UPDATE: Murphy calls for mayor’s resignation

A year after a mysterious FBI raid on his home, Atlantic City Mayor Frank Gilliam appeared before a federal judge in Camden Thursday and pleaded guilty to wire fraud.

Gilliam, 49, defrauded a basketball club of more than $87,000, prosecutors said, spending that money on luxury designer clothing, expensive meals, and personal trips to various locations. More than $41,000 was recovered when his house was raided in December 2018.

Dressed in a dark suit, Gilliam told U.S. District Judge Joseph H. Rodriguez that he founded AC Starz Basketball Club, a non-profit that he incorporated to operate a youth basketball team, and opened a bank account for the club in March 2011. From 2013 to 2018, he admitted soliciting $87,215 in donations on behalf of the club and using them for his personal expenses.

Gilliam, who was released on $100,000 unsecured bond, could face 20 years in prison when he is sentenced on Jan. 7. He also agreed to make restitution.

Assistant U.S. Attorney Sean Farrell said more than 10 people were defrauded by Gilliam.

According to federal prosecutors, Gilliam was a member of the board of trustees of the basketball club, which was funded through fees paid by the families of youth basketball players and donations from contributors. But they said he used the club funds primarily to pay for personal expenses unrelated to the team, including designer clothing and pricey restaurants.

“Mayor Gilliam took advantage of his victims’ desire to assist underprivileged children by falsely representing that the money contributed to the AC Starz Basketball Club would go to pay for school supplies or to support youth basketball,” said U.S. Attorney Craig Carpenito said. “Instead, he spent the money on himself."

Gilliam said very little during the court hearing, except acknowledging he committed wire fraud. He also declined to comment as he awaited the hearing before Judge Rodriguez. The mayor’s wife, Shawna, sat in court in the row behind him.

The first hints of a federal investigation into the Democrat came last December when at least a dozen agents were seen going in and out of the mayor’s Ohio Avenue home, removing more than 10 boxes and computer equipment. An FBI spokeswoman at the time said both FBI and IRS agents were involved in the search of home, but would not then disclose the focus of their inquiry.

In a statement following the plea, defense attorney Harry Rimm said the charge to which he pleaded guilty related only to his conduct as a private citizen, and not conduct in his official capacity as mayor.

“He is not charged with taking any public or taxpayer funds,” the attorney said, adding that the mayor “is accepting responsibility for his actions and is genuinely remorseful.”

Rimm said Gilliam has already started paying back the money, making a voluntary payment Thursday in connection with his plea.

“To date, and in advance of sentencing, Mr. Gilliam has paid back almost half of the restitution amount that the parties have agreed is owed,” said the attorney.

Gilliam, a high school athlete and native-born son, was elected to the City Council in 2009, and became mayor in 2017, in an election marked by unheard of sums of money raised for a municipal race that was later punctuated by questions over where those funds went.

FBI agents raid the home of Atlantic City Mayor Frank Gilliam, Monday, Dec. 3, 2018. (Lori M. Nichols | NJ Advance Media for NJ.com)Lori M. Nichols | NJ Advance Media for NJ.com

Even before the FBI raid on his house, Gilliam found himself in an unwelcome spotlight. The mayor was accused of simple assault and harassment stemming from a 2:30 a.m. brawl outside the Golden Nugget Casino’s Haven nightclub last year.

He was cleared of criminal charges in March by a municipal court judge in nearby North Wildwood, where the case had been transferred to avoid a conflict of interest.

Atlantic City’s third African-American mayor, Gilliam is not the first official to face legal trouble in a city long marked by scandal. Infamous political boss Enoch “Nucky” Johnson, the subject of the HBO series “Boardwalk Empire,” ruled over the seaside resort during the 1920s and developed relationships between city officials and organized crime during Prohibition.

Mayor Michael J. Matthews in 1984 admitted to committing extortion after taking $10,000 from an undercover FBI agent posing as a developer tied to convicted crime boss Nicodemo “Little Nicky” Scarfo. His successor, James L. Usry, pleaded guilty to a violation of campaign finance law after being indicted in 1990 on charges of conspiracy, bribery and official misconduct.

In 2007, Mayor Robert Levy went missing after questions were raised about his claimed military service record. He later pleaded guilty in federal court to lying to government officials to boost his veterans benefits. Federal prosecutors contend the false claims led to an overpayment of $24,683.

The charges against Gilliam:

Staff writers Ted Sherman and Kelly Heyboer contributed to this report.

Joe Atmonavage may be reached at jatmonavage@njadvancemedia.com. Follow on Twitter @monavage.

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