Ex-legislator Sentenced In Pension-fund Fraud

Posted: December 12, 1987

Former Union County Assemblyman Joseph Higgins, 58, was sentenced to eight years in prison yesterday for defrauding a New Brunswick-based Teamsters union pension fund and for perjury in connection with his Florida bankruptcy trial.

"Mr. Higgins' life was a web of lies and deceits," U.S. District Judge John F. Gerry said in Camden yesterday, enumerating how Higgins had lied to police, to the bankruptcy court, to federal investigators and even to Gerry

himself in a pretrial hearing.

"It is a most incredible litany of lies and deceits from which emerged the picture of a most unusually corrupt man," said Gerry, as Higgins stood in silence before him in the ornate Camden courtroom.

The stiff sentence meted out by Gerry took both the defense and the prosecution by surprise, since Higgins had been a key government witness in a four-month-long trial that led to the Dec. 23 convictions of two trustees and a lawyer from the pension fund in the same scam.

On April 24, Gerry sentenced Teamsters Local 701 trustees Robert Coar, 59, of Manalapan, Monmouth County, and Frank Scotto, 65, of Flushing, N.Y., and the pension fund's former lawyer, Kenneth P. Zauber, 49, of Princeton, Mercer County, to four years each in prison.

A federal indictment had charged Coar and Scotto - the fund's sole trustees at the time - and Zauber with agreeing to receive kickbacks in return for hiring Omni Funding Group Inc. in 1982 to invest and manage $20 million of Local 701's $100 million pension fund.

Higgins, of Pompano Beach, Fla., owned Omni Funding Group Inc. His silent partner, who was also indicted in the case, was former New Jersey Sen. David Friedland of Jersey City, according to testimony. Friedland, now a fugitive, staged a drowning on Labor Day 1985 and avoided trial. Higgins pleaded guilty on Oct. 23, 1985.

In court yesterday, the assistant U.S. attorney who prosecuted the case against the three union officials asked the judge to sentence Higgins to no more than he had sentenced the three others.

"For the government to prosecute these three people, we needed Mr. Higgins to prove the case," Assistant U.S. Attorney John Fahy said.

Before passing sentence, Gerry quoted the government's sentencing memorandum, which suggested that Higgins' culpability in the scam was no worse than the three union officials.

"I think he was far more culpable," Gerry said. The union officials opened the door "to permit Higgins and Friedland to rape the funds of hard- working men and women."

Higgins' attorney, John J. Hughes, told Gerry that he intended to appeal Higgins' sentence, which is stayed until Jan. 15.

Hughes blamed Friedland, a man he described as a "schemer and conniver of great moment," for Higgins' troubles. Friedland dazzled Higgins into letting Friedland use Higgins' tiny mortgage company as a mechanism for stealing from the pension fund, Hughes said.

"He was a tool used by these people" and should not be sentenced on his past actions, but on the way he has tried to reform since then, Hughes told Gerry.

Beyond the mystery of the missing Friedland, weird tales from Higgins about the lies he told to various officials provided the only break in the government's excruciatingly dull paper case.

The jury heard about how he told police that burglars stole nearly a million dollars in gold coins hidden in his attic. They heard how he told a bankruptcy judge about a mysterious trust fund in Ghana where he sent the money he made on the Omni deal - unfortunately, the trustee was nowhere to be found. And there was the plan to stage a sinking of a trawler full of coffee beans to collect the insurance.

Omni made its money by charging tremendously high points and commissions on the mortgages it wrote for high interest, sometimes to people who had bad credit histories and wound up defaulting on loans for hundreds of thousands of

dollars.

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