Feds investigate property flip involving two New Jersey state senators

Federal authorities are investigating a real estate deal involving two New Jersey state senators who bought public land and then flipped it for seven times the original price.

Investigators recently subpoenaed records of the real estate transaction in Vineland, in South Jersey. A federal grand jury subpoena sent to the Vineland Industrial Commission and obtained by POLITICO seeks documents and communications related to the sale of the lot at 1615 W. Garden Road, which is now an almost-completed cold storage warehouse , according to a Vineland official.

Publicly-accessible property records show that the Vineland Industrial Commission sold the plot to four limited liability companies.

According to state business records, one of the companies that flipped the property, Nova Investments, is listed as a major source of income by state Sen. Michael Testa — a Vineland native and Cumberland GOP chair — on his legislative financial disclosure forms. Nova is a joint venture with his father, Michael Testa Sr.

Another company, Dotia Investments, was registered by state Sen. Doug Steinhardt, who chairs the Republican Party in Warren County, and is listed on his financial disclosure form (he was not a senator at the time of the purchase but was when the property sold.) A third company, JERC Partners XLVIII, is affiliated with the Asbury-based developer J.G. Petrucci Co. And a fourth, 1615 W. Garden Road LLC, lists attorney Seth Tipton, a named partner in Steinhardt’s law firm, as its registered agent, while another document lists Steinhardt law partner Michael Perrucci as a member.

Matthew Reilly, a spokesperson for the New Jersey U.S. Attorney’s Office, declined to comment.

The subpoena, addressed to commission member Dan Kuhar, commanded him to at the federal courthouse in Camden on the morning of July 17. Rick Tonetta, Vineland’s law director, confirmed the subpoena’s existence to POLITICO and said that the city complied by turning over all documents requested. He said he believes everything was done legally.

Steinhardt and Testa said that there "are no secrets, irregularities, or illegalities" about the land deal. They added that they paid the full asking price and invested personal capital in the property.

"We are an open book on this and welcome any questions," they said in a joint statement. "Every legal and ethical 'I' was dotted and 't' crossed. The city will confirm that the transaction followed every legality to the letter."

Steinhardt spokesperson Harrison Neely said that none of the partners have personally received a subpoena and not heard of any follow-ups since the July deadline to turn over documents.

The parcel was first sold by the City of Vineland to the Vineland Industrial Commission for $1 in May 2022, property records show. The commission’s purpose is to acquire city-owned vacant land for resale to “industries whose presence within the city will benefit Vineland residents,” according to its website .

In October 2022, the Vineland Industrial Commission sold the parcel to the four LLCs for $1.15 million, according to property records. Neely said the investors had first gone into contract on the property in June 2021. In March of 2023, records show that Cumberland County granted two easements to the property owners — one for right of way and one for drainage — for $1 each.

The easement documents are signed by Steinhardt, Testa, Perrucci and James Petrucci, president of J.G. Petrucci Co.

Five months later, in August 2023, records show that the companies sold the property to the Michigan-based Dawsar Investments for $8.4 million.

Tonetta said the property had languished with no buyers for a long time before the group came along to purchase it. He said there had been complications regarding developing part of the parcel over Native American artifacts that were found, making at least part of it undevelopable through a New Jersey Department of Environmental Protection historical preservation regulation. That was later resolved by clarifying on a property map which part could not be developed, he said.

”There were a couple issues with the property that we had to handle, but nonetheless here we are,” Tonetta said.

He said it’s not the city’s concern that the property was sold for so much more than the city got for it.

“Our job is to have a tax base, create buildings and develop our industrial base,” Tonetta said. “...If somebody made money off the deal internally or externally, once we’ve divested ourselves from it and they’ve done what they needed to do to provide Vineland with jobs and a building, we’re happy.”

Sandy Forosisky, Vineland’s director of economic development, said city officials were “not sure where this is going.”

“Yes, they made money, but everything was done by the book,” she said.

View the subpoena here .

Dustin Racioppi contributed to this report.