Mulvihill may have been “dreaming” (per recent obits) with results entailing economic benefit to part of Sussex County, but he was realistic in pleading guilty to federally sanctioned, felonious charges
[A few edits done 12/12/12.]
Subsections below:
Some earlier public statements by several, in 2012, about Mr. Mulvihill
Background and findings stated within the 1986 SEC decision
State-land-use component to the one-count accusation of criminal activity
A deed-restriction matter, and a 1989 local-news topic is ahead
I had said I would look into how Eugene Mulvihill had gotten in trouble, as led to news reporting about him by the later 1980s being negative, including reference to him as a convicted felon. I did find a copy of a decision by an administrative law judge on file with the federal Securities and Exchange Commission, which had been signed September 30, 1986. It is eye-opening.
Some earlier public statements by several, in 2012, about Mr. Mulvihill
In my November 6 blog entry, I had noted that
Anyone who has had their own “stomping grounds”—place of residence, area in which they do most of their business—in this northern crescent [of Vernon Township, the Franklin/Hamburg area, and Wantage Township], as opposed to those more in the direction of Newton—know that Mr. Mulvihill has long had a rather dark reputation. Whether or how much this is rooted in reality (such as a legal issue where he got in trouble for a self-insurance matter in the early 1980s—for some backup, see here [link is provided], under the subhead “Vernon Valley,” but be aware that as of November 15, 2012 [sic], important allegations in this Wikipedia article such as Great American Recreation’s having engaged in such things in the 1980s as “unauthorized operation of an insurance company” are noted with “citation needed”; but local news entities have covered this latter issue in the past), the simple fact had long been that Mr. Mulvihill had long had a “folk reputation” among many in Vernon Township (and probably in neighboring municipalities as time went on) that saw him as being an exploitative big-businessman, running a park (long called Action Park in the summer [now Mountain Creek] and the Vernon Valley Ski Resort [or something close to this] before Intrawest took it over by 1998) that had numerous problems of its own, whether simply perceived or not.
I also remarked,
Consider how an otherwise acceptable-enough obituary, in including various people’s quotes, describes Mr. Mulvihill as “the man whose vision changed the face of northern Sussex County, creating bustling amusement parks and ski resorts where there were woods and farms,” who “dreamed of turning Vernon Township into a tourist destination that could rival Disney World” (both said in the Star-Ledger obit of October 30[, 2012]), and quoting Governor Chris Christie as saying “Gene Mulvihill’s contributions to the economic development of Sussex County are unquestionable” (same source). Consider how the same obit has Harold Wirths, currently the commissioner of the state Department of Labor and Workforce Development and previously a county freeholder, say, “…Gene Mulvihill delivered on his dreams since the 70’s […]. He built the northern part of the county into a renowned recreational area and employed over 4,000 people [there]” (same source).
Mr. Mulvihill, of course, bought Mountain Creek, the successor to the Vernon Valley/Great Gorge ski resort and Action Park in Vernon Township , N.J.
Let’s see some small part of how Mr. Mulvihill “delivered on his dreams.”
Background and findings stated within the 1986 SEC decision
The September 30, 1986, “initial decision” delivered by administrative law judge David J. Markun represents the outcome of a hearing, including appearances by attorneys for the New York Regional Office for the Division of Enforcement, and other attorneys (some “on the briefs,” and one or more “at the hearing only”). The hearing, held May 27 and 28, 1986, was for the determination of what sanction(s) was/were to be applied in order to serve the public interest in the matter of Mr. Mulvihill (decision, p. 10), in which he had already pleaded guilty to six counts of a set of charges with a total of 109 counts (p. 4). This hearing was quite some period after the initial time of the guilty pleading; this was shown in an order of the SEC of October 16, 1981, to determine Mr. Mulvihill’s wrongdoing (p. 2). “In 1983 or 1984, [a] State Grand Jury Indictment…, containing 108 counts, and…(a one-count accusation) were filed with the Superior Court of New Jersey [it does not say where this court was]” (p. 4). “On November 8, 1984, the State of New Jersey and Respondent Mulvihill entered into a plea agreement pursuant to which (a) Respondent pled guilty to counts 17, 23, 57, 61 and 65 of the indictment and to the one-count accusation and (b) the remaining counts in the indictment were subsequently dismissed” (pp. 4-5).
Mulvihill, the decision indicates, had been “the secretary, treasurer, and 75-100% owner of the outstanding common stock of Mayhill Agency, Inc. …, a broker-dealer, since October 1977. Mayhill, in turn, ha[d] been the owner of 75-100% of the outstanding shares of Seabord [sic] Planning Corporation…, another broker-dealer, since January 1977. Respondent Mulvihill ha[d] been president and a director of Seabord since January 1985 and ha[d] been the beneficial owner of 75-100% of the outstanding common shares of Seabord since February 1977. Both Mayhill and Seabord are broker-dealers registered with the [Securities and Exchange] Commission pursuant to Section 15(b) of the Exchange Act, and both are also registered with the NASD [sic]” (p. 3).
Further, “During the period from April 1977 to April 1981[,] Respondent Mulvihill was a member of the board and chief executive officer of Vernon Valley Recreation Association, Inc. …, which owned and operated a recreational ski area and summer action park [sic] in northern New Jersey, and was also associated with other entities and operations” (p. 3).
To the point: “In order to avoid the cost of insurance premiums in connection with insurance required by the various recreational and construction operations in which he was involved, … Mulvihill formed a phony offshore corporation, London & World Assurance, Ltd. (“L&W”), as an exempt corporation under the laws of the Cayman Islands, British West Indies , and utilized it to issue and distribute fictitious insurance policies and performance bonds. This conduct resulted in the convictions of … Mulvihill that are involved in this administrative proceeding” (p. 4).
On December 14, 1984, the decision says, Mr. Mulvihill was sentenced. “On the [one-count] accusation (using a corporation to promote a criminal object) he received a suspended three[-]year sentence, was placed on probation for three years, and was fined $7,500” (p. 5). On the five counts in the grand-jury indictment (connected with allegations of doing business as an unauthorized insurance company, and falsifying and tampering with records), “he received, for each count, a suspended one[-]year sentence, a term of one year’s probation, and a fine of $7,500” (p. 5).
“A judgment of conviction and order for probation was issued against…Mulvihill on Feb[ru]ary 27, 1985, in accordance with the plea of guilty, and all remaining counts of the indictment were dismissed” (p. 5).
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When the issue of the sanctions to be applied in view of the public interest was being addressed in 1986, Mr. Mulvihill had argument presented to the Division of Enforcement to inveigh against “the Division’s contention that an additional jurisdictional basis for sanctions exists because the violations arose out of ‘the conduct of the business of a[n] … insurance company’ within the meaning of the relevant statute” (p. 7).
The decision notes, “The essence of Respondent [Mulvihill]’s arguments on this point is that L&W was not a bona fide insurance company and did not sell or purport to sell insurance to the public at large but only to various entities in which Mulvihill had an interest” (p. 7).
The one-count accusation that charged Mr. Mulvihill with “Use of a Corporation to Promote a Criminal Object, Third Degree” “charged that from April 1, 1977 through April, 1984, Mulvihill and others created and used L&W to promote a criminal object by, among other things, fabricating and distributing documents purporting to be valid insurance policies and performance bonds issued by L&W and other documents, records[,] and correspondence relating to the financial condition of L&W for the purpose of creating the false impression that L&W was a bona fide insurance company when in truth it was not” (p. 8). “[A]s already noted, …Mulvihill pleaded guilty to the one-count accusation” (p. 8).
Of the five counts in the grand-jury indictment, “each details specific acts involving the issuance of purported insurance policies or performance bonds by Mulvihill through L&W” (p. 8).
The decision points out “it is clear that…Mulvihill pleaded guilty to engaging in the unauthorized [italics here; underscored in original] business of insurance within the relevant period…” (p. 8).
There is what seems a bit of humor. The decision looks at the question of “whether the doing of unauthorized, bogus insurance business constitutes the commission of a crime that arose ‘out of the conduct of the business of’ an insurance company within the meaning of subsections 15(b)(6) and 15(b)(4)(B) of the [Securities and] Exchange Act” (p. 9). Apparently this may refer in part to Mr. Mulvihill's argument that "no one got hurt and that no one was put at risk by his phony insurance machinations" (p. 20). “In some respects Respondent [Mulvihill]’s argument on this point is somewhat akin to the argument that income illegally obtained need not be reported as income for Federal income tax purposes because it was not legally obtained. That argument, of course, has been singularly unpersuasive in the courts” (p. 9).
“[B]asically, I conclude that the Division’s argument that the pertinent sections of the Exchange Act must be broadly construed in order to effectuate their remedial purposes i[s] sound and persuasive” (p. 9).
Remaining was the question of what sanction must be applied against Mr. Mulvihill to serve the public interest.
The judge notes that the Division had argued that “the dismissed counts, while not admissible to prove or establish the counts to which Respondent pleaded guilty, are admissible on the question of what sanctions are appropriate in the public interest, by analogy to the wide latitude [that] criminal courts have to consider broadly matters bearing upon the personal history and behavior of the accused…” (p. 11). The judge doesn’t buy this argument, concluding “…that due process considerations militate against considering the dismissed counts of the indictment in determining what sanctions may be appropriate in the public interest.” Nevertheless, “…I do not strike such dismissed counts from the record in view of their possible utility in any appeal that may be involved in subsequent stages of this proceeding” (p. 12).
State-land-use component to the one-count accusation of criminal activity
In view of what the judge characterizes the “egregious nature, character, and duration of the felonies committed and admitted by…Mulvihill” (p. 12), the accusation is quoted at length, and includes:
During the time period set forth in this Accusation, [Mulvihill], as a member of the…board of directors and as chief executive officer of Vernon Valley Recreation Association, Inc. was aware of the express conditions contained in various lease agreements between the State of New Jersey
This meant that state land, which abutted VVRA-owned land, which was used probably for support of the ski areas (such as, I suppose, water for use by the artificial-snow-making equipment), “did not have bona fide insurance coverage from July, 1977 until March 1981 as required by said leases…” (p. 14) and false documents were supplied to the state to suggest that there was such insurance (p. 14).
There was also false representation of performance bonds (alleged to come from the same bogus insurance company) made to Vernon Township
The judge’s decision notes the sentencing court’s acknowledgement of the seriousness of Mr. Mulvihill’s infractions with respect to his awareness of the crimes: the sentencing court wrote, “What I find very troubling is the fact that the defendant, Mr. Mulvihill, with such ability and such talent[,] has deliberately, calculatedly[,] and premeditatedly chose[n] the course of action which he did, and I have no doubt in my mind that he knew at the time that it was illegal, criminal, and an attempt deliberately to deceive for the purpose of a commercial venture” (p. 17).
The 1986 administrative law judge notes that “[t]he sentencing Court had before it numerous letters from friends, acquaintances, and persons who had had business or other contacts with…Mulvihill and who spoke of his generosity, standing as a fine family man, uprightness in his business dealings, and the like” (p. 17). “These same letters were received in this proceeding as part of Respondent’s Exhibit B and are relied upon by him on the question of sanctions” (p. 17).
The 1986 judge notes that the sentencing court remarked at one point, “…I don’t see this as a crime committed out of weakness; I see it as a crime committed out of strength and an arrogant belief that it could be accomplished without detection…” (p. 18).
The 1986 judge later heads toward his conclusion with, “I find nothing in the record or in the Respondent’s arguments that would prompt me to come to a different conclusion in evaluating these several elements in determining sanctions in the public interest in this proceeding. Respondent’s past acts of charity and assistance to worthy groups and individuals cannot serve to immunize him from the consequences of his serious and calculated violations” (p. 20).
“Respondent attempts to make much of the arguments that no one got hurt and that no one was put at risk by his phony insurance machinations. This argument only serves further to demonstrate Respondent’s failure to appreciate the nature and gravity of his offenses, as the sentencing Court noted” (p. 20).
“Mulvihill’s disposition to cut corners rather than to turn square corners in legal matters as indicated by his convictions is precisely the kind of tendency that must be guarded against, and cannot be countenanced, in the securities business, an industry that presents so many opportunities for abuse and overreaching and depends so heavily on the integrity of its participants” (p. 22; boldface added).
The decision notes that Mr. Mulvihill had been “in the brokerage business since 1959” (p. 23).
The order concludes that “Respondent Eugene Mulvihill is hereby barred from association with a broker-dealer,” which the judge has premised on the idea that it is “necessary in the public interest” (p. 24).
I don’t know whether this decision was appealed (i.e., whether a “review” was petitioned for).
All this would support most of what I said in my November 27 blog entry where I noted
…Mr. Mulvihill pleaded guilty to six counts of wrongdoing within a set of charges (some were criminal; I’m not sure if others were civil) that included setting up a dummy corporation to seem as if Action Park and/or its associated business(es) had liability (?) insurance it was required to carry. There was also a component of some alleged misuse of state land [I need to look at this aspect further; my reference here may only aim at the single-count accusation's allegation that Mulvihill did not have insurance on land he leased from the state] (the Action Park
Now let’s move slowly to the next general item of interest, news reporting in 1989.
A deed-restriction matter, and a 1989 local-news topic is ahead
There was an agreement, apparently reached later in 1986, brokered by a state assemblyman, I believe (Walter Kavanaugh, was the name?), where Mr. Mulvihill was allowed to continue running GAR/VVRA (excuse me if there’s looseness in referring to this company or companies), and it involved some swap of ownership of mountaintop land—Mulvihill gave some of his to the state, and the state gave some of its own to him.
In particular, some deed restrictions were placed on the land he received, which became a point of controversy by the early 1990s connected with a proposed campground project (on this I have clearer memories, having attended some of the township government meetings related to this; I might have news clippings addressing it, too). I leave this stated as roughly as I do here because, first, it is not as serious as the matters I just cited above from the 1986 judicial decision; and second, what I have to relate from 1989 presupposes fairly common-sense knowledge, which I will make clearer, behind the land-use issues that were central to interrelations I got tangled up in (in 1989) as a news reporter trying to make sense out of contentions coming from various, rather bitterly opposed sides.
