ATLANTIC CITY — New Jersey gaming regulators finally believe what Joseph N. Merlino and his mother, Phyllis, have been insisting for more than 20 years — that they are not tied to organized crime.
The state Casino Control Commission unanimously approved a license Wednesday that allows the Merlinos and their Bayshore Rebar Inc. construction company to work on Atlantic City casino projects.
Phyllis Merlino, fighting back tears of joy while embracing her son and other family members, said the ruling finally clears their name of any mob taint.
“I’m relieved,” she said. “It’s finally over.”
Joseph N. Merlino said the grueling regulatory battle was well worth it. He maintained that the commission’s 5-0 vote vindicated his company and confirmed the Merlinos are simply “a good, hard-working family.”
In approving the license, the commission, which serves as the chief regulatory body for Atlantic City’s $3.9 billion gaming industry, lifted a 21-year ban on the Merlinos and Bayshore from performing casino work. It did so over the strenuous objections of its sister agency, the New Jersey Division of Gaming Enforcement.
Arguing against the Merlinos, the division contended that a license for Pleasantville-based Bayshore would set “a troubling new standard” contrary to New Jersey’s long-standing practice of barring organized crime from working in the tightly regulated casino industry.
The Merlinos were denied a license by the commission in 1989 and 1997 based on the belief then that they had “inimical associations” with organized crime.
However, this time around the commission declared the Merlinos were free of any mob influence, despite their family ties to organized crime figures in Philadelphia and southern New Jersey. Jailed Philadelphia mob boss Joseph S. “Skinny Joey” Merlino is Joseph N. Merlino’s cousin. The late Lawrence “Yogi” Merlino, a high-ranking mobster, was Joseph N. Merlino’s father and Phyllis Merlino’s ex-husband.
Throughout their battle for a casino service license, the Merlinos insisted they had severed all contact with any family members linked to organized crime in the past 10 years. Their attorney, John M. Donnelly, claimed the Division of Gaming Enforcement opposed the Merlinos simply “because of their name.”
“I believe that was the mantra of the division — that no one with the name Merlino would ever be licensed,” Donnelly told the commission.
Louis S. Rogacki, a deputy state attorney general representing the division, argued the Merlinos ignored repeated warnings over the years not to associate with any family members connected to organized crime. He said they continued to socialize with mobsters — including accepting phone calls from them made from prison — after they were rejected for a casino license the last time.
“Our contention is that they intensified contact with organized crime figures,” Rogacki said.
Rogacki also claimed the commission’s decision means that solid evidence such as telephone records and surveillance reports compiled by law enforcement would be “rendered meaningless” unless accompanied by wiretaps. The division largely relied on phone records and police surveillance information in attempts to link the Merlinos to the mob.
But the commission called the division’s case weak, saying it was based on outdated information, unsubstantiated allegations and “mere suspicions” about the Merlinos’ alleged ties to organized crime.
“Credibility was integral to the findings of fact in (this) matter. The record reflects that at nearly every turn, the applicants credibly refuted the division’s unsubstantiated claims,” Commission Chair Linda M. Kassekert said.
The Merlinos had four retired FBI agents testify in their defense during a 14-day, trial-like licensing hearing last year. The former agents, some of whom were involved in breaking up the Philadelphia-Atlantic City organized crime family headed by Nicodemo “Little Nicky” Scarfo in the 1980s, testified that neither Joseph N. Merlino nor his mother had any mob ties.
“We knew the truth, that they weren’t involved in the mob,” said James B. Darcy Jr., the former head of the FBI office in Linwood and now a private security consultant. “The bottom line is, we knew the truth for over two decades and thought it was important for the commission to hear it.”
In addition to pitting the Division of Gaming Enforcement against the Merlinos, the licensing case also involved a duel between the division and the Casino Control Commission. Tensions flared again Wednesday when Kassekert harshly criticized the division’s attorneys for their personal attacks against Commissioner William T. Sommeling, who served as hearing officer in the Merlinos’ request for a license.
Sommeling, who initially recommended a license for the Merlinos on March 24, was the target of a blistering division report in April that characterized him as incompetent and possibly corrupt.
“I was shocked to see the division’s exceptions,” Kassekert said of the Sommeling criticisms. “The division has taken the unprecedented step of attacking not just the findings of fact and conclusions of law, but the character and integrity of nearly anyone who appeared to reject the division’s posturing.”
Josh Lichtblau, the division’s director, declined to comment.
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