Atlantic City mayor resigns after pleading guilty to stealing $87K from youth basketball nonprofit

CAMDEN, N.J. – Atlantic City Mayor Frank M. Gilliam Jr. resigned from office late Thursday after admitting to embezzling more than $87,000 meant to buy school supplies and fund activities for a youth basketball club he co-founded, becoming the latest in a long string of the city’s elected leaders to face possible prison time.

Even as Gilliam, 49, was raising funds for the Atlantic City Starz, an organization he has touted both in his campaigns and his official biography, he was spending donors’ money on luxury clothing, expensive meals and trips that had nothing to do with the underprivileged children the organization was supposed to serve, prosecutors said.

“It is with a heavy heart that I tender my resignation as Mayor of the City of Atlantic City, effective immediately,” Gilliam wrote in a letter time-stamped by City Clerk Paula Galetei at 4:39 p.m., minutes after a police officer had locked up City Hall for the day.

“I would like to apologize to the residents of the Great City of Atlantic City who deserve stability and respect.”

Gilliam left his house, passport in hand, shortly after 7 a.m. and took that well-worn route from Atlantic City to Camden, where he pleaded guilty to one count of wire fraud in a hearing before U.S. District Judge Joseph Rodriguez.

He now faces a potential prison sentence of up to 20 years. The judge informed him that his plea could also mean he would no longer be able to hold public office. Prosecutors said more than $41,000 in cash seized in an FBI raid of his home would go toward restitution.

Gilliam did not resign until hours after his guilty plea and calls from the state’s top officials for him to step down. New Jersey Attorney General Gurbir S. Grewal filed an Order to Show Cause in Superior Court in Mercer County seeking to remove Gilliam from office under the state’s forfeiture of public office statute.

“The residents of Atlantic City deserve immediate action to remove Mayor Gilliam, who demonstrated by his criminal conduct that he is not fit for office,” Grewal said.

New Jersey Gov. Philip Murphy called the charge to which Gilliam pleaded “despicable” and said he “must resign” to make way for a mayor who would focus on the “betterment of Atlantic City and not themselves.”

“He has squandered the trust and confidence of his community and of his administration to lead that community,” Murphy said mid-afternoon, even as a spokesperson for Gilliam was at the door of Gilliam’s seventh-floor office saying he was still the mayor.

“When a scheme depletes charity for children, it’s unconscionable,” said Gregory W. Ehrie, special agent in charge of the FBI’s Newark office, in a statement. “But when the fraud is perpetrated by someone the public trusts, it damages the community’s confidence in their public servants. This defendant betrayed the trust of his community and of people of people who wanted to improve the lives of children.”

Gilliam is a former city councilman elected to lead the cash-strapped casino town in 2017.

In court, Gilliam showed no emotion, responding succinctly to the judge’s questions while his wife, Shawna, sat alone in the front row. She had accompanied Gilliam there from their Atlantic City home.

He was released hours later on a $100,000 unsecured bond pending his Jan. 7 sentencing hearing.

As part of his guilty plea, Gilliam agreed to repay the money he stole from the basketball nonprofit between 2013 and 2018 – in part with more than $41,000 in cash that FBI agents seized from his home last year. Gilliam founded the charity along with former Atlantic City basketball alumnus, Keith Fader, of Margate, in 2011.

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Thursday’s hearing brought to a head speculation that has swirled around Gilliam, a Democrat, since the day he was elected in 2017. Questions arose over checks that were deposited into his campaign account but were made out to the Atlantic City Democratic Committee. He has dismissed that as an oversight.

Then in December, FBI and IRS agents raided his home, carting off computers and files, amid reports that his campaign finances and the nonprofit he founded had drawn federal scrutiny. Speculation centered on a dispute over a $10,000 campaign finance check that came from the Atlantic County Democratic Committee that Gilliam had deposited in his personal account, and on a nonprofit Gilliam founded called “Connecting the Dots.” But the guilty plea centered on none of that.

That search came five days after state prosecutors announced that they had decided not to charge Gilliam and Councilman Jeffree Fauntleroy II for their involvement in a separate incident – a Nov. 11 fight outside the Haven nightclub at the Golden Nugget casino.

Atlantic City Councilman George Tibbitt has said he had been questioned by the FBI as a possible victim of campaign finance violations. He ran on the same ticket as the mayor, but the two have had a falling out.

In March 2018, a judge dismissed a citizens’ complaint alleging Gilliam, a Democrat, stole a $10,000 campaign check not meant for him.

In the ruling, Superior Court Judge Bernard DeLury said there did not appear to be “even a scintilla of evidence” of wrongdoing by Gilliam or his campaign chair, Rich Winstead, when Gilliam endorsed and deposited a $10,000 check from the Atlantic County Democratic Committee that was made out to the City Democratic Committee. Gilliam said he returned the money to the county Democratic Committee.

The future leadership of Atlantic City remains uncertain.

With Gilliam’s resignation, the city’s Democratic Committee will submit a list of three potential replacements from which the City Council would select a successor.

Municipal employees declined to comment as they entered and exited City Hall. Bob McDevitt, the head of UniteHERE Local 54 casino workers union, who is working to change the form of government, said the development was not unexpected.

“It’s not like anyone was surprised right?” McDevitt said by telephone. “It’s part of the natural course of things here.”

Small noted that Atlantic City has “been through this before.” He declined to call for Gilliam to resign and said the process would play out according to state law. “We’re very resilient,” he said. “We’ll get through it.”

Indeed, three former Atlantic City mayors have been charged with federal crimes while in office.

Mayor Michael Matthews was recalled from office in 1983 after being charged with accepting a $10,000 bribe from an undercover federal agent and for accepting money from Philadelphia mob boss Nicodemo “Little Nicky” Scarfo. Matthews pleaded guilty to a single count of extortion.

Mayor James Usry lost his bid for a third term after being indicted in 1989 for taking a $6,500 bribe from a state police informant and later pleaded guilty to extortion.

And in 2007, Mayor Bob Levy resigned before pleading guilty to lying about his military record.

“Hopefully we can get past this and get someone in there who cares about the community,” said Gwen Lewis, who heads the City’s Democratic Committee, in a phone interview. “It’s going to have a bad mark on the city and those who want to change the form of government will point to it.”

A group of residents centered around the casino workers union president Bob McDevitt is collecting signatures for a petition to change the form of government to a city manager form.

Atlantic City remains under state control, after the administration of former Gov. Chris Christie took over management of the city in 2016.