Jones Lang LaSalle

Developer set to leave jail, fueling new probe
Sources: FBI suspects Kushner lied to get out
Thursday, February 16, 2006
BY JOHN P. MARTIN
Star-Ledger Staff

After serving less than half his sentence at an Alabama prison camp, millionaire developer Charles Kushner has won his release to a halfway house in New Jersey, a transfer that has outraged federal prosecutors and sparked a new criminal investigation, according to sources familiar with the case.

Kushner, the 51-year-old Livingston businessman sentenced to two years in prison for cheating on his taxes, hiding campaign donations and retaliating against a grand jury witness, qualified for the less restrictive setting and shaved several months off his term by saying he was an alcoholic who wanted help.

The admission made him a candidate for residential substance-abuse treatment, the only program in the federal prison system that allows inmates to earn credit against their sentences.

Kushner recently completed the 500-hour program and is to be transferred Feb. 28 from the camp at Maxwell Air Force Base in Montgomery, Ala., to the unidentified halfway house, the sources said.

At his new location in New Jersey, he will be required to hold a job, and could ostensibly return to the real estate empire that bears his family name.

Prosecutors and FBI agents have been scrambling to try to prove Kushner faked his way into the program, the sources said. In a grand jury probe that began late last year, FBI agents have interviewed liquor-store owners, Kushner's doctor and his one-time employees, trying to build a case that Kushner perjured himself by swearing to a debilitating alcohol addiction, the sources said.

A spokesman for U.S. Attorney Christopher Christie declined to comment yesterday, as did Kushner's attorney, Benjamin Brafman.

A public affairs officer for the U.S. Bureau of Prisons would not discuss Kushner's pending transfer but said he had completed the treatment program.

"His release method is the substance-abuse program, and that allows for time off," said the official, Carla Wilson. "It's the only program that allows for time off."

The twists are the latest developments in an investigation that has continued even with its primary target, one of the region's most prominent businessmen, behind bars.

Kushner, the son of Holocaust survivors and a noted benefactor to schools, hospitals and social agencies, was a rising political player when he came under federal scrutiny four years ago. He had been the single largest individual contributor to Gov. James E. McGreevey and was poised to become the powerful board chairman of the Port Authority of New York and New Jersey.

But a bitter feud with his brother, Murray, over control of the family real estate business, Florham Park-based Kushner Cos., led to civil accusations of fraud and a federal criminal probe.

In August 2004, Kushner pleaded guilty to tax and campaign violations. He also acknowledged he had retaliated against a grand jury witness -- his own sister -- by hiring a prostitute to seduce her husband and then sending her a videotape of the encounter.

His admission spared Kushner a public trial that might have offered a window into his lifestyle, business operations and family infighting.

But despite the plea, Kushner refused to cooperate with investigators, and the acrimony between prosecutors and his defense team lasted through his sentencing last March.

At that time, Kushner and his attorneys gave his sentencing judge hundreds of pages of documents, including letters from supporters, family and Kushner himself. None mentioned a drinking problem, the kind of admission a judge might consider.

By contrast, friends and acquaintances have portrayed the slim businessman as an avid runner and exercise buff. And Kushner himself told the judge his downfall had inspired and focused him.

"What has gotten me through the past months has been my daily thoughts about projects and endeavors I intend to take on in what I refer to as my 'after-life' -- the hopefully not so distant time when I return from prison," he wrote in a letter to U.S. District Judge Jose Linares.

As part of the sentencing, Linares ordered Kushner to undergo a mental health examination, but made no reference to substance abuse. He also recommended Kushner be sent to the minimum-security camp in Alabama, in part because it was particularly accommodating to the diets and religious need of Orthodox Jewish prisoners.

Sources say Kushner told U.S. probation officials during a presentence interview that he was a social drinker who had been drinking more since his guilty plea. He arrived at the Alabama prison camp last April 8 and immediately applied to be accepted into the residential substance-abuse treatment program.

Wilson, the prisons bureau spokeswoman, said she could not discuss Kushner's participation in the program, but said each applicant is screened before being approved.

"They have to have a documented substance-abuse history and be a nonviolent offender," she said.

According to bureau policies, inmates in the program live together in a unit away from the general population. Participants spend half of each weekday in intensive group and individual counseling and therapy.

Those who complete the program can get as much as a full year cut from their prison sentence, with the amount determined by the bureau of prisons. Congress added the incentive in 1994 to encourage more prisoners to seek substance-abuse treatment.

Federal inmates already could earn up to 54 days off each year for good behavior. Under that formula, Kushner stood to be free from federal custody sometime in December, four months ahead of his original release date.

By yesterday, the bureau of prisons had moved his projected release date up to Aug. 26.