2002-07-25 -- Nesbitt, Michelle -- Guilty Plea -- News Release

Roselle Park Woman Admits Embezzling More Than $200,000 in HUD Rent Sudsidaries

NEWARK - A former employee of an agency administering federal housing funds on behalf of Union County admitted today that she embezzled more than $200,000 and tried to get money from tenants for security payments, U.S. Attorney Christopher J. Chrisite announced.

Michelle Nesbitt, 39, of Roselle Park, pleaded guilty to a two-count Information charging mail fraud, according to Assistant U.S. Attorney Lorraine S. Gerson. Following the guilty plea, U.S. District Judge Alfred M. Wolin set sentencing for Oct. 30.

The defendant faces a maximum sentence of five years in federal prison and a $250,000 fine on each of the mail fraud charges. In addition, Nesbitt could also be ordered to repay the funds she obtained illegally.

Nesbitt admitted that the amount of embezzled funds was $209,000.

Nesbitt was employed by Rehabco, Inc., which was designated by the Union County Division of Community Development as its agent in administering its housing programs and disbursing payments received from the U.S. Department of Housing and Urban Development. HUD fully funded a rental assistance program - known as the "Section 8 Housing Program" - by paying rent subsidies to landlords with qualifying low-income tenants.

Nesbitt performed administrative tasks for Rehabco, including the verification of landlord and tenant rent payments, and the preparation of checks in payment of Section 8 subsidies to landlords.

Nesbitt admitted that from at least as early as March 2000 to about May 2001 she used the alias "Michelle Washington," to prepare and execute various documents to fraudulently establish that Washington owned property, had rental agreements with tenants who were qualified for Section 8 subsidies and was entitled to receive Section 8 rent subsidy payments.

Nesbitt admitted that she would prepare checks payable to "Michelle Washington" for payment of the rent subsidies, would forge an authorized signature and, at other times, would submit these checks for signature by an authorized signatory of Rehabco, Inc.

To conceal her involvment in the scheme Nesbitt would then cash the "Michelle Washington" checks at a check-cashing service, convert the cash proceeds into money orders and send them by private commercial interstate carrier to her own bank accounts outside New Jersey.

In addition, Nesbitt solicited and demanded money from Section 8 tenants in Union County by falsely representing that Rehabco, Inc. had pre-paid security deposits to their landlords, which the Section 8 tenants were then required to repay. Nesbitt mailed letters to Section 8 tenants demanding more than $63,000 in what she represented had been pre-paid security deposits. Nesbitt admitted taking some of that money.

Under U.S. Sentencing Guidelines, Judge Wolin will determine Nesbitt's actual sentence based upon a formula that takes into account the severity and characteristics of the offense, and the defendant's criminal history, if any.

Parole, however, has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

Under an Information, a defendant waives the right to have his case presented to a Federal Grand Jury and, instead, pleads guilty to charges presented by the Government.

Christie credited Special Agents of HUD, under the direction of Special Agent in Charge Ruth Ritzema; and Special Agents of the U.S. Postal Inspection Service, under the direction of Special Agent in Charge Kevin J. Burke, with bringing the case against Nesbitt.

The Government is represented by Assistant U.S. Attorney Lorraine S. Gerson, of the U.S. Attorney's Commercial Crimes Unit.

Defense Attorney:

Thomas F.X. Dunn, Esq. Glen Rock