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Raleigh Native Indicted In Connection With Fraud And Extortion

By on January 25, 2012
Raleigh Native Indicted In Connection With Fraud And Extortion

The former President of Encap Golf Holdings LLC (“Encap”), William Gauger III, was indicted this week for his participation in a scheme to extort approximately $100,000 from a financial consultant and a fraudulent invoicing scheme relating to his work for a New Jersey-based management firm.

Gauger allegedly hired his brother-inlaw Craig Groce, who was originally charged along with Gauger by Complaint in July 2011, and the financial consultant, to provide services on various redevelopment projects in New Jersey.

According to the Indictment:

In August 2006, the financial consultant received “success fees” of approximately $881,500 for his services in arranging two loans of $69.4 million and $26.3 million for a redevelopment project in New Jersey. Gauger allegedly demanded that the financial consultant pay a portion of those fees – $100,000 – to his brother-in-law, threatening him with the future loss of business if he did not comply. The financial consultant made the payment to Groce in September 2006, even though he had not provided any services to the financial consultant.

Although Gauger allegedly told the financial consultant that the $100,000 payment was for his brother-in-law, Gauger was actually the beneficiary. Gauger had Groce make payments for Gauger’s benefit using the money allegedly extorted from the financial consultant. The payments included: $5,506 for a personal computer and high-definition, liquid crystal display television; $6,250 for season hockey tickets; $6,000 for a donation to a private school attended by one of Gauger’s children; a $10,000 donation to a soccer club in which
Gauger’s children were members; a $10,000 payment to Gauger’s father; and a $2,232 payment for a laptop computer.

The Indictment further charges Gauger with submitting and approving fraudulent invoices and expense reports in connection with his management of redevelopment projects in New Jersey that were undertaken by a private equity investment firm located in right here in Raleigh, North Carolina, (the “Raleigh Firm”). Coincidently, Gauger hails from one of Raleigh’s neighboring city’s, Morrisville, North Carolina.

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Gauger, his brother-in-law, who also performed consulting services, and the financial consultant allegedly submitted false and fraudulent invoices and expense reports for reimbursement to the Raleigh Firm and its project specific limited liability companies, including Encap. Their alleged fraudulent vacation expenses, political donations, dinners with their spouses, and other non-business expenses were ultimately paid by Encap and the other companies.

Encap won a contract in 2000 from the New Jersey Meadowlands Commission to cap and close four landfills in the Meadowlands and to sell the land for residential, commercial and recreational development, including golf courses. In December 2005, Encap received more than $300 million in publicly sponsored bond financing, including more than $200 million in loans from the New Jersey Department of Environmental Protection and New Jersey Environmental Infrastructure Trust. Encap’s project in the Meadowlands was the subject of a report by the New Jersey Office of Inspector General in February 2008. Encap filed for bankruptcy protection later in 2008 and did not complete the project.

Gauger is charged with three counts of mail fraud, five counts of wire fraud, two counts of conspiracy to commit mail and wire fraud, and one count of extortion obstructing commerce – Source.


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