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FBI Nabs over 40 N.J. Politicians, Rabbis

Last Updated at 7:00 p.m. EDT

An investigation into the sale of black-market kidneys and fake Gucci handbags evolved into a sweeping probe of political corruption in New Jersey, ensnaring more than 40 people Thursday, including three mayors, two state lawmakers and several rabbis.

Even for a state with a rich history of graft, the scale of wrongdoing alleged was breathtaking. An FBI official called corruption "a cancer that is destroying the core values of this state."

There were so many suspects that the FBI had to round them up in a bus. The probe was part of a 10 year public corruption investigation, reports CBS News correspondent Kelly Wallace.

Federal prosecutors said the investigation initially focused, with the help of an informant, on a money laundering network that operated between Brooklyn, N.Y.; Deal, N.J.; and Israel. The network is alleged to have laundered tens of millions of dollars through Jewish charities controlled by rabbis in New York and New Jersey.

The investigation widened to include official corruption in July 2007 when the cooperating witness approached public officials in Hudson County posing as a developer seeking to build in the Jersey City area.

Hoboken's waterfront has proven to be an especially lucrative piece of real estate across from midtown Manhattan. Developers have put up dozens of buildings in the last 15 years in the mile-square city. Fears that the city was being overdeveloped had become a hot topic during elections among candidates.

"This case is not about politics, it is certainly not about religion," Weysan Dun, Special Agent in Charge of the FBI, Newark, said. "It is a shocking betrayal of the public trust."

Among 44 people arrested Thursday were Hoboken Mayor Peter Cammarano III, Secaucus Mayor Dennis Elwell, Jersey City Deputy Mayor Leona Beldini, state Assemblyman L. Harvey Smith and state Assemblyman Daniel Van Pelt.

Ridgefield Mayor Anthony Suarez, who is also an attorney, is charged with agreeing to accept an illegal $10,000 cash payment for his legal defense fund.

Also, five rabbis from New York and New Jersey - two of whom lead congregations in Deal - were accused of laundering millions of dollars, some of it from the sale of counterfeit goods and bankruptcy fraud, authorities said.

Those arrested included Levy Izhak Rosenbaum of Brooklyn, who was charged with conspiring to arrange the sale of an Israeli citizen's kidney for $160,000 for a transplant for the informant's fictitious uncle. Rosenbaum was quoted as saying he had been arranging the sale of kidneys for 10 years.

The politicians arrested were not accused of any involvement in the money laundering or the trafficking in human organs and counterfeit handbags.

The number of arrests was noteworthy even for New Jersey, a state that has seen more than 130 public officials plead guilty or be convicted of corruption since 2001.

"New Jersey's corruption problem is one of the worst, if not the worst, in the nation," said Ed Kahrer, who heads the FBI's white collar and public corruption investigation division. "Corruption is a cancer that is destroying the core values of this state."

Gov. Jon Corzine reacted to the probe Thursday morning by saying, "any corruption is unacceptable - anywhere, anytime, by anybody. The scale of corruption we're seeing as this unfolds is simply outrageous and cannot be tolerated."

Hours after FBI agents seized documents from his home and office, New Jersey Community Affairs Commissioner Joseph Doria resigned. Federal officials would not say whether he would be charged. Doria did not return calls for comment.

The informant, Solomon Dwek, was the hinge between the two investigations. He became an informant two years ago after being accused of a $50 million bank fraud. Wearing a wire for the FBI, Dwek handed out envelopes stuffed with cash to public officials in parking lots and laundered $3 million with the rabbis, using charitable organizations, Wallace reports.

Dwek found a particularly receptive ally in Hoboken Mayor Peter Cammarano III, according to prosecutors. The 32-year-old Cammarano, who won a runoff election last month, was accused of accepting money from the developer at a Hoboken diner.

"There's the people who were with us, and that's you guys," the complaint quotes Cammarano saying. "There's the people who climbed on board in the runoff. They can get in line. ... And then there are the people who were against us the whole way. ... They get ground into powder."

Joseph Hayden, an attorney representing Cammarano, said his client "is innocent of these charges. He intends to fight them with all his strength until he proves his innocence."

Cammarano was accused of accepting $25,000 in cash bribes. Secaucus Mayor Dennis Elwell was charged with taking $10,000. Jersey City Deputy Mayor Leona Beldini, 74, was charged with conspiracy to commit extortion by taking $20,000 in illegal campaign contributions.

Jersey City Mayor Jerramiah Healy said Thursday the charges were "a little shocking."

"I have full faith in Leona," Healy said. "She's a good friend of mine - was and will be."

Smith, the Jersey City Council President, and several other current and former Jersey City public officials also are accused of accepting money to help the fake developer gain permits and approvals.

"The scope of the bust is enormous and any time you have this many people collared at one time the next question is: is anyone now going to rat out anyone else, provided that there was illegal conduct here," said CBS News legal analyst Andrew Cohen. "I am sure the feds now will try to see if they can build stronger cases against some using the testimony of others."

Each of the defendants is looking at significant jail time, according to Cohen. Their defense teams can be expected to "attack the reliability and the credibility of the government snitch or snitches who helped the feds put together their huge case. That person or people are going to be on trial almost as much as the defendants themselves."

In Deal, Mike Winnick of the Elberon section of Long Branch was praying inside the Deal Synagogue when it was raided by FBI, IRS and Monmouth County Prosecutor's Office agents.

"Everyone was looking at each other, like, `What's going on here?'" he said.

Winnick said four FBI agents escorted a rabbi from the synagogue into his office and blocked the doorway.

Winnick said he left shortly afterward.

Nearby, FBI and IRS agents removed several boxes from the Deal Yeshiva, a school that educates the children of Sephardic Jews.

Busloads carrying those arrested were brought to the FBI's Newark field office Thursday morning. One agent slowly walked an elderly rabbi into the building as another covered his face with a felt hat.

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