Also at the hearing, Russo's lawyer said the ex-mayor is broke and that he blew most of the money betting on sports and horseraces.
Last year, Russo, who served as Hoboken's mayor from 1993 to 2001, entered into a plea agreement in which he admitted to accepting thousands of dollars in bribes and unlawful cash payments from the city's auditing/accounting firm, in exchange for his helping the firm secure over $2.5 million in municipal contracts.
The Hoboken-based firm, Lisa and Associates, is run by Gerard Lisa and was run by his late brother Joseph Lisa, who was one of Russo's best friends.
According to the plea agreement, Russo admitted taking unlawful cash payments from Gerard Lisa, including but not limited to one for $2,000 on Oct. 1, 2001 and another for $3,000 on Nov. 30, 2001. Russo admitted in his plea to taking those two bribes, but there were questions as to whether he took others, as the FBI had been targeting Russo for the better part of a decade.
Much more $$$
Before U.S. District Judge Joel Pisano Tuesday, the U.S. attorney's office said that Russo accepted $317,000 in bribes from the Lisa firm while mayor. He held detailed records from Lisa Associates as supporting evidence.
Tuesday's hearing was an attempt by prosecutors to compel Russo to fully disclose how much money he has left. According to the terms of Russo's plea agreement, Russo has to pay $332,000 in restitution, and provide the court with accurate tax returns from 1994 to 2001. But now Russo's attorney has told the judge that his client is flat broke, and that because Lisa and Associates was also his personal accountant, he is having trouble compiling completed tax returns.
According to Russo's attorney, Dennis McAlevy of Union City, Russo blew the money on gambling, both on horses and on sports. McAlevy added that his client's teaching pension is jeopardy, which will also make it difficult to pay restitution. Russo was a special education teacher in the Hoboken schools before he became mayor. He started teaching decades ago at $5,000 a year.
McAlevy said that Russo only told him about his gambling problem only a couple weeks ago. But the U.S. attorney isn't buying it.
According to Michael Drewniak, the public affairs officer for the U.S. Attorney's office in Newark, it a common strategy employed by those convicted of taking corrupt money to hide the cash.
"There is no creditable evidence to support Russo position," said. "This was, in our view, an 11th hour excuse we had not heard until just a few weeks ago from Russo's attorney, and we believe it is a last-ditch attempt to deceive and hide corrupt assets."
But Russo's attorney countered that this is an attempt by the feds to get to the assets of Russo's wife, Michele, who is a successful Hoboken real estate agent.
A local newspaper reported last week that Michele Russo bought a Belmar property in 2001 and had earned $400,000 that year as a real estate agent in town.
The Russos live in Church Towers, a moderate-income apartment complex. They moved into the property back when Russo had just started teaching and was under the income limit. By law, anyone who met the requirements when they moved in is allowed to stay, but if they earn more over time, they must pay extra, which the Russos do.
Church Towers is not a subsidized building, but does have artificially low rents because the builders got a low-interest government mortgage back in the 1960s in order to create moderate income housing.
Why did Russo only admit to $5K?
If Russo allegedly took around $317,000 from Lisa, then why did Russo, in his plea, only have to admit to receiving $5,000?
The answer is simple. According the prosecutors, getting a conviction usually means getting a less-than-complete picture of the scope of corruption. The U.S. Attorney wouldn't have the time or resources to prove that every single bribe was taken, so they pick the ones that are easiest to prove.
With former Hudson County Executive Robert Janiszewski, who was recently sentenced to 41 months for extortion and tax evasion, when police arrested him there was $80,000 in cash stuffed in an envelope in one of his desk drawers, they said. He later admitted in court that he has been accepting bribes for over two decades. But according to his plea, he only acknowledged that he took "more than $100,000."
Plea in jeopardy?
Russo was scheduled to be sentenced Wednesday morning, but because he has been slow to cooperate and provide financial information, the sentencing has been put off until May 17 at 10 a.m.
Under Russo's plea, he is looking at 27 to 33 months in federal prison. But if the judge deems that he is not disclosing his true financial state, he could have as many as 14 extra months added to his sentence.
In a memo to the judge, Assistant U.S. Attorneys Luis Valentin and Ralph Marra, who are prosecuting the case, said Russo gave "misleading financial information" and refused to turn over his tax returns, as required by his plea.
Another issue that was argued before the court Wednesday was Russo's health.
Russo was first stricken with cancer four years ago. A malignant tumor was found in his brain and doctors gave him eight months to live. The tumor was removed in March of 2000 and Russo was treated with 25 sessions of radiation therapy.
Tests later revealed that the cancer had manifested in his lung. He underwent surgery that removed the upper third of his right lung, and he was treated with six cycles of chemotherapy. A second brain tumor was detected in August 2001. Russo underwent another procedure to remove the tumor. But remarkably, the cancer went into remission in 2002 and doctors said Russo was in good enough health to run for public office again.
But then, shortly after being elected to a seat as the city's 3rd Ward councilperson, he resigned tearfully at a press conference, announcing that cancer had returned.
Russo's defense last week argued that there should be a downward departure motion, seeking a lesser sentence based on Russo's serious cancer condition. They say that he needs daily care, which the prisons are not equipped to provide.
But the U.S. Attorney argued that the federal prison system has plenty of inmates with health problems, and that the system has the capability of handling Russo's cancer.