Update 4 p.m.: This article was updated with the results of a court appearance.
JERSEY SHORE, NJ -- A former Toms River mayor was arrested late Monday on tax evasion charges, according to the U.S. Attorney's Office.
Carmine Inteso, 46, appeared in federal court in Newark Tuesday afer being arrested at John F. Kennedy International Airport in New York City last night.
Inteso is charged with three counts of federal personal income tax evasion and three counts of failing to file federal personal income tax returns.
He appeared before U.S. Magistrate Judge Mark Falk this afternoon and was released on $200,000 bond. An arraignment has yet to be scheduled.
He was arrested after returning from Afghanistan, where he had been working as a contractor, according to the U.S. Attorney's Office, which alleges he took a job in Afghanistan after learning he was the target of the tax investigation.
Inteso served briefly as mayor in 2002 and then served as deputy mayor for the Dover Township Committee in 2003. He served as a councilman-at-large from 2004 to 2007.
A Republican, he ran for mayor in 2007 as an independent but lost to Tom Kelaher.
According to the federal court docket, a warrant had been issued for Inteso's arrest on Nov. 10, 2011 — the same day an indictment was handed up charging Inteso with tax evasion, a federal felony.
Federal investigators allege Inteso used a sham company as part of a tax evasion scheme.
"Defendent Inteso also controlled a company that had ceased operating by at least in or about 2007 and was instead used by defendent Inteso to facilitate his evasion of federal income taxes," according to the indictment.
An insurance broker from Towson, Maryland would make payments to the sham company, and those payments totalled $133,235 in 2006, $127,304 in 2007, and $31,253 in 2008, according to the indictment. The payments would be more than $10,000 in a month. Inteso would then use these funds for personal expenses. The IRS says Inteso owes taxes on this income for tax years 2006-2008.
The indictment states the unreported income and tax delinquency is allegedly:
- 2006: $155,226 unreported income, $26,971 in taxes owed.
- 2007: $135,271 in unreported income, $20,839 in taxes owed.
- 2008: $62,504 in unreported income, $3,206 in taxes owed.
The indictment alleges the insurance broker received premiums, brokerage commissions and fees on a yearly basis for providing insurance brokerage for the Brick board of education and for Toms River.
Inteso accepted payments from the insurance broker, through the sham company, the indictment states:
"It was part of the tax evasion scheme that defendant Inteso received compensation from the insurance broker through payments made by the insurance broker's companies to the sham company as directed by defendant Inteso, in order to concel such income and purposely evade the assessment by the Internal Revenue Service of federal income tax owing on such compensation."
Paul Brush, mayor through 2007, said Inteso was a nemesis of his.
"I was mayor for four years with Carmine Inteso. He was one of my chief antagonists," Brush said. As a Democrat mayor and a Republican council, "It wasn’t easy serving with a council that blamed me for everything. Carmine was one of my nemeses."
"All that said I’m not happy to see it. It's another blow to public officials," Brush said. "I'm very very disappointed."
Nels Luthman, president of the Toms River Democratic Club and a former member of the Planning Board, said Inteso opposed changing the government from a committee to a council in 2003.
"He didn't think there would be any interest. That encouraged us even more to get a petition going," Luthman said.
Kelaher, the current mayor, said he didn't know Inteso that well when Inteso served as mayor because Kelaher was the Ocean County prosecutor.
"I hardly knew the guy. I had no contact with him and I don't know anything about the charges. I didn't know him that well, even when we were running for mayor," he said.
Judge Joel Pisano is assigned to hear the case.
On June 25, Pisano ordered the case unsealed. With six months passing since Inteso's arrest, an arraignment originally scheduled for Dec. 2011 had been postponed. Inteso was arrested upon his return to the United States from working in Afghanistan, according to the U.S. Attorney's office.
Inteso could face five years in prison and a $250,000 fine for each of the three tax evasion counts. Each of the three failure to file counts carries a maximum potential penalty of one year in prison and a $100,000 fine.
U.S. Attorney Paul Fishman credited a number of agencies in the investigation: "special agents of IRS – Criminal Investigation, under the direction of John R. Tafur, Acting Special Agent in Charge, Newark Field Office – and the FBI, under the direction of Special Agent in Charge Michael B. Ward, with the investigation leading to the indictment. The Office of International Affairs in the Justice Department’s Criminal Division and the Diplomatic Security Service’s Regional Security Office in Kabul, Afghanistan provided invaluable assistance."