June 2000

Jersey City Approves Windfall Gain for Developer who Swindled S&L out of $ 16 Million

689 Luis Marin Boulevard has sat vacant for the past ten years since Joseph M. Lucarelli abandoned the property, leaving behind over 20 million dollars in unpaid debts.

Joseph M. Lucarelli, vice president of operations for United Diversified, LLC, has succeeded in gaining approvals for his $150 million, 43-story Millennium Towers project in Jersey City. Lucarelli's multi-million dollar bank fraud conviction, abandoned buildings, failure to pay real estate taxes and long list of construction liens did not deter the City of Jersey City from providing an extraordinary economic windfall for United Diversified through amendments to the Jersey Avenue Redevelopment Plan and plans for a light rail stop.

Lucarelli pleaded guilty in 1995 to defrauding North Jersey Savings and Loan out of $16.3 million. In 1989, after defaulting on a mortgage and two loans, and accumulating a long list of additional debts, Lucarelli abandoned 689 Luis Marin Boulevard which, since then, has remained vacant and uninhabitable, just a block from the Millennium Towers site. United Diversified only paid their million dollar overdue tax bill on the Millennium Tower site after threat of foreclosure and warnings from the City Council that the project would not be approved until they paid up.

The community opposition to this 551 unit extravaganza has been intense. Concerns about protecting the views to and from the Palisades, and speculation regarding traffic gridlock failed to dissuade Jersey City Mayor Bret Schundler and the City Council from putting Millennium Towers on a fast track. On Tuesday, June 20, the Jersey City Planning Board approved the preliminary site plan for this project, before the amendments to the Jersey Avenue Redevelopment Area that increased height limits from 110 to 440 feet had even gone into effect.

On January 15, 1988, L.B.J. Management and Realty, Inc. took over a $7.25 million mortgage for 689 Marin Boulevard from North Jersey Savings and Loan. The two people listed as the directors of L.B.J. Management and Realty were Joseph M. Lucarelli and Joseph B. Lucarelli. L.B.J. then obtained a construction loan for $8.5 million and another loan of $621,101 from the same S&L. No payments were ever made by L.B.J. on these debts. In addition, the Lucarellis, through L.B.J. and another company, Joseph M. Lucarelli & Sons--Construction Division, Inc. racked up more than $385,000 in additional debt owed to various building suppliers and contractors for work on 689 Marin Boulevard as well as nearly a quarter of a million in unpaid real estate taxes. The bonding companies, one of which was based in the Bahamas, never made good on these bad debts. In 1989, Joseph M. Lucarelli and his wife filed for personal bankruptcy.

On December 21, 1990, the FDIC determined that North Jersey Savings & Loan was insolvent and appointed the Resolution Trust Corporation as its conservator. In 1991, the RTC initiated a civil action in United States District Court of New Jersey against L.B.J. Management and Realty and Joseph M. Lucarelli & Sons--Construction Division. The court entered a default judgment in December of that year against the Lucarellis' companies for $21.7 million which included the principal on the mortgage and two loans plus interest.

On January 25, 1995, Joseph M. Lucarelli was indicted in federal court for conspiracy in a scheme to defraud North River Savings and Loan. The indictment charged Lucarelli with presenting the S&L with false documents and forged signatures, and diverting funds to his other companies and for his personal use. He pleaded guilty to bank fraud and was sentenced to 14 months in federal prison.

The organizational chart for United Diversified, LLC shows Joseph M. Lucarelli as the central figure. He directly supervises Joseph B. Lucarelli who is the superintendent in charge of construction. Joseph M. Lucarelli also deals directly with the attorney, the accountant, architect and insurance agent. Lance Lucarelli, who is Joseph M.'s son, is responsible for the overall management of the construction division of United Diversified. Michael Galella and Joseph Zingale are listed as the principals and owners of United Diversified, LLC. Galella is Lance Lucarelli's father-in-law.

Galella and Zingale, however, are not developers. They are in the beauty supply business. Galella is registered as the owner of Beauty Bizz, First Beauty, Inc., J & M Beauty Supplies and Jon Michael's Beauty Supply, Inc. All of these companies, except for First Beauty, are registered at 534 Broadway in Bayonne. Zingale owns New York City Beauty Supplies, Inc. in Passaic, New Jersey. Beauty Bizz is located in a luxuriantly renovated storefront at 534 Broadway. In the back alley, behind this building, is the entrance for United Diversified, LLC.

The development track record of United Diversified is quite limited. They have completed one 5-unit building and are finishing two others, also comprised of five units each, in Hoboken. These projects are located at 107, 208 and 210 Jackson Street, down the street from a large public housing complex. They have also just begun another small residential project of about 11 units in Bayonne under the corporate name of Waterfront Homes, LLC. In a prospectus submitted to the Jersey City Housing Authority (JCRA), United Diversified claims that Joseph M. Lucarelli has been involved in various other developments including industrial complexes, mausoleums, hospitals, educational facilities and residential projects, but no locations or dates are given for these projects.

There has already been a number of construction liens placed on the Jackson Street properties, two of which, totaling $34,655, are still unsatisfied. On May 18, 1999, Superior Court of New Jersey entered a judgment on behalf of Blue Circle Materials of Bayonne against United Diversified, Joseph M. Lucarelli and 208 Jackson Street, LLC for an unpaid bill of $35,687. One couple reported repeated delays in their attempt to close on a condominium at 208-210 Jackson Street.

Lance Lucarelli, in the prospectus submitted to the JCRA, is given credit for being the owner of an upscale restaurant/nightclub. Reports in the Asbury Park Press, however, tell a different story. In 1993, Lance and Joseph M. Lucarelli set up an adult entertainment club named Extreme Fahrenheit in Asbury Park that had a long history of conflicts with that City and was closed down repeatedly for lewd behavior. The Empress Motel in which the club was located became notorious for drug dealing and prostitution, and was also the scene of a murder. By 1996 the Lucarellis lost their liquor license. They then abandoned the club and the Empress Motel which has remained an empty, derelict building until its resuscitation just this year. Three judgments were entered against Joseph M. Lucarelli in connection with Extreme Fahrenheit between March 1997 and January 1998 totaling over $74,000.

Mayor Bret Schundler and City Council President Thomas DeGise have been strong advocates for the Millennium Towers project. First Beauty, Inc., owned by Michael Galella, contributed $1000 to City Council President Thomas DeGise, at his March 27 fundraiser at Puccini's Restaurant. DeGise is starting a campaign for Mayor of Jersey City. The election will be held next spring. Schundler has his sights on the New Jersey governor's race which will begin next year.