While certain North Jersey check cashers ac­commodated many suspicious deals with New Yorkers, they of course were also processing simi­larly suspicious and lucrative transactions in­itiated by New Jersey-based clients. The public hearing testimony described a variety of examples of such New Jersey check cashing activities, in­cluding the following episodes.

Two Union County businessmen bounced more than $1.3 million checks at check casher entities, mostly at the North Avenue East check casher in Elizabeth, over separate periods of time during the 1980s. As the SCI's organized crime in­telligence chief, Justin Dintino, made clear during his public hearing testimony, a primary motive for the willingness of check cashers to accept a series of bad checks from a customer is to generate usurious fees.

One businessman, Joseph Damiano of Rahway, bounced more than $911,000 in checks at Herb Siegel's North Avenue East outlet between 1983 and 1985. (There is no blood relationship between Herb Siegel and Edwin Siegel.) Another customer, Dennis Abato of Branchville, an auto scrap dealer, bounced checks worth more than $200,000 at North Avenue East in 1984-85 and another $204,000 at Ed Siegel's organized crime-con­nected City Check Cashing entity in Jersey City in 1986. In both episodes, whatever the reason for cashing and recashing so many bad checks, the check cashers were actually "lending" money at loanshark rates. This was confirmed at the hear­ing with respect to both Damiano and Abato in the excerpted private session testimony of an uniden­tified check casher, who was familiar with their accounts at North Avenue East.

$911,000 In Bad Checks Bounced

Joseph Damiano,, owner of Dauman Pallets of Linden, claimed he needed large amounts of cash to operate because he pays cash for the pallets he buys but, when he sells them, is paid by checks that are often late and can't be drawn upon until they clear, if they do. Damiano recalled that he needed up to $4,000 a day in cash to purchase pallets and that his outstanding receivables would run as high as $400,000 from time to time. His cash flow was so tight, he told Counsel Saros, that he could not cope with the traditional limitations imposed on customers by banks:

Q. Why did you use a check casher as opposed to a bank?
A. Because [at] a bank when you make a deposit, you can't get the money.

Q. The bank has to wait till it collects the funds?
A. Yes.

Q. Did you use North A venue East Check Cashing in Elizabeth which was owned by Herb Siegel?
A. Yes.

Q. Did you cash your company checks at North Avenue East Check Cashing?
A. Yes.

Q. And to whom were those checks made out?
A. Well, they were usually made out to cash be­cause I needed that to buy pallets.

Q. What fee did Herb Siegel charge you to cash a check?
A. I think it was one point.

Q. That would be 1 percent?
A. Yes.

Q. It was always 1 percent?
A. Yes.

Q. Did you pay the fee or was it deducted from the amount of the check?
A. Well, if I wanted $3,000. I made it $3,030.

Q. Did you also cash personal checks at North Avenue East Check Cashing?
A. It may have been once in a while, yes.

Q. Were some of the company checks and per­sonal checks that you cashed at North Avenue East Check Cashing returned for insufficient or uncollected funds?
A. Yes.

COUNSEL SAROS: For the record, the in­vestigation and analysis conducted by the State Commission of Investigation reveals that from 1983 to 1985 approximately $875,000 in Dauman Pallet checks that were cashed at North Avenue East Check Cashing were re­turned for insufficient or uncollected funds.

Q. During the same period of time, 1983 to 1985, approximately $36,000 of your personal checks that were cashed at North Avenue East Check Cashing were also returned for insuffi­cient or uncollected funds. When these checks were cashed at North Avenue East did you know that the checks would be returned?
A. No, riot really.

Q. What do you mean by "not really"?
A. Well, a lot of times you put the check in and, you know, you cash a check and sometimes other checks would come in, you know. A lot of times he'd call to make sure the money was there, too. A lot of them were probably re­turned for uncollected funds, too. You know, I can't pinpoint, you know, the exact litany of what it really was.

Damiano's testimony wavered when he was pressed for details on whether Herb Siegel charged extra for redepositing bounced checks or for accepting replacement checks. He was "not sure" whether Herb Siegel made him pay the bank charges for bad checks but, whatever these trans­actions cost him, he had to get financial as­sistance from his relatives:

Q. At times did you have to borrow money from your family in order to make good on the checks?
A. Absolutely.

Q. Why did you stop using North Avenue East Check Cashing?
A. Well, because the amount of bank charges and the 1 percent was just killing me so I just cut back on everything and I stopped using check cashers.

Q. Have you used any check casher since the time that you stopped going to Herb Siegel's?
A. No, I have not.

Charged 1 Percent a Week Interest

The unidentified check casher whose private testimony was read at the public hearing (his anonymity was promised by the SCI because of his fear of personal harm) said Dauman Pallets was one of the largest check bouncers at North Avenue East. That account, according to his recol­lection, was being charged interest at the rate of 52 percent a year (the SCI's investigative findings indicated an annual rate of more than 300 percent was common in some cases). Other excerpts from the unidentified check casher's executive session testimony elaborated on how accounts such as Damiano's were processed:

Q. Now, were there instances where the customer could not make good immediately and you accepted payouts or paybacks over a period of time?
A. Yes.

Q. Now, in those instances did you charge the customers an additional amount of interest on those loans, if I can use that term?
A. There were instances.

Q. Did they come back to make good on that check with a new check at times?
A. Yes.

Q. What would the fee have been?
A. Normally we would charge them 1 percent for cashing the check.

Q. Were there instances where customers owed you money, and you charged them 1 percent on the unpaid balance?
A. Yes.

Q. Was that 1 percent a week?
A. Yes.

Q. Tell us how that was handled.
A. Well, to give you an example, if a customer had a check for a thousand dollars that was returned and they could not make it good, there were times when-there were instances where they would pay us $100 a week and 1 percent of the unpaid balance.

Q. We know of instances where there are some entities or individuals who bounced a large volume of checks totaling a significant amount of money and they were continually bouncing checks. In other words, they weren't cut off as customers. For example, Dauman Pallets bounced $875,000 worth of checks; Eastern Building Maintenance, $592,000 worth of checks; International Maintenance, $238,000; Scorpio Meats. $235,000; Abato Truck Sales, $200,000. There were many others, but these were the largest ones. What was the situation with these customers? Let's take Dauman Pallets.
A. There were times that [Dauman Pallets] checks were returned by his bank and he always brought either cash or a-he brought the money in. He would bring me in new checks which we verified with the bank were good and the checks always were.

Q. And what did you charge him?
A. We charged him for cashing the replacement checks.

Q. Was it 1 percent?
A. Yes. "You Paid What He Wanted"

Dennis Abato operates a scrap yard called Abato Truck Sales in Jersey City that has long had a serious "negative" cash flow, aggravated by financial setbacks caused by two fires. Such prob­lems forced him to utilize check cashers, he testi­fied, because they meant "instant cash versus a bank not paying ... until the check clears." Some years ago he was cashing checks through an or­ganized crime-influenced check casher and through an apparent mob grapevine he was re­ferred to Herb Siegel's North Avenue East outlet in Elizabeth. This was where during 1984-85 he cashed a series of 41 company checks totaling $200,000 that kept bouncing so regularly as to constitute a shylock loan. During questioning by Counsel Saros, he indicated more candidly than the previous witness, Damiano, that Herb Siegel's charges were usurious:

Q. When a check was cashed at North Avenue East Check Cashing what fee was charged?
A. 1 percent.

Q. Were some of the company checks that you had cashed there returned for insufficient or uncollected funds?
A. Quite a few.

Q. When a check was returned what did Herb Siegel require you to pay?
A. The same 1 percent.

Q. If a check was returned a second time what did Herb Siegel charge?
A. The same thing again.

Q. And at that point you would have to give a replacement check?
A. You'd have to issue another check for the checks or check, whichever the case might have been, to cover the check which was re­turned for whatever reason.

Q. Did Herb Siegel assess an amount beyond the 1 percent?
A. Well, there was times he charged, you know, maybe more than that because if you need the money ...

Q. You testified previously, Mr. Abato, that he might have charged you $500 or a thousand dollars or $1,500?
A. Well, depending on the amount of checks ... the amount that [were] returned at one particu­lar time. If it's one point on a dollar-if he had gotten back, hypothetically-speaking, $20,000 worth of checks, that's one point of $20,000 is $200, so if you do that two times twice, that's $400; pay the fees on top of that, $18 or $20 per check, that becomes $500 real quick.

COMMISSIONER ZAZZALI: There were, in fact, times when you paid him charges and fees of $500 or a thousand or whatever?
WITNESS: Well I just gave you a for instance ... If I cashed a check for $500, if it bounced two times, twice, you'd have to pay double and pay the fees double.

COMMISSIONER ZAZZALI: And that, in fact, happened?
WITNESS: Yes, it did.

Q. Would you pay Herb Siegel whatever he de­manded?
A. Well, it was never a demand. It was like-it was an understanding.

Q. That if you wanted your money you had to pay whatever he wanted?
A. Correct.

Q. And in order to get some cash you would pay him whatever he wanted?
A. Well, I had two fires which almost completely destroyed me. I had to keep my credibility good. At least if I got cash I could get money orders, pay bills, keep my phones turned on, keep my electricity there turned on, keep my payroll.

The executive session transcript of the uniden­tified check casher in connection with North Av­enue East's operation in Elizabeth recalled Abato Truck Sales as a customer:

Q. How did you handle the bounced checks?
A. Either [they were] redeposited or new checks were brought [in].

Q. And what [were the] charges?
A. We charged them-if it was redeposited, we charged them a fee for redepositing it. If they brought us a new check, we charged them a fee. If a check for $2,000 had come back and they brought us a new check, we would want a check for $2.020. The anonymous testimony also revealed that North Avenue East assessed customers additional charges during any period when a bounced check was not made good. Speaking of a client other than Abato, the unidentified check casher testi­fied:

Q. Now, is [this] an example of someone that you charged an additional fee when he came in, or additional interest?
A. There were times when we charged 1 percent for the week that he did not make the check good.

Q. Now, if that continued more than a week he would then have to pay another 1 percent the following week on the unpaid balance. Is that right?
A. Yes.

The unidentified check casher went on to say that he assessed similiar extra charges against scrap dealer Abato:

Q. I'd like you to think back to Mr. Abato and see if you can recall any instances where you did charge him that extra amount.
A. You're asking me that if he had bounced a check for $2.000 and he did not make it good for two weeks would I charge him $20 the first week and $20 the second week?

Q. Yes, or some other figure?
A. Yes.

Q. Now, there were customers obviously who never made good?
A. Yes.

Q. And how did you handle those situations?
A. We instituted lawsuits.

Another $202,000 in Bounced Checks in Jersey City

When Herb Siegel at North Avenue East filed suit against Abato, the scrap dealer shifted his check cashing business back to Jersey City, to the notorious (and previously discussed) City Check Cashing entity and a different Siegel, Edwin, no relation to Herb Siegel. At Eddie Siegel's City Check Cashing, Abato cashed bad corporate checks amounting to $202,000 during 1986. The pile-up of fees for processing bounced checks continued at City although on a less aggressive basis than at North Avenue East. However, the easier treatment may have resulted because City Check Cashing began to cash Abato's receivables that North Avenue East had rejected, at such a rate that more than $1 million in receivables were processed during one year beginning March. 1986.

Q. Did you also cash customer checks [or] re­ceivables at City Check Cashing?
A. Yes, I did.

Q. Eddie Siegel would take your receivables, then?
A. Yes, he would. At this point in Abato's testimony, he revealed that he had not filed federal income taxes for three years and was trying to catch up:

Q. Investigation and analysis conducted by the State Commission of Investigation reveal that from March, 1986, through March, 1987, you cashed $1,067,000 in customer checks at City Check Cashing. You did not file a 1986 income tax return. Are you and your accountant pres­ently in the process of preparing a return for 1986?
A. '85, '86 and '87, ma'am. 64

Q. You're preparing tax returns for those three years?
A. That's correct.

Abato recalled that during his transactions at City Check Cashing, he dealt with Bobby Santoro who had figured in earlier testimony about City Check Cashing), a long-time associate of the since murdered Hudson County mob leader John DiGilio. Abato, who had known Santoro for at least a decade, said he was cautioned by Santoro against bad check transactions but ignored that advice. He was questioned about this by Counsel Saros:

Q. Did Bobby Santoro give you some advice about not letting your checks bounce?
A. That's correct.

Q. What did he tell you?
A. I honestly don't remember.

Q. Let me refresh your memory. At the time that you testified in executive session you stated that Bobby Santoro told you not to let your checks bounce because it makes the check casher look like a shylock?
A. That's correct.

Q. And makes the bounced checks appear to be illegal, even if they're not?
A. That's correct.

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