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First-term Atlantic City Mayor Frank Gilliam has pleaded guilty to defrauding a youth basketball club of $87,000 in federal court in Camden.
FBI, IRS agents executed a search warrant on Frank Gilliam's Atlantic City home in December 2018.
Gilliam faces up to 20 years in prison when he is sentenced in January. He resigned Thursday after his guilty plea.
Atlantic City mayor Frank Gilliam Jr. has resigned after pleading guilty to defrauding a youth basketball club he founded of $87,215.
Gilliam sent in his resignation letter Thursday.
"It is with a heavy heart that I tender my resignation as the Mayor of the City of Atlantic City, effective immediately," he wrote. "I would like to apologize to the residents of the great City of Atlantic City who deserve stability and respect. My sincere apologies to each constituent that voted for me and had high hopes in my tenure."
The resignation came after Gilliam pleaded guilty to a single count of wire fraud in federal court in Camden on Thursday morning.
The 49-year-old Democrat arrived at the courthouse with his wife and attorney before entering his guilty plea.
"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," U.S. Attorney Craig Carpenito said in a prepared statement. "Instead, he spent the money on himself."
Gilliam co-founded the Atlantic City Starz as a nonprofit youth basketball club, according to documents filed in the case.
As a member of Atlantic City Council, then as mayor, Gilliam took donations from people in Atlantic City and Philadelphia saying that the money would go toward the basketball club and for school supplies for underprivileged children, court documents said.
"When a scheme depletes charity for children, it's unconscionable," Special Agent in Charge Gregory W. Ehrie said. "But when the fraud is perpetrated by someone the public trusts, it damages the community's confidence in their public servants."
Gilliam used the money for luxury clothes, expensive meals and trips that had nothing to do with the youth group from 2013 to 2018, court documents said.
NBC10's Ted Greenberg was there in December 2018 as FBI and IRS agents removed computer equipment and white boxes from Gilliam's North Ohio Avenue home during a Monday morning raid.
Following the raid, Gilliam returned to work, but had no comment about the raid.
Mystery surrounded the raid until Thursday when Gilliam admitted to defrauding the basketball club.
Gilliam left his home early Thursday clutching his passport, and declined comment to reporters other than to say, "Have a good day." Surrendering a passport is commonly done when a defendant faces federal charges to prevent them from leaving the country.
Judge Joseph Rodriguez informed Gilliam his guilty plea could result in his no longer being able to hold public office. He was released after posting a $100,000 bond with the court.
Gilliam stayed silent as he left court then left in a car after the plea hearing.
Gilliam's attorney, Harry Rimm, partner at Sullivan & Worcester, said the fraud had nothing to do with Gilliam's work as mayor.
"It should be noted that Mr. Gilliam was charged as a private citizen; the charge and his plea are unrelated to his official role and at no time has he been charged with taking any public or taxpayer funds," Rimm said in a prepared statement.
Rimm said Gilliam has already paid back half of the money.
“Mr. Gilliam, who is a lifelong resident of Atlantic City, has admitted his wrongful conduct, is accepting responsibility for his actions and is genuinely remorseful," Rimm said in a statement.
City Council President Marty Small will be sworn in at noon Friday to take over as acting mayor, city officials said.
"We pray for Mayor Gilliam and his family during a difficult time but the city has to move forward," Small said.
Gilliam could face 20 years in prison and a fine of $250,000 when he is sentenced on Jan. 7. He also agreed to make restitution.
After Gilliam's guilty plea, Attorney General Gurbir S. Grewel filed an order to show cause in New Jersey Superior Court seeking to remove the mayor from office under the state's Forfeiture of Public Office Statute.
"Under the state statute, when the defendant is convicted of an offense under the laws of another state or the United States that triggers forfeiture under New Jersey’s statute, the Attorney General or a County Prosecutor must file an application in state court seeking the removal from office in order to effectuate the forfeiture," a spokesperson for the Attorney General's Office wrote.
Gilliam's term as Atlantic City mayor was marred by controversy.
A former two-term city councilman, Gilliam defeated Republican incumbent Don Guardian in November 2017 in a contentious election in which Guardian alleged voter fraud by Gilliam's campaign.
In April 2018, a judge threw out a criminal complaint against Gilliam over the alleged theft of a $10,000 check from the Atlantic City Democratic Committee. Gilliam said it was a mistake and later returned the money.
Gilliam and several others were also involved in an early morning fight in November 2018 outside an Atlantic City casino but a judge later cleared Gilliam.
Gilliam's guilty plea marks the latest in a long history of corruption involving elected officials in the seaside resort community, which provided the basis for the long-running hit HBO series "Boardwalk Empire."
As recently as 2007, four of the city’s last eight mayors had been arrested on graft charges and one-third of last year's nine-member City Council was either in prison or under house arrest.