Feds investigate Melius after report on over $900,000 in court fees

Federal agents are investigating political power broker Gary Melius over Newsday reports that Melius and a network of his associates collected more than $900,000 in fees from state court appointments.

Investigators have questioned Geri Mayo, a former employee at Melius' Oheka Castle estate, according to two people familiar with the inquiry. Frank X. Pagano, principal of Integrated Realty Group, a Garden City commercial real estate company that worked with Melius and his associates on the court appointments, has also met with investigators.

Pagano's records have been subpoenaed and federal investigators questioned him about money Melius collected while holding court appointments, according to an individual familiar with the case.

Pagano could not be reached for comment.

An FBI spokesman declined to comment.

Mayo told Newsday she could not comment for this story because Melius had her sign a confidentiality agreement when he fired her after more than 20 years at Oheka Castle, which is in Huntington Town.

Melius said in an interview Friday that he was unaware of the federal investigation and is not worried. "I've done nothing," he said. "I don't care."

Newsday reported in October that Suffolk Supreme Court Justices Thomas Whelan and Emily Pines violated court rules when they named Melius and his associates property managers and receivers -- essentially temporary landlords -- at four office complexes in foreclosure. By failing to report the appointments and fee awards, as required by court rules, the judges effectively hid the group's activity.

Those who benefited financially from the appointments include Melius and his daughter, Kelly; Richard Bellando, an Oheka Castle employee and Melius' former son-in-law; Ronald Rosenberg, a former Independence Party committee candidate and Melius' attorney; Steven Schlesinger, then-Nassau County Democratic Party attorney and one of Melius' closest friends; and Mark Cuthbertson, a Huntington Town Board member whose largest individual donor is Melius.

Although judges named Melius, his daughter and Bellando as property managers, Newsday reported that Mayo actually handled the work.

By keeping Mayo's name out of the court file, the group skirted court rules that bar an individual or entity from taking more than one appointment a year if compensation from any single one is expected to exceed $15,000. Judges awarded Melius and his associates at least three appointments in 2012 that totaled roughly $200,000 in fees, exceeding the $15,000 cap in each case.

David Bookstaver, spokesman for Chief Administrative Judge A. Gail Prudenti, declined to say whether federal investigators have contacted state court officials.

Melius' name on agreement

Although it's unclear why investigators had questions about Integrated's role, court records show the company was involved in brokering lease agreements at two of the four receiverships tied to Melius and his associates.

One involved an office building on Walt Whitman Road in Huntington Station. At the request of attorney Evan Krinick, who represented the lender foreclosing on the property, Pines appointed Rosenberg receiver in 2012.

Rosenberg later asked her to approve hiring Bellando, chairman of the Nassau Independence Party, as property manager. Pines agreed, despite court rules that bar party leaders from getting court appointments.

Rosenberg then asked her to approve paying commissions to a leasing agency affiliated with the property manager. Records show Pines approved the request and an attached leasing agreement.

The end of the agreement, which is unsigned, has the names of Gary Melius and Ronald Rosenberg below lines for their signatures. Above Melius' name is "Integrated Realty Group" and above Rosenberg's name is "Receiver."

Christopher Cassar, Pagano's attorney, said Melius had no role with Integrated and that he does not know why Melius' name is on the agreement.

Rosenberg has said in interviews that he did not remember what role Melius played in the company or why he would tell Pines the entity was affiliated with the property manager.

"I don't know why I would care," Rosenberg said.

The court file shows that $72,565 was paid to Integrated from the receivership account.

Rosenberg's spokesman Gary Lewi said federal investigators have not spoken to Rosenberg.

The other receivership involving Integrated was the Fleetwood Office Park in Ronkonkoma.

Whelan chose Cuthbertson to be the property's receiver in 2012, and then appointed Kelly Melius property manager at Cuthbertson's request.

Court records show that Cuthbertson made payments of nearly $20,000 to Integrated from a receivership account. He previously told Newsday that either Melius or Mayo had recommended Integrated to him.

Cuthbertson said Friday that federal investigators had not contacted him.