Special agents of the FBI and IRS arrested Charles Conway, 56, Monday morning at his Beach Haven home. The arrest came after a federal grand jury indicted he on 33 counts including mail and wire fraud, money laundering and tax evasion.
The 37-page indictment details how Conway allegedly abused his position as one of three trustees at the Rita and Harry Greenberger Foundation, a now-bankrupt nonprofit organization.
The abuses included an embezzlement scheme to transfer hundreds of thousands of foundation funds for his own use through the establishment of bank and investment accounts, including off shore accounts; the formation of a Bahamian Corporation; and the purchase of residential and commercial properties, according to the indictment.
Elaine G. Kislak, who died in 1989 while living in Ocean Township, created the Rita and Harry Greenberger Foundation through her will. Conway served as the executor of the will and eventual trustee of the foundation.
The foundation was created for scientific, educational and charitable purposes, prosecutors said.
According to U.S. Attorney Michael Guadagno, Kislak had no heirs, leaving her estate largely unguarded.
The bylaws of the Greenberg Foundation required the consent of at least two of the three trustees before any funds could be disbursed.
The foundation was successful until 1995, according to Guadagno. It grew from $1 million to $1.3 million, while also contributing to local colleges and charities.
But things quickly changed, and now the foundation is bankrupt, Guadagno said.
Prosecutors said it started when Conway created a company in the Bahamas under the same name as the foundation. Prosecutors claim the name similarity was to throw off the other two trustees and make it easier for Conway to embezzle funds.
Conway then tried to merge the two companies, prosecutors said. It is unclear if the merger was successful, a point both sides will argue come April when the federal trial begins in Trenton.
In December of 1998, Conway and two partners formed Serhus, Conway & Suss Global investments, a limited liability company. The company was ostensibly formed to trade in foreign currencies.
As of Oct. 31, 1996, the Greenberger Foundation had a balance of $1,372,781 in an account at a Rochdale management company, prosecutors said.
In November of the same year, Conway withdrew $200,000 from the foundation account, which he used to invest in his newly formed company, prosecutors said.
The lengthy indictment is filled with other instances – including setting up a phony scholarship fund – where Conway allegedly set up similar companies and accounts using a series of intricate transfers from the foundation account.
Conway used funds from the scholarship fund (which, itself, was funded by the foundation) to make a down payment on his $500,547 Beach Haven home, according to the indictment.
Prosecutors also claim he used foundation funds to buy a law office in Toms River for $200,000, which he later sold for $500,000.
The other two trustees, named “R.L” and “C.G” in court documents, were not aware of Conway’s actions, prosecutors said.
The two trustees filed a lawsuit in 1998 against two of Conway’s companies, claiming they defrauded the foundation of more than $800,000.
The case was eventually dropped because of lack of foundation funds, but not before Conway was named as a defendant in the case.
While Conway was allegedly benefiting from his position as a trustee, prosecutors claim he painted a different picture to the IRS.
In 1998, Conway reported his taxable income as $0, thus he was not obligated to pay taxes. Instead, prosecutors said, he received a refund of $12,083.
In 1997, Conway allegedly claimed a $67,584 loss in one of his foundation-funded companies.
Since Conway’s capital contributions to his companies came from money he embezzled, prosecutors said, his claim of loss was fraudulent.
There are several other, very similar instances of tax evasion charges in the indictment.
In the past couple months, prosecutors claim Conway attempted to get the other trustees to lie to the grand jury.
Calls to Conway’s lawyer were not returned, but from court transcripts, it appears Conway will argue that the money transfers were loans.
Conway was denied bail Monday. Guadagno said the judge felt he was a flight risk.
The 13 laundering counts and the witness tampering count each carry a 20-year maximum sentence.
In addition, the federal government hopes to seize Conway’s property and bank accounts, which, Guadagno said, would be used to restart the foundation.
From 1985 to 1992, a law firm in Middletown employed Conway. From 1992 through 2001, Conway operated his own practice, with various locations including an office on Route 37 West in Toms River. On May 5, 2001, Conway was temporally suspended. He was disbarred in May 21, 2003.
By Jarrett Renshaw, Press Of Atlantic City
