
of
the
commission
prior
to
commencement
or
continuation
of
any
business
with
a
casino
applicant
or
licensee
or
its
employees
or
agents.
Such
casino
service
industries,
whether
or
not
directly
related
to
gaming
operations,
shall
include
suppliers
of
alcoholic
beverages,
food
and
nonalcoholic
beverages;
garbage
handlers;
vending
machine
providers;
linen
suppliers;
maintenance
companies;
shopkeepers
located
within
the
approved
hotels;
limousine
services
and
construc-
tion
companies
contracting
with
casino
applicants
or
licensees
or
thqir
employees
or
agents...
d.
Licensure
pursuant
to
subsection
c.
of
this
section
of
any
casino
service
industry
may
be
denied
to
any
applicant
disqualified
in
accordance
with
the
criteria
contained
in
section
86
of
this
act
(emphasis
added).
[N.J.S.A.
5:12-92c,
d]
Those
grounds
of
disqualification
include
those
of
inimical
as-
sociation
under
N.J.S.A.
5:12-86f,
as
discussed
and
concluded
above.
The
regulations
promulgated
by
the
Casino
Control
Commission
provide,
with
respect
to
issuance
of
casino
service
industry
licenses,
that:
[n]o
casino
service
industry
license
shall
issue
unless
the
individual
qualification
of
each
of
the
following
persons
shall
have
first
been
established
in
accordance
with
all
provisions,
including
those
cited,
of
the
Act
and
of
the
regulations
of
the
Commission
.
..
[i]n
the
case
of
casino
service
industry
licenses
issued
in
accordance
with
section
92c
and
d
of
the
Act
each
such
applicant
in
accordance
with
the
standards
of
section
92d
and
86
and
the
Act.
[N.J.A.C.
19:41-3.2]
The
casino
control
regulations
further
provide,
as
to
standards
for
qualification
for
a
casino
service
industry
license,
that:
The
general
rules
relating
to
casino
service
industry
standards
for
qualification
are
set
forth
in
N.J.A.C.
19:41-3.2
et
seq...
(c)
Each
applicant
required
to
be
licensed
as
a
casino
service
industry
in
ac-
cordance
with
section
92c
and
d
of
the
Act
shall,
prior
to
the
issuance
of
any
casino
service
industry
license,
produce
such
information
and
documentation,
including
without
limitation
as
to
the
generality
of
the
foregoing
its
financial
books
and
records,
and
assurances
to
establish
by
clear
and
convincing
evidence
its
reputation
for
good
character,
honesty
and
integrity
.
.
.
[N.J.A.C.
19:43-1.3(a)
and
(c)]
(emphasis
added)
As
to
disqualification,
the
regulations
state
that:
A
casino
service
industry
license
may
be
denied
to
any
applicant
who
has
failed
to
prove
by
clear
and
convincing
evidence
that
he,
or
any
of
the
persons
required
to
be
qualified,
are
in
fact
qualified
in
accordance
with
the
act
and
with
the
provisions
of
these
rules
and
regulations,
or
who
has
violated
any
of
the
provisions
of
the
Casino
Control
Act
or
these
rules
and
regulations,
or
who
is
disqualified
under
any
of
the
criteria
set
forth
in
section
86
of
the
Casino
Control
Act.
[N.J.A.C.
19:43-1.5]
(emphasis
added)
With
respect
to
persons
who
need
to
be
qualified
before
a
casino
service
industry
license
can
be
issued,
the
Commission
has
provided
that,
as
to
Casino
Service
Industry
Licenses
issued
in
accordance
with
Section
92c
and
d
of
the
Act
of
the
following
persons
must
be
quali-
fied:
(i.)
The
enterprise;
(iii.)
Each
owner
of
the
enterprise
who
directly
or
indirectly
holds
any
beneficial
interest
or
ownership
in
excess
of
five
percent
of
the
enterprise;
(v.)
Each
director
of
the
enterprise
except
that
a
director
who,
in
the
opinion
of
the
Commission,
is
not
significantly
involved
in
or
connected
with
the
management
or
ownership
of
the
enterprise
shall
not
be
required
to
qualify;
(vi.)
Each
officer
of
the
enterprise
significantly
involved
in
the
conduct
of
business
and
each
officer
who
the
Commission
may
consider
appropriate
for
qualification
in
order
to
insure
the
good
charac-
ter,
honesty
and
integrity
of
the
enterprise;
(viii.)
The
management
employee
supervising
the
regional
or
local
of-
rice
which
employs
the
sales
representative
soliciting
business
or
dealing
directly
with
a
casino
licensee;
(ix.)
Each
employee
who
will
act
as
a
sales
representative
or
otherwise
regularly
engage
in
the
solicitation
of
business
from
casino
licensees;
(x.)
Any
other
person
whom
the
chairman
may
consider
appropriate
for
approval
or
qualification.
[N.J.A.C.
19:43-1.14(a)2]
As
discussed
above,
Joseph
Merlino
is
currently
vice-president
and
treasurer,
as
well
as
25
percent
owner
of
Bayshore
Rebar,
Inc.
His
mother,
Phyllis
Mistie,
is
the
president
and
secretary
of
the
com-
pany
and
also
75
percent
owner.
Rocco
Bunodono
functions
as
the
Superintendent
and
foreman
for
Bayshore
on
various
construction
jobs.
An
application
for
licensure
as
a
Casino
Service
Industry
pursuant
to
N.J.S.A.
5:12-92c,
was
filed
by
Bayshore
Rebar,
Inc.,
on
July
29,
1988.
The
Division
objected
to
that
application
on
August
10,
1988,
maintaining
that
Bayshore
cannot
demonstrate,
by
the
requisite
clear
and
convincing
evidence,
the
good
character,
honesty
and
integrity
necessary
for
licensure.
The
Division
also
argued
that
Bayshore
was
disqualified
for
licensure
as
a
casino
service
industry
because
of
its
association
with
Lawrence
Merlino
and
due
to
the
indictment
of
the
applicant's
principal,
Joseph
N.
Merlino.
In
addition,
the
Division
asserts
disqualification
on
the
basis
of
N.J.S.A.
5:12-86b
because
of
alleged
misrepresentations
made
by
Joseph
N.
Merlino
and
Phyllis
Mistie
at
the
hearing
in
this
matter.
No
particular
misrepresentations
are
cited
by
the
Division,
which
nonetheless
argues
that
the
testimony
of
the
two
was
"less
than
truthful
concerning
several
issues
of
fact"
(Division's
objection
of
August
10,
1988,
at
3).
As
to
the
last
claim
of
misrepresentation,
I
CONCLUDE
that
the
Division
has
failed
to
show
that
Joseph
N.
Merlino
and
Phyllis
Mistie
supplied
any
information
which
was
untrue
or
misleading
as
to
any
material
fact
pertaining
to
their
qualifications.
The
Division's
case,
beyond
the
statements
of
Thomas
DelGiorno,
was
largely
cir-
cumstantial,
and
the
respondent
did
not
deny
the
allegations
of
the
complaint.
This
case
turns
on
the
interpretation
to
be
given
to
those
admitted
facts.
The
Division
perceives,
and
I
conclude
that
it
has
proven,
an
inimical
association
where
the
respondents
see
only
family
connections.
The
Division
has
not
shown,
however,
that
the
respon-
dent
supplied
untrue
or
misleading
information
as
to
any
material
facts
and
I
CONCLUDE,
on
that
basis,
that
Bayshore
is
not
dis-
qualified
from
receiving
a
casino
service
industry
license
under
N.J.S.A.
5:12-86b.
The
Division
also
cites
the
criminal
indictment
pending
against
Joseph
N.
Merlino
as
an
additional
basis
for
disqualification,
under
N.J.S.A.
5:12-86c
and
d.
Because
the
matter
of
this
pending
indict-
ment
as
set
forth
in
the
amended
complaint
was
severed
in
order
to
expedite
resolution
of
the
original
complaint,
as
well
as
the
casino
service
industry
license
application
matter,
it
is
not
appropriate
at
this
time
to
consider
the
indictment
pending
its
resolution
and
I
so
CON-
CLUDE.
The
Division
also
asserts
Bayshore's
inimical
association
under
N.J.S.A.
5:12-86f
as
precluding
the
issuance
of
a
casino
service
indus-
try
license
in
this
instance
under
N.J.A.C.
19:41-3.2(a)2.
The
Casino
Control
Act
provides
that
licensure
for
a
casino
service
industry
may
be
denied
when
the
applicant
is
disqualified
under
section
86,
includ-
ing
86f.
See,
N.J.S.A.
5:12-92d.
The
rule
requiring
that
an
applicant
also
establish
its
reputation
for
good
character,
honesty
and
integrity
by
clear
and
convincing
evidence
is
in
addition
to
the
basic
require-
ment
that
the
applicant
not
be
disqualified
under
N.J.S.A.
5:12-86.
See,
N.J.A.C.
19:43-1.3(a),
(c).
The
Commission
has
discretion
to
deny
a
casino
service
industry
license
application
if
it
concludes
that
the
nature
of
the
disqualification
is
such
as
to
render
issuance
of
the
license
contrary
to
the
policy
of
the
Act
and
to
gaming
operations.
In
this
instance,
the
evidence
supports
the
conclusion
that
Bayshore
is
disqualified
by
virtue
of
its
inimical
association
with
Lawrence
Merlino,
a
career
offender
and
a
member
of
a
career
offender
cartel.
On
the
basis
of
this
disqualification
alone,
and
without
reaching
the
issue
of
the
reputation
of
Bayshore
and
its
officers
for
good
character,
honesty
and
integrity,
I
CONCLUDE
that
the
Bayshore
Rebar,
Inc.,
application
of
for
a
casino
service
industry
license
should
be
denied
by
the
Commission.
DISPOSITION
On
the
basis
of
the
above
findings
of
fact
and
conclusions
of
law,
it
is
ORDERED
that
respondent
Bayshore
Rebar,
Inc.,
is
adjudged
to
be
disqualified
pursuant
to
N.J.S.A.
5:12-86f
and
that
its
vendor
registration,
issued
pursuant
to
N.J.S.A.
5:12-104b,
be
revoked.
It
is
further
ORDERED
that
the
application
of
respondent
Bayshore
Rebar,
Inc.,
for
casino
service
industry
license
pursuant
to
N.J.S,4.
5:12-92c
and
d
is
denied
on
the
grounds
of
disqualification
under
N.J.S.A.
5:12-86f.
It
is
further
ORDERED
that
all
casino
licensees
are
prohibited
from
transacting
any
business--present
or
future,
direct
or
indirect--with
Bayshore
Rebar,
Inc.
This
recommended
decision
may
be
adopted,
modified
or
rejected
by
the
CASINO
CONTROL
COMMISSION,
which
by
law
is
em-
powered
to
make
a
final
decision
in
this
matter.
FINAL
DECISION
BY
THE
CASINO
CONTROL
COMMISSION:
This
matter
arises
out
of
a
complaint
filed
by
the
Division
of
Gaming
Enforcement
(Division)
which
essentially
sought
the
terrain-
ation
of
business
between
casino
licensees
and
Bayshore
Rebar,
Inc.
(Bayshore)
pursuant
to
section
104(b)
of
the
Casino
Control
Act
(Act),
N.J.S.A.
5:12-1
et
seq.'
Subsequent
to
the
filing
of
the
complaint
Bayshore
was
required
to
and
did
apply
for
a
casino
service
industry
license
pursuant
to
section
92
of
the
Act.
By
order
dated
April
10,
1989,
this
application
was
denied
and
the
relief
sought
by
the
Division
was
granted
by
the
New
Jersey
Casino
Control
Commission
(Com-
mission)
essentially
for
the
reasons
stated
in
the
initial
decision
which
had
been
filed
in
this
case
by
the
Office
of
Administrative
Law
(OAL).
Bayshore
filed
an
appeal
to
the
New
Jersey
Superior
Court,
Appellate
Division
and
the
Commission
issues
this
opinion
pursuant
to
R.
2:5-1(b).
Procedural
History
Bayshore
reinforces
concrete
on
construction
projects.
It
had
been
engaged
in
business
as
a
subcontractor
on
several
construction
sites
of
casino
licensees
or
applicants
for
casino
licenses.
Pursuant
to
N.J.S.A.
5:12-104(b),
the
agreements
between
Bayshore
and
casino
licensees
and
applicants
are
subject
to
review
and
approval
by
the
Commission?
On
January
6,
1987,
the
Division
filed
with
the
Commission
a
complaint
for
revocation
and
an
application
for
a
temporary
prohibitory
order
against
Bayshore.
The
Division
sought
to
prohibit
any
further
business,
direct
or
indirect,
between
Bayshore
and
casinos
based
upon
the
allegation
that
the
company
and
its
principal
qualifier,
Joseph
N.
Merlino,
were
associated
with
a
member
of
organized
crime
in
such
a
manner
as
to
render
it
disqualified
pursuant
to
N.J.S.A.
5:12-86(f).
The
organized
crime
figure
identified
in
the
complaint
is
Lawrence
"Yogi"
Merlino,
the
father
of
Joseph
N.
Merlino.
We
denied
the
Division's
request
for
a
temporary
prohibitory
order
at
our
public
meeting
of
February
25,
1987.
On
March
3,
1987,
Bayshore
filed
an
answer
to
the
complaint
and
the
matter
was
there-
after
transmitted
to
the
OAL
for
a
plenary
hearing.
On
May
6,
1987,
the
Division
filed
an
amendment
to
the
corn-
'Various
provisions
of
the
Act
may
be
cited
by
section
number
only,
omitting
the
prefix,
"N.J.S.A.
5:12-."
-'At
the
time
this
matter
was
initiated
section
104(b)
did
not
include
reference
to
applicants
for
casino
licenses.
However,
the
Act
was
amended
in
January
1988
to
so
provide.
L.
1987,
c.
355,
{}8,
eft.
January
4,
1988.
plaint
alleging
that
Joseph
N.
Merlino
and
Bayshore
were
disqualified
pursuant
to
N.J.S.A.
5:12-86(c)
(1)
and
(g)
based
on
a
three-count
indictment
filed
against
Joseph
N.
Merlino
on
March
20,
1987,
for
possession
of
a
deadly
weapon
for
unlawful
purposes
contrary
to
N.J.S.A.
2C:39-4;
aggravated
assault
contrary
to
N.J.S.A.
2C:12-1(b)(l);
and
aggravated
assault
with
a
deadly
weapon
contrary
to
N.J.S.A.
2C:12-1(b)(2).
To
expedite
a
hearing
and
resolution
of
the
association
allegation,
and
with
the
concurrence
of
the
parties,
the
Administrative
Law
Judge
(ALl)
in
his
prehearing
order
dated
No-
vember
18,
1987,
deferred
a
hearing
on
the
allegations
of
the
indict-
ment
pending
resolution
of
the
criminal
proceedings
against
Joseph
N.
Merlino
pursuant
to
section
86(d).
Hearings
on
the
association
allegation
were
held
on
March
14,
29
and
31,
1988.
The
record
was
closed
on
April
17,
1988.
On
June
16,
1988,
the
Division
filed
a
motion
to
reopen
the
record
to
admit
additional
evidence,
specifically
the
affidavit
of
Thomas
A.
DelGiorno,
an
admitted
member
of
the
Scarfo
organized
crime
family.
On
June
24,
1988,
the
Division
filed
a
second
application
for
a
temporary
prohibitory
order
with
the
Commission.
We
denied
this
application
at
our
public
meeting
of
July
13,
1988,
noting
in
part
that
the
ALJ's
decision
on
the
associational
question
appeared
to
be
immi-
nent.
On
July
22,
1988,
the
ALJ
granted
the
Division's
motion
to
reopen
the
record
and
both
parties
were
permitted
to
supplement
the
record.
In
the
interim,
by
letter
dated
May
18,
1988,
Bayshore
was
advised
that,
due
to
the
regular
and
continuing
nature
of
its
business
with
casino
licensees
and
applicants,
it
was
required
to
file
an
appli-
cation
for
licensure
as
a
casino
service
industry
pursuant
to
N.J.S.A.
5:12-92
and
N.J.A.C.
19:43-1.2.
Bayshore
filed
its
application
on
July
26,
1988.
By
letter-report
dated
August
10,
1988,
the
Division
objected
to
Bayshore's
licensure
on
the
grounds
stated
in
its
complaint,
as
amended,
and
on
the
further
grounds
that
Joseph
N.
Merlino
and
Phyllis
Mistie
Merlino,
Bayshore's
quailfiefs,
misrepresented
material
facts
at
the
OAL
hearing
and
that
Bayshore
lacked
the
good
character,
honesty
and
integrity
required
by
N.J.A.C.
19:43-1.3.
On
August
18,
1988,
the
application
matter
was
consolidated
with
the
pending
complaint
matter
in
the
OAL.
The
record
was
kept
open
until
November
21,
1988,
to
permit
the
parties
an
opportunity
to
introduce
additional
evidence..
On
December
21,
1988,
the
ALJ
recommended
that
Bayshore's
application
be
denied
for
the
reasons
stated
in
an
initial
decision.
Essentially,
the
ALJ's
recommendation
was
predicated
upon
his
find-
ing
that
Bayshore
and
its
principal,
Joseph
N.
Merlino,
had
an
as-
sociation
with
Lawrence
Merlino,
a
career
criminal
offender
and
a
member
of
a
career
criminal
cartel,
which
rendered
Bayshore's
licensure
inimical
to
the
Casino
Control
Act
pursuant
to
N.J.S.A.
5:12-86(f)
and
thus
disqualified
it
for
licensure
as
a
casino
service
industry.
The
ALl
further
concluded
that
the
Division
failed
to
prove
its
allegations
that
Joseph
N.
or
Phyllis
Mistie
Merlino
had
made
any
material
misrepresentations.
The
judge
also
noted
that
the
criminal
indictments
filed
against
Joseph
N.
Merlino
were
still
pending
at
the
time
of
the
filing
of
the
initial
decision
and
were
not
considered
in
his
decision.
The
ALJ
made
no
determination
on
the
issue
of
whether
Bayshore
carried
its
burden
proving
its
good
character,
honesty
and
integrity.
On
January
9,
1989,
Bayshore
filed
exceptions
to
the
initial
de-
cision.
On
January
17,
1989,
the
Division
filed
a
reply.
After
consideration
of
the
entire
record
in
this
matter,
we
de-
termined
at
our
public
meeting
of
April
5,
1989,
to
adopt
the
initial
'decision,
subject
to
a
modification
to
find
that,
in
addition
to
Bayshore,
Joseph
N.
Merlino
and
Phyllis
Mistie
Merlino
were
also
disqualified
by
reason
of
section
86(f).
Prior
to
announcing
our
de-
cision
we
were
informed
by
the
parties
that
Joseph
N.
Merlino
had
been
found
guilty
of
all
three
counts
of
the
indictment.
Counsel
for
Bayshore
iterated
Bayshore's
right
to
have
a
hearing
relating
to
this
aspect
of
the
case.
(Transcript
of
Commission
public
meeting
April
5,
1989,
at
100-7
to
100-112.)
The
decision
to
deny
the
application
was
memorialized
by
order
dated
April
10,
1988.
Consistent
with
our
determination,
the
order
further
required
the
termination
of
all
contracts
between
Bayshore
and
casino
licensees
and
their
agents
within
fifteen
days.
On
April
24,
1989,
Bayshore
filed
with
the
Commission
a
motion
for
stay
pending
appeal
of
our
order
of
April
10,
1989.
At
our
public
meeting
of
April
26,
1989,
we
denied
Bayshore's
motion.
Disqualification
Pursuant
to
N.J.S.A.
5:12-86(f)
The
ALl
concluded
that
Bayshore
is
disqualified
pursuant
to
N.J.S.A.
5:12-86(0,
by
reason
of
the
association
between
it
and
its
principal,
Joseph
N.
Mefiino,
with'
Lawrence
Merlino.
Bayshore
con-
ceded
that
Lawrence
Merlino
was
a
career
offender
and
member
of
a
career
offender
cartel,
the
Act's
euphemism
for
organized
crime
figures.
This
Commission
had
already
determined
as
much
by
includ-
ing
the
elder
Merlino
on
the
Exclusion
List,
pursuant
to
N.J.S.A.
5:12-71,
in
1985.
3
Having
reviewed
the
record
in
detail
we
accept
the
ALJ's
recommendation
to
deny
Bayshore's
application
and
grant
relief
sought
in
the
Division's
complaint.
The
Commission
has
been
charged
by
the
Legislature
with
protecting
the
"public
confidence
and
trust
in
the
credibility
and
integrity
of
the
regulatory
process
and
of
casino
operations."
N.J.S.A.
5:12-1(b)(6).
To
this
end
the
Legislature
enacted
"a
comprehensive
statutory
scheme
that
authorizes
casino
gambling
and
establishes
a
rigorous
system
of
regulation
for
the
entire
casino
industry."
Brown
v.
Hotel
and
Restaurant
Employees
and
Bartenders
International
Union
Local54,
468
U.S.
498,
104S.
Ct.
3179,
3182,
82
L.
Ed.
2d373
(1984).
Keeping
the
casino
industry
free
from
infiltration
by
or
even
the
influence
of
organized
crime
is
the
primary
mission
of
the
agencies
created
by
the
Act.
Ibid.
N.J.S.A.
5:12-92(d)
provides
that
a
casino
service
industry
may
be
"disqualified
in
accordance
with
the
criteria
contained
in
section
86"
of
the
Act.
The
Division
alleged
that
Bayshore
should
be
dis-
qualified
pursuant
to
section
86(f)
of
the
Act.
That
section
provides
in
part
that
any
person
A
who
is
required
to
be
qualified
under
the
Act
shall
be
disqualified
if
such
person
is
determined
to
be
"...
an
associate
of
a
career
offender
or
a
career
offender
cartel
in
such
a
manner
which
creates
a
reasonable
belief
that
the
association
is
of
such
a
nature
as
to
be
inimical
to
the
policy
of
this
Act
and
to
gaming
operations."
As
this
language
has
been
interpreted
and
applied,
the
association
is
inimical
if
it
presents
the
danger
of
influence
or
control
over
casino-related
business
by
an
organized
crime
figure.
See
In
the
Matter
of
the
Hotel
and
Restaurant
Employees
and
Bartenders
Inter-
national
Union
Local
54,
203
N.J.
Super.
297
(App.
Div.
1985),
certif.
den.
102
N.J.
352
(1985),
cert.
den.
475
U.S.
1085,
106
S.
Ct.
1467
(1986).
We
need
not
wait,
however,
until
this
potential
control
mani-
fests
itself
in
criminal
behavior
by
the
associate.
Ibid.
In
accordance
3See
State
v.
Lawrence
Merlino
and
Philip
Leonetti,
8
N.J.A.R.
126
(1985),
aff'd.
216
N.J.
Super.
579
(App.
Div.
1987),
aff'd.
o.b.
109
N.J.
134
(1988).
4N.J.S.A.
5:12-37
defines
"person"
as:
Any
corporation,
association,
operation,
firm,
partnership,
trust
or
other
form
of
business
association,
as
well
as
a
natural
person.
with
these
guiding
principles,
we
must
analyze
the
nature
and
quality
of
the
association
between
Bayshore
and
Lawrence
Merlino
to
de-
termine
if
it
creates
an
appreciable
risk
that
Lawrence
Merlino
might
exercise
some
degree
of
influence
over
Bayshore.
The
ALJ
reviewed
the
voluminous
record
in
this
matter
and
found
that
the
contacts
between
Lawrence
Merlino
and
Joseph
N.
Merlino,
Bayshore's
principal,
"are
substantial
and
ongoing
and
while
they
embrace
the
usual
aspects
[of]
the
relationship
between
a
father
and
his
son,
they
also
are
characterized
by
extensive
business
associations
that
go
beyond
the
family
tie
and
pose
an
appreciable
threat
to
the
operations
of
a
casino
service
industry."
Based
on
our
own
close
scrutiny
of
the
record,
we
agree
with
the
ALJ.
The
Division's
proofs
established
by
a
fair
preponderance
of
the
credible
evidence
that
the
nature
and
quality
of
the
association
is
such
that
Lawrence
Merlino
could,
indeed,
exercise
control
or
influence
over
Bayshore.
Although
the
evidence
here
of
a
tainted
association
is
largely
circumstantial,
it
is
not
for
that
reason
alone
deficient.
The
Local
54
decision,
which
also
involved
an
86(f)
disquali-
fying
association,
was
grounded
in
"a
record
replete
with
circum-
stantial
evidence."
Local
54,
203
N.J.
Super.
at
321.
There,
too,
no
proof
of
actual
misconduct
by
union
officials
at
Scarfo's
behest
was
shown,
though
there
was
evidence
of
Scarfo's
interest
in
union
affairs.
Nevertheless,
the
court
upheld
the
Commission's
determination
that
the
potential
for
untoward
influence
by
the
Scarfo
crime
family
was
disqualifying.
In
response
to
the
Division's
proofs,
Bayshore
suggests
that
each
of
the
indicia
of
the
purportedly
inimical
association
can
be
explained,
most
as
the
natural
elements
of
a
father-son
relationship.
The
appli-
cant's
contention
essentially
is
that
it
has
no
relationship
with
Law-
rence
Merlino;
the
only
relationship
is
between
Lawrence
the
father
and
Joseph
the
son
and
the
son
ought
not
be
disqualified
simply
because
of
who
and
what
the
father
is.
We
can
agree
only
to
a
point.
The
disqualification
of
the
father
does
not
alone
disqualify
the
son.
The
old
English
notion
of
"corrup-
tion
of
the
blood"
has
never
been
part
of
American
jurisprudence
and
certainly
section
86(f)
does
not
provide
reason
to
incorporate
it
into
casino
law.
But
just
as
the
father-.son
relationship
cannot
be
used
as
a
sword
to
disqualify,
neither
can
it
be
used
as
a
shield
from
regulatory
scrutiny.
In
Niglio
v.
New
Jersey
Racing
Commission,
158
N.J.
Super.
182
(App.
Div.
1978),
the
Appellate
Division
recognized
the
public
interest
in
the
strict
regulation
of
legalized
gambling
and
upheld
the
Racing
Commission's
decision
to
disqualify
the
wife
of
an
individual
con-
victed
of
certain
criminal
offenses
from
racing
a
horse
that
she
owned.
The
court
held:
The
undesirabilty
of
an
association
between
those
previously
con-
victed
of
a
crime
or
those
in
affinity
with
such
a
person
and
the
sensitive
"business
of
racing
and
the
legalized
gambling
attendant
thereupon,"
is
too
apparent
to
justify
extended
discussion.
Certainly
an
appropriately
strong
state
interest
is
involved
and
there
is
a
rational
basis
for
the
classification
imposed.
lid.
at
188,
(quoting
Jersey
Downs,
Inc.
v.
Division
of
New
Jersey
Racing
Commission,
102
N.J.
Super.
451,
457
(App.
Div.
1968)].
The
Niglio
decision
was
predicated,
not
so
much
on
the
familial
relationship
per
se,
but
rather
on
the
wife's
financial
dependence
on
her
disqualified
spouse.
In
the
instant
case,
the
operative
question
is
whether
the
evidence
cited
by
the
ALJ
is
sufficient
to
raise
reasonable
concern
that
Lawrence
could
influence
the
activities
of
Bayshore.
We
believe
that
it
most
certainly
is,
as
a
recapitulation
of
the
pertinent
evidence
will
demonstrate.
Bayshore
was
incorporated
in
New
Jersey
on
December
13,
1985,
only
one
month
after
the
dissolution
of
a
Florida
corporation
of
the
same
name
owned
by
Lawrence
Merlino.
Joseph
N.
Merlino's
em-
ployment
with
Lawrence
Merlino's
company,
Nat
Nat,
ended
some
undisclosed
date
prior
to
December
1985,
yet
Joseph
received
a
$15,000
"bonus"
check
from
his
father
on
or
about
March
10,
1986.
At
around
the
same
time,
Joseph
bought
from
Lawrence
the
con-
dominium
that
Lawrence
had
previously
acquired
from
Scarf,
Inc?
Phyllis
Mistie
Merlino,
Bayshore's
President,
is
listed
on
insurance
records
for
Nat
Nat
as
late
as
January
16,
1987.
Nat
Nat
and
Bayshore
operated
from
the
same
premises,
the
home
of
Phyllis
and
her
chil-
dren,
which
is
owned
by
Phyllis'
ex-husband,
Lawrence,
as
recently
as
eight
months
prior
to
the
OAL
hearings
conducted
in
March
1988.
Bayshore
paid
no
rent
during
this
period
and
on
occasion
had
its
phone
bill
paid
by
Lawrence.
It
used
the
same
bookkeeper
and
in-
surance
agent
as
Nat
Nat.
As
of
the
date
of
the
OAL
heatings,
5The
background
of
Scarf,
Inc.,
is
discussed
in
State
v.
Lawrence
Merlino
and
Philip
Leonetti,
Supra,
8
N.J.A.R.
at
152-153.
Bayshore
had
employed
as
its
foreman,
Rocco
Bunodono,
the
former
foreman
for
Lawrence
at
Nat
Nat.
We
cannot
dismiss
these
factors
as
being
"innocuous"
as
the
applicant
suggests.
The
indicia
of
a
significant,
non-familial,
associa-
tion
between
Lawrence
Merlino
and
Bayshore
are
too
recent,
numer-
ous
and
substantial
to
permit
Bayshore's
participation
in
the
casino
industry
under
the
strict
standards
that
we
are
obliged
to
uphold.
The
risk
of
infiltration
by
organized
crime
is
too
great,
too
palpable,
to
warrant
any
decision
other
than
denial
of
licensure
in
this
instance.
Our
concerns
are
in
no
way
alleviated
by
Bayshore's
contention
that,
because
Lawrence
Merlino
has
recently
been
sentenced
to
prison
for
life,
he
is
in
no
position
to
influence
Bayshore.
The
influence
of
the
Scarfo
crime
family
in
the
Atlantic
City
area
is
well
documented.
We
do
not
share
the
same
confidence
that
Lawrence
Merlino
either
directly
or
indirectly
could
not
influence
the
operations
of
Bayshore
even
while
he
resides
within
prison
walls.
Moreover,
this
record
is
inadequate
for
us
to
reach
a
firm
conclusion
as
to
the
finality
of
Lawrence
Merlino's
conviction
and
sentence.
Disqualification
Pursuant
to
N.J.S.A.
5:12-86(b)
As
an
additional
basis
for
disqualification,
the
Division,
in
its
letter-report
objecting
to
Bayshore's
licensure
as
a
casino
service
in-
dustry,
alleged
that
Phyllis
Mistie
Merlino
and
Joseph
N.
Merlino
each
misrepresented
material
facts
at
the
OAL
hearing
in
an
attempt
to
cover-up
any
relationship
between
Bayshore
and
Nat
Nat
contrary
to
section
86(b)
of
the
Act.
The
A[J
concluded
that
the
Division
failed
to
prove
its
case
concerning
these
allegations.
We
agree.
Because
the
Division
failed
to
make
any
specific
allegations
of
such
conduct
or
offer
any
proof
in
this
regard,
we
do
not
see
any
need
for
extended
discussion
on
this
issue.
Disqualification
Pursuant
to
N.J.S.A.
5:12-86(c)(1)
In
its
amended
complaint
and
letter-report,
the
Division
alleged
that
Joseph
N.
Merlino
had
engaged
in
criminal
conduct
which
was
the
basis
of
a
three
count
criminal
indictment
filed
against
him
and
disqualifying
to
Bayshore
pursuant
to
section
86(c)(1)
of
the
Act.
To
expedite
a
hearing
on
the
other
issues
involved
in
this
matter,
the
ALJ
accepted
a
stipulation
by
the
parties
to
sever
the
issue
of
the
indict-
ment
and
defer
consideration
of
the
indictment
pending
its
resolution.
The
ALJ
properly
did
not
consider
the
indictment
in
his
initial
de-
cision.
We
were
advised
by
the
parties
at
our
public
meeting
of
April
5,
1989,
that
Joseph
N.
Merlino
has
been
found
guilty
on
each
count
of
the
indictment.
We
do
not
consider
this
aspect
of
the
case
in
this
decision.
Upon
sentencing,
because
the
criminal
conduct
by
Mr.
Mefiino
will
have
been
resolved,
there
will
no
longer
be
any
basis
for
continued
deferral
under
the
Casino
Control
Act.
N.J.S.A.
5:12-86(d).
Thereupon,
the
matter
should
proceed
to
a
hearing
in
the
Office
of
Administrative
Law
to
assess
whether
Bayshore
and
Joseph
N.
Mefiino
are
also
disqualified
pursuant
to
N.J.S.A.
5:12-86(c)(1).
Good
Character,
Honesty,
Integrity
Pursuant
to
N.J.A.C.
19:43-1.3(c)
The
ALJ
also
did
not
reach
a
decision
with
respect
to
whether
Bayshore
established
the
good
character,
honesty
and
integrity
re-
quired
by
N.J.,4.C.
19:43-1.3(c).
The
criminal
allegations
against
Joseph
N.
Merlino,
concerning
disqualification
pursuant
to
section
86(c)(1)
of
the
Act,
are
equally
relevant
to
a
consideration
of
Bayshore's
good
character,
honesty
and
integrity.
Therefore
it
is
ap-
propriate
for
the
good
character
issue
to
proceed
to
a
hearing
and
be
tried
along
with
the
issue
of
disqualification
pursuant
to
section
86(c)(1).
Conclusion
The
possibility
of
infiltration
into
the
casino
industry
by
the
likes
of
Nicodemo
Scarfo
and
his
associates
is
the
raison
d'etre
for
strict
State
regulation.
The
Division's
proofs
established
by
a
fair
preponderance
of
the
evidence
an
association
between
the
applicant
and
a
notorious
organized
crime
figure
well
beyond
the
mere
familial.
We
are
satisfied
that
this
association,
manifesting
itself
in
the
structure
and
operation
of
a
business
engaged
in
casino
hotel
construction,
is
the
type
envisioned
by
section
86(f)
of
the
Act,
i.e,
one
which
we
reasonably
believe
to
present
a
threat
to
the
integrity
of
the
gaming
industry.
Accordingly,
we
adopt
the
ALJ's
conclusion
that
Bayshore
is
disqualified
pursuant
to
section
86(f)
and
his
recommendation
that
Bayshore's
application
for
a
casino
service
industry
license
be
denied.
This
disqualification
runs
to
Bayshore's
qualifters
as
well.
Accordingly
we
modify
the
initial
decision
to
conclude
that
Joseph
N.
Merlino
and
Phyllis
Mistie
Merlino
are
also
disqualified
pursuant
to
section
86(0.
You
must
check
the
New
Jersey
Citation
Tracker
in
the
companion
looseleaf
volume
to
determine
the
history
of
this
case
in
the
New
Jersey
courts.