More corruption in boro alleged in indictment Prominent developer accused of bribing elected official in 2004 BY KAREN E. BOWES Staff Writer NEWARK - New allegations of government corruption are once again pointing to Keyport. On March 19, a federal jury charged local developer Anthony Spalliero, 63, Holmdel, with bribing an unidentified Keyport "elected official" in 2004. According to the indictment, the official was in a position to influence, and did influence, the Unified Planning Board. The cash was given in exchange for coaxing the board's decision regarding approvals for four in-town residences. The unnamed Keyport elected official was delivered the cash bribe via a third party. According to the indictment, Spalliero ordered an unnamed employee of Monmouth County to deliver the cash to the Keyport elected official. In return, the elected official was to provide assistance in procuring the necessary housing approvals. In June, Anthony Palughi, the former Monmouth County Superintendent of Bridges, testified in the corruption trial of former Middletown Committeeman Raymond O'Grady, who is now serving a 43-month sentence at the federal prison at Fort Dix. During the course of O'Grady's trial, Palughi testified that he often hand-delivered cash bribes to various government officials and employees from around the county, including former Keyport Mayor John Merla. Palughi explained that due to his own troubles with the law, he later acted as an undercover cooperating witness for the FBI, wearing a wire to record conversations with O'Grady and others. On Friday, Keyport Councilman George Walling said he recalled Merla speaking in support of an application to build four new homes in the area of Division, Third and Osborn streets. In 2004, Merla sat on the Unified Planning Board. Merla, whose term as mayor ended Jan. 1, pleaded guilty on Jan. 17 to accepting $2,500 in bribes from undercover FBI agents. Merla was charged with taking $24,000. Although Walling was not a councilman at the time of the alleged payoff, he said he regularly attended municipal meetings as a resident. "If memory serves, the mayor was pushing this," Walling said. "It was going to be great for Keyport, four different styles of housing. When they built them, they were all the same. ... After they promised not to cut down trees, they cut down one and replaced it with another. John basically tried to sell this - it would be great for Keyport, four different styles." Former Planning Board Chairman Doug Lane, an alternate member in 2004, said he could not recall any specific four-unit proposals from 2004. Lane resigned from the board in 2006, but said his decision had nothing to do with any suspicions of improper activity by Merla or any other board member. Current Planning Board member Al DeGracia was also on the board in 2004. Like Lane, he said he could not recall any specific four-unit proposals. "I can honestly tell you, [Merla] has never tried to influence me in any way," DeGracia said on Thursday. "I never, ever witnessed anything like that. He's been on the up and up with me." In addition to Spalliero's job as a commercial and housing developer, he also has a financial interest in several adult entertainment nightclubs, including Bourbon Street in Sayreville, Heartbreakers North in North Brunswick and Heartbreakers South in Neptune, according to the U.S. Attorney's Office. Spalliero now faces a 16-count federal indictment for bribing various government officials throughout Monmouth County, including over $150,000 to former Marlboro Mayor Matthew V. Scannapieco, for which Scannapieco has already pleaded guilty. Merla, whose name was never mentioned in the Spalliero indictment, could not be reached for comment on this story. Merla's attorney, Michael Pappa, did not wish to comment for the story. Coincidentally, Pappa is also representing Spalliero on separate charges regarding a September 2005 incident in which he allegedly pointed a gun at a 22-year-old female student and acquaintance in the parking lot of Brookdale Community College. Pappa also had no comment regarding those charges. Briefly jailed after the incident, Spalliero now remains under house arrest due to poor health, including complications due to congestive heart failure, diabetes and Parkinson's disease.