A seasoned detective with the Port Authority of New York and New Jersey Police Department, who also worked with the FBI, was arrested yesterday on charges he filed false claims in a Superior Court lawsuit regarding flood damage to his home in 2007 to collect $10,000 for repairs that a federal informant did for free.
Michael Palermo, 50, a detective for more than 16 years, the past 11 of which he spent with an FBI violent crime task force, was arrested on a mail fraud charge by federal agents who said they were tipped off that he had falsified the financial tally for losses the officer suffered when his new home in Jackson Township flooded in April 2007. The officer, according to a federal complaint, convinced a repair contractor -- a convicted criminal and confidential informant who Palermo had worked with since 2003 -- to falsify a $10,000 receipt to bolster the damage claims the officer made in a lawsuit filed against his home builder, real estate broker and a project engineer.
"This is a sad day for everyone involved," said Weysan Dun, special agent in charge of the FBI's Newark Field Office, contending Palermo appears to have an otherwise unblemished law enforcement career.
"The charges against him have nothing to do with his law enforcement responsibilities. It does not reflect his many years of service," Dun added during a press conference held in Newark with Port Authority Police Superintendant Michael Fedorko.
The federal charges stem from a legal battle Palermo initiated against a home construction contractor in February 2007 after buying his Jackson Township home in 2006 and claiming there were problems with the construction. When the home's basement subsequently flooded in April of that same year, Palermo amended his lawsuit to add a Realtor, a project engineer and a claim he spent $10,000 to have a Jackson Township company called New Day Construction repair the flood damage, according to a federal complaint.
"He had never been charged for those repairs," Dun explained, contending the company owner, a federal informant, never charged Palermo.
According to the FBI complaint against Palermo, he admitted to lying about paying $10,000 in cash for repairs and to submitting a false receipt when confronted about the case by agents on July 12 in Newark.
Palermo had lied once in a signed and sworn statement in September 2007 and again in sworn testimony in December 2008 as the officer's lawsuit against the contractor proceeded through the legal system, according to the charges.
The lawsuit settled for $50,000 in January. But authorities contend they subsequently learned through a "tip from a citizen" that the flood repair bill was phony and that Palermo had many favors done for him over the past several years by the federal informant.
"Officer Palermo unfortunately developed a personal relationship with this cooperating witness," Dun explained.
The informant, who has a criminal record, was not identified by the FBI or Ralph Marra, deputy U.S. Attorney for New Jersey, at the press conference. Authorities said only that the informant had worked with Palermo from 2003 through 2008 while the officer was with the FBI task force and that the informant pleaded guilty in August 2008 to a federal charge of rolling back the odometers of cars. The informant also cooperated with the probe of Palermo, said Dun, confirming that the flood repair work was done for free and that the officer asked him to submit a phony receipt for $10,000. The informant, who has not been charged in the case, also told the FBI he did other favors for Palermo, including getting the officer favorable prices on high-end automobiles, repairing his car for free and getting him price breaks on landscaping work at the Jackson Township home.
But Dun and Marra said there is no indication that any investigations Palermo was working on were ever compromised or that the informant was extorted for the favors.
"There is no indication of anything like that at this point," said Dun, although the probe continues.
"We are undertaking an internal review of all of the cases in which Officer Palermo and the cooperating witness worked together," Marra added.