CAPE MAY COURT HOUSE - A Cape May County grand jury Tuesday indicted Wildwood Mayor Gary DeMarzo and assistant Wildwood municipal attorney Samuel Lashman for official misconduct for allegedly using city funds to pay DeMarzo's private legal bills.

The alleged misuse of taxpayer dollars involved a lawsuit launched after the May 2007 commission election, in which former Mayor Ernie Troiano Jr. and former Commissioner Bill Davenport fought to force DeMarzo to choose between his elected commissioner's job and his position as a city police officer.

The indictment alleges that between November 2009 and March 24, 2010 DeMarzo, who became mayor in December 2009, "knowingly did use public funds belonging to the City of Wildwood to pay personal legal expenses and other related expenses, in an amount greater than $200."

The indictment also charges that Lashman, who also holds the title of municipal prosecutor, "knowingly did receive public funds belonging to the City of Wildwood to satisfy his providing legal service in a private matter and other related expenses in an amount greater than $200."

Cape May County Prosecutor Robert Taylor said Tuesday that his office presented the case to the Division of Criminal Justice in the state Attorney General's Office, and they agreed the charges were appropriate.

Taylor said the mayor used public funds to pay his personal legal expenses, but Taylor did not name the exact dollar figure. The indictment states the amount could be anywhere between $200 and $75,000.

DeMarzo, who said he learned of the indictment when a Press of Atlantic City reporter called, said he had committed no crimes. DeMarzo said the prosecutor was using his office to go after him following his decision to sue the Prosecutor's Office to retrieve a videotape involving an alleged instance of police abuse recorded at the Wildwood Police station in 2000. That litigation is still pending.

"He's been in here (City Hall) digging for dirt since I filed that lawsuit," DeMarzo said.

Taylor denied DeMarzo's claim that the indictment was in retaliation for the videotape incident.

"It's got absolutely nothing to do with it," Taylor said.

Regardless, DeMarzo said he had not violated the law and that he was concerned about the effect the charges would have on him and his credibility.

"Unequivocally, I have nothing to worry about. There's nothing I have done that would even hint at criminal prosecution," DeMarzo said.

Attorney Joseph Grassi, representing Lashman, said he was surprised his client was indicted, adding he hadn't seen the indictment yet.

"I don't really understand the prosecutor's theory," Grassi said. "The activity that was claimed to be criminal was conducted out in the open. I don't think at the end of the day the mayor and Mr. Lashman will be convicted of a crime."

Grassi also said the timing was curious given the legal case pending involving Taylor and the city over the videotape, and he said the case should be handled by the Attorney General's office instead of the Prosecutor's Office given that conflict.

Regarding the lawsuit in which DeMarzo allegedly used public dollars, the court rulings that followed in 2007 allowed him to hold both positions while on an unpaid leave of absence from the Police Department as long as he adhered to a series of judicial restrictions limiting what issues he could vote on or be involved with within the city.

In May 2010, however, Superior Court Judge Valerie Armstrong -- enforcing an appellate court ruling -- found DeMarzo had to choose one job or the other.

DeMarzo then chose to stay on City Commission and leave his job as a police officer, a position he had held since February 1998.

In November 2010, the state's Supreme Court agreed to hear DeMarzo's claim that he should be able to serve as both an elected official and be a member of the city's Police Department, as long he was on unpaid leave from the force. That case is pending.

Chief Assistant Prosecutor Rob Johnson said the second-degree official misconduct charges carry a penalty of five to 10 years in prison, and a provision in state law requires a five-year term of parole ineligibility for public employees convicted of the charge.

In addition, the indictment also charges DeMarzo, 43, and Lashman, 50, with conspiracy to commit official misconduct, also a second-degree crime, for the same November 2009 to March 24, 2010, time period.

DeMarzo is also charged with the fourth-degree offenses of disbursement of money or incurring of obligations by a public official in excess of appropriations and corruption of public resources.

Those charges allege, respectively, that on diverse dates from Sept. 30, 2009 to March 29, 2010, DeMarzo disbursed public funds and that he used public funds for unauthorized purposes in an amount less than $75,000.

Troiano, who is planning to run for office in the city's May 10 election, said Tuesday that when he was still on the commission, it was believed that DeMarzo had illegally hired Lashman.

"He was told about it at that time that he wasn't allowed to do it," Troiano said, adding that other city employees in the purchasing, clerk's and legal offices said it shouldn't be done.

"But Gary DeMarzo did what he wanted to do," Troiano said.

Troiano said the case would bring unflattering attention to the city, but he hoped justice would be served.

"It's a shame the city once again gets a black eye," Troiano said.

DeMarzo said the matter was discussed in 2009 and was "a dead issue. Then, they came back with a vengeance. It's J. Edgar Hoover AKA Bob Taylor."

Taylor said he would not comment on what initiated the investigation and he added no other charges are being contemplated at this time.

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