mob firm
Bayshore Rebar Inc. owner Joseph N. Merlino and his mother Phyllis Merlino.

ATLANTIC CITY - Bayshore Rebar Inc., a construction company trying to win a license to work on Atlantic City casino projects, was created by a high-ranking organized crime figure, a former federal investigator testified Monday.

Convicted mob killer Lawrence "Yogi" Merlino controlled Bayshore, not his ex-wife, Phyllis, or his son, Joseph N. Merlino, according to Ronald C. Chance, a retired U.S. Department of Labor investigator and nationally recognized organized crime expert.

"Bayshore was Larry Merlino's company," Chance testified at a New Jersey Casino Control Commission hearing on the company's application for a gaming license. "Larry Merlino controlled Bayshore."

Denying any mob ties, Phyllis and Joseph Merlino have been trying to distance themselves from Lawrence Merlino's infamous past in their third attempt in 20 years for approval to work on casino projects. Lawrence Merlino, who died in 2001, became a government informant after his 1989 conviction in the murder of a fellow mobster. He was a top member of the Philadelphia-southern New Jersey organized crime family once headed by Nicodemo Scarfo.

Joseph and Phyllis Merlino claim they continue to be unfairly tarnished by the misdeeds of Lawrence Merlino and other family members. Joseph N. Merlino's cousin is jailed Philadelphia mob boss Joseph S. "Skinny Joey" Merlino.

Since 1989, the Casino Control Commission and New Jersey courts have repeatedly denied the Merlinos and Pleasantville-based Bayshore a gaming license based on the belief they have "inimical associations" with organized crime.

Chance, the star witness for the New Jersey Division of Gaming Enforcement, renewed those allegations in his testimony. He said Bayshore was founded and run by Lawrence Merlino, although Phyllis Merlino was listed as the owner and his son had been placed on the payroll.

"Not one single person ever had any dealings with Joseph or Phyllis Merlino," Chance testified. "Their dealings were with Larry Merlino."

Chance asserted that Lawrence Merlino listed Phyllis Merlino as Bayshore's owner to skirt bidding requirements that a portion of construction work must be awarded to firms headed by women or minorities.

"Bayshore was the minority company of Larry Merlino," he said.

Chance's testimony angered Phyllis Merlino, who stormed out of the Casino Control Commission meeting room afterward.

"I don't know how a person can lie," she told The Press of Atlantic City.

Chance also has written a report on Bayshore, but it has not yet been made public because gaming investigators are waiting to introduce it as evidence in the hearing. However, excerpts were in full view in the commission meeting room on oversized placards prepared by the Merlinos' attorney.

"Joseph N. Merlino and Phyllis Merlino are known associates of organized crime and have been for over 20 years," Chance wrote.

Chance's report went on to say that organized crime figures routinely use their wives, girlfriends, mothers and daughters to relay messages to each other in hopes of avoiding detection by law enforcement. He alleged Phyllis Merlino has kept in contact with mobsters' wives.

"Telephone conversations between Phyllis Merlino and wives of organized crime members and associates demonstrate a continuing relationship with members and associates of organized crime," Chance wrote.

Chance's report disputes the earlier testimony of several retired FBI agents, who claimed that mobsters never use their wives or girlfriends for secret communication. Those former agents, who testified on behalf of the Merlinos, also maintained that neither the Merlinos nor Bayshore are connected to organized crime.

Bayshore installs the steel reinforcing rods that give concrete its strength. While other public and government agencies in New Jersey and Pennsylvania have allowed Bayshore to work on their construction projects, casino regulators have balked. The Division of Gaming Enforcement, the casino industry's investigative agency, wants the casino ban to continue because of the reputed mob ties.

Chance, who began investigating organized crime and corrupt Atlantic City labor unions in the 1980s, testified that Lawrence Merlino also controlled a New Jersey construction company called Nat-Nat Inc. He said investigators began to suspect Lawrence Merlino's influence over Bayshore while probing Nat-Nat's alleged mob links.

Chance will continue his testimony when the hearing resumes Friday.

E-mail Donald Wittkowski:

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