The real estate developer who sprung the trap that helped federal investigators snare six political figures -- including Spring Valley Mayor Noramie Jasmin and Deputy Mayor Joseph A. Desmaret -- has a sketchy financial background that includes a $126 million debt to Citigroup, sources close to the case told Newsday on Wednesday.
Moses "Mark" Stern, 40, who also is known as Mo and Morris, pleaded guilty March 11 to federal charges in a case that has been sealed. He has not been sentenced and has been cooperating with FBI agents and federal prosecutors for nearly two years, according to a federal complaint unsealed Tuesday in which he is not identified.
Stern's escrow agent in the Citigroup debt case, Ephraim Frenkel, was charged by federal prosecutors with fraud in connection with that case. Stern was not charged -- at least not in open court.
"His name is all over every document in the case except the indictment," said lawyer George Fufidio, who represented Frenkel for part of the ongoing case. "So of course it made you wonder if he was working for federal prosecutors."
Stern's history as a real estate developer is littered with problems. He took his company, First Republic Realty Group, into bankruptcy in 2009 after Citigroup declared him in default on the $126 million in financing the bank provided for Stern's company to buy 11 strip malls in the Southeast.
A spokesman for U.S. Attorney Preet Bharara declined to comment Wednesday.
Stern, who lives in a Monsey mansion, used his position as a wealthy real estate developer in the FBI sting, doling out nearly $40,000 in bribes -- and promising $40,000 more -- to political figures who each had an agenda, according to court documents.
During a Tuesday news conference, Bharara detailed what the key players allegedly were seeking:
Jasmin wanted a 50-50 partnership in an under-the-table deal for her and Stern's fake holding company -- which included an undercover FBI agent -- to build the community center.
Desmaret wanted his financial cut for backing Jasmine's plan.
Bronx GOP chairman Jay Savino and Queens GOP vice chairman Vincent Tabone wanted to be paid off for backing Smith in his bid for the Republican nomination, which allegedly was aided by Republican City Council member Daniel Halloran.
STERN'S MANSE: 'NAUSEATING OPULENCE'
On Wednesday, a knot of media gathered outside Stern's brick manse on Remsen Avenue that some in the mostly modest community of 18,000 derided as "grotesquely luxurious." A masseuse and a maid drove up to the circular driveway, and there was a note from United Water jammed in the front door threatening to turn off the water unless a $616 overdue bill was paid.
When Stern, the father of nine, began erecting the mansion in the mid-2000s, "People kept saying it's the biggest house in Rockland County, an insane mansion he built for himself, and it's been years and years in the making," said one resident who did not want his name used.
Construction appears to be ongoing. The unkempt front lawn was filled with pallets of granite slabs and columns Wednesday. In the back, an outdoor, built-in swimming pool takes up much of the yard.
The house, the resident said, is "grotesquely luxurious. Parts of it were flown in from other countries. There was some marble and moldings flown in from Europe -- nauseating opulence is the way I'd describe it."
'GOOD CLIENT UNTIL HE STOPPED PAYING'
Stern's tangled financial history played out over three years in Manhattan bankruptcy court, where he filed on behalf of his company, First Republic Realty Group, in March 2009. Two years later, Stern's company negotiated more than $111 million in mortgages from Citigroup for the strip malls and an additional $15 million loan.
Citigroup wasn't repaid, the company argued in court documents asking a judge to disallow Stern's bankruptcy filing. There was an accusation by Citigroup that Stern and Frenkel had stolen $13 million from an escrow account for two other companies that were supposed to invest in Stern's company. The alleged theft led to lawsuits and counterlawsuits between First Republic Realty Group and the two California companies -- Amusement Industry Inc. and Practical Finance Co.
In February, federal Magistrate-Judge Gabriel W. Gorenstein in Manhattan determined that there was enough evidence that Stern engaged in questionable conduct that Stern's attorneys had to provide documents and testimony about their dealings with him.
Specifically, Gorenstein said there was evidence by companies suing Stern that he allegedly used forged or false documents to get loans from JPMorgan Chase and Citigroup.
In some cases, Gorenstein noted, "Stern's involvement is unmistakable." Gorenstein also said that there was probably cause to believe Stern engaged in a scheme to defraud a company in terms of the $13 million investment, as well as other financing.
Gorenstein did rule in Stern's favor when he found there wasn't sufficient evidence to show he laundered money. But because Stern hid behind his right against self-incrimination, Gorenstein said that the parties suing him were able to draw adverse inferences against him in his attempt to shield his lawyers from making disclosures.
Attorneys for Stern didn't return telephone and email messages for comment.
Stern's bankruptcy case ended in August 2012, with Stern's creditors losing more than $17 million.
Stern is named as a defendant in more than a dozen lawsuits filed in courthouses in several counties by companies and individuals who contend that he owes them money, according to state records.
Among them is the Manhattan law firm Heller, Horowitz & Feit, which secured a $117,000 judgment against Stern this year for legal work it did on his behalf several years ago.
"He was a good client until he stopped paying," said Eli Feit, a partner in the firm.
Feit said Stern made partial payments to the firm to handle depositions and other legal work in a civil case. He was unaware of Stern's criminal troubles.
"We sued him because he owed us money," Feit said. "Now, we're waiting in line."
SPRING VALLEY MAYOR: 'PRAY FOR ME'
Earlier Wednesday, Jasmin denied any wrongdoing during a blink-of-the-eye news conference at Spring Valley Village Hall.
"We will vigorously defend against those charges to restore my good name," she said. "I'm asking the community not to prejudge me, rather to keep me in your prayers for my good name to restore."
Desmaret accepted a series of cash bribes from a cooperating witness in return for steering some $500,000 in state transportation funds to the community center project, according to the criminal complaint.
Desmaret declined to comment Wednesday, saying his lawyer had advised him not to speak publicly about the case.
Jasmin, 49, and Desmaret, 55, face 20 years behind bars if convicted of mail fraud. They are free on $250,000 bail.
On Tuesday, George Venizelos, the assistant director of the FBI, said Jasmin and Desmaret colluded "in a pure piece of theater" by conning fellow members of the village's board of trustees to vote for a favored developer, unaware that Jasmin had a financial stake in the sale. Jasmin knew all three bidders were working together to rig the outcome, Venizelos said.
The 4-1 vote on Oct. 23, 2012, authorized the village to enter into negotiations with 2 Holdings LLC to develop the land for the Spring Valley Community Center, court records show. Jasmin allegedly had coached an undercover FBI agent and two others posing as straw developers on how to make their case to the five-member Spring Valley Village Board.
Rockland County District Attorney Thomas Zugibe told Newsday the probe was sparked by his office's investigation into the real estate deal, which began three years ago. Zugibe said he decided to bring in federal investigators after it became clear the probe was bigger than anticipated. He declined to say what triggered the inquiry but noted that Jasmin and Desmaret's roles did not come into focus until later in the case.
With Thomas Zambito and Anthony M. DeStefano