FBI raid a black mark after Atlantic City fiscal progress

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Legal limbo surrounds Atlantic City Mayor Frank Gilliam as he closes his first year in office at a time when the city has fiscal momentum at its back.

Investigators from the FBI and IRS conducted a search at Gilliam’s home Monday. The FBI press office did not provide details on why the raid occurred.

Gilliam returned to work on Tuesday and was unavailable for comment. Gilliam’s chief of staff Maisha Moore said “he is still mayor of Atlantic City and has a job to do for the city’s residents and he is continuing to do so.”

Atlantic City has faced state intervention since November 2016 after it was on the verge of defaulting. S&P Global Ratings cited fiscal progress under state control for its Oct. 16th two-notch upgrade to B from CCC-plus. Moody’s raised Atlantic City’s rating four notches to B2 from Caa3 on Nov. 1.

In November, Gilliam and Atlantic City Councilman Jeffree Fauntleroy were involved in a physical altercation with employees outside the Golden Nugget’s Haven Nightclub, with casino surveillance video of the incident posted by NJ.com. The Cape May County prosecutor’s office opted not to pursue criminal charges against Gilliam and Fauntleroy. The elected officials are still slated to appear in North Wildwood Municipal Court on Dec. 11 to address citizen complaints filed by nightclub employees.

The fight prompted the Atlantic City Democratic Committee to call on Gilliam and Fauntleroy to resign their posts. The committee filed a criminal complaint against Gilliam related to the theft of a $10,000 check. Superior Court Judge Bernard DeLury dismissed the complaint in April.

“The issues that stem from the FBI raid along with the ongoing battle between the Mayor and his own local party highlight the challenges that the City continues to have when it comes to self-governance,” said Marc Pfeiffer, assistant director of the Bloustein Local Government Research Center at Rutgers University. “These are self-inflicted reminders of the value that state oversight and engagement brings to the city.”

Moody’s spokesman David Jacobson said, “We don’t see a credit impact at this juncture,” when asked about legal uncertainty with Atlantic City’s mayor.

Gilliam became mayor in January after upsetting incumbent Donald Guardian in November 2017. He previously was a two-term Democratic city councilman.

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