NEW BRUNSWICK, NJ—On October 3, the city's longtime Chief Housing Inspector resigned, after being suspended without pay for more than nine months following his arrest in a city vehicle that cops say contained a "distribution quantity" of cocaine.

It was one of the most bizarre "only in New Brunswick" stories when it all went down, and it continues to be today.

Just days before Christmas, Michael Mahony was allegedly caught using his city vehicle to transport as much as eleven ounces of cocaine, sources said.

New Brunswick Today also got word that a raid had been executed on the New Brunswick Elks Lodge, where Mahony continues to serve as the organization's treasurer.

His arrest proved to be part of "Operation: Smoke Screen," a larger State Police investigation that also ensnared a New Brunswick landlord, a North Brunswick DPW employee, a Middlesex County Sheriff's dispatcher, and a business owner as far away as Cranbury.

The investigation yielded 10 arrests, 36 weapons, 1.5 kilos of cocaine, 12 ounces of MDMA, two pounds of marijuana, large quantities of fake brand-name apparel, and a Toyota truck supposedly involved in the distribution network.

State Police have yet to release key information, including search warrants, from the operation as it has not yet resulted in an indictment.

Fellow employees and private citizens often complained about Mahony's conduct during his tenure. He had been in office for nineteen years, and survived a federal investigation that sent two inspectors to prison on corruption charges in 2007.

Mahony was charged with distribution of cocaine, possession of cocaine, posession of cocaine within 1,000 feet of a school, and Possession of cocaine within 500 feet of a public building.

Authorities say the charges remain in full effect.

"All of the original charges in Operation Smoke Screen are pending," said Attorney General's office spokesperson Peter Aseltine. "They remain in force."

The city waited three days to announce Mahony's arrest, and included an ominous quote from Mayor James Cahill: "The City has been involved in a long term investigation, at the beginning of which, Police Director Anthony Caputo advised me could be far-reaching and have significant and serious implications."

Mahony was suspended without pay, pending an administrative hearing, from his $54,066 per year job supervising the city's staff of housing inspectors. It is not yet apparent why Mahony gave up on his right to the hearing and resigned.

"I am told that no, he did not [give a reason for his resignation]," said city spokesperson Jennifer Bradshaw, who broke the story of Mahony's arrest as a journalist for New Brunswick's Patch.com.

An excerpt from her follow-up article on January 7 included quotes from Police Director Caputo and Mayor Cahill:

“I am proud of the contributions my officers were able to bring to this investigation and I am thankful to the New Jersey State Police and the other agencies for their resources throughout this process,” said New Brunswick Police Director Anthony Caputo. “The New Brunswick Police Department will continue to work with our partners in the pursuit of criminal activity which touches our neighborhoods.” On Tuesday, New Brunswick Mayor James Cahill released a statement condemning the arrests and thanking the law enforcement agencies involved. “Let this serve as a clear and strong message that any illegal conduct by any and all city employees will not be tolerated and will be prosecuted to the full extent of the law," Cahill said. "As city employees and officials, we have one responsibility and that is to serve the public. Any deviation from this is unacceptable."

In January, Mahony resigned his position on the Citizens Recreation Committee, a small city-sponsored group of volunteers that meets at the city's Teen Center four times a year. But that did not stop him from seeking re-election as the Elks Treasurer months later.

Mahony remains a regular at the Elks Lodge, located at 40 Livingston Avenue, and his city truck was often seen parked outside for an extended lunch break before his arrest.

Among other things, the Elks is known for being strongly against illegal drugs.

That's why it was surprising when Mahony narrowly won re-election to continue as the group's treasurer earlier this year.

The organization counts among its members many law enforcement officials and others in the political power structure. James O'Neill, for example, the spokesperson for the Middlesex County Prosecutor's Office, has previously served as the organization's "Exalted Ruler."

"This is not our case," O'Neill said, referring questions to the State Police and declining to speak about the Elks organization.

On Memorial Day, Mahony was seen helping with the city's parade, marching alongside roughly a dozen Elks members.

Just a week after his resignation, Mahony was again marching with the Elks in a city-sponsored event: the Fire Department's 250th anniversary.