How power broker George Norcross may try to undercut ‘iconic’ developer Carl Dranoff’s credibility in racketeering case

To hear prosecutors tell it, perhaps no single person faced greater harm from the decade-long criminal enterprise they say South Jersey power broker George E. Norcross III led than Philadelphia developer Carl Dranoff.

It was Dranoff who in 2016 sold his Camden waterfront property rights for far less than he thought they were worth after Norcross threatened that, should Dranoff refuse, he’d never do business in the city again, according to the racketeering indictment unveiled this summer by the New Jersey Attorney General’s Office.

It was Dranoff’s 2018 deal to sell a luxury apartment complex that was allegedly scuttled by Camden officials at the urging of Norcross’ brother Philip. And it was Dranoff, authorities say, whose reputation Norcross conspired to damage in an expletive-filled tirade.

So, as Norcross prepares to defend himself against charges that now could send him to prison, it’s not surprising that Dranoff — a fixture in Philadelphia real estate — has emerged as a central focus of his defense team’s attacks.

In court papers and media statements, Norcross and his allies have labeled Dranoff a villain masquerading as a “do-gooder” — a savvy negotiator who “lined his own pockets” at the expense of Camden’s taxpayers, then, once caught, concocted wild theories of a Norcross-led vendetta against him.

“Dranoff, himself a sophisticated real estate developer, did not wilt as soon as George Norcross dropped a few ‘f-bombs,’” Norcross’ lawyers wrote in a filing last month seeking the dismissal of the racketeering case. It claimed, among other things, that Norcross — not Dranoff — was the real victim of an attempted shakedown while “the fate of Camden’s renaissance hung in the balance.”

» READ MORE: ‘A crime thriller with no crime:’ George Norcross’ lawyers urge judge to throw out racketeering case

Those attacks are likely to heat up as the defense team seeks to discredit testimony Dranoff might give in court. But the developer is sticking by prosecutors’ version of the story.

In a civil lawsuit he filed against the Norcross brothers last month echoing many of the same accusations contained in the indictment, Dranoff painted himself as a crusader who dared to stand up to the Norcross machine.

“Dranoff,” his attorneys wrote, “stands as a cautionary tale to all those who would seek to take on entrenched corrupt interests to improve the region and its residents’ lives.”

But the suit, filed just before the statute of limitations on Dranoff’s claims was about to expire, could also give the defense a chance to challenge the developer’s credibility by arguing that he has a financial stake in the outcome of the criminal trial.

New Jersey prosecutors have signaled their case against Norcross — executive chairman of insurance brokerage Conner Strong & Buckelew, chair of the board at Cooper University Health Care, and former longtime member of the Democratic National Committee — relies on more than Dranoff’s testimony. But much could ultimately hinge on whether a jury is willing to take the Philadelphia developer at his word.

» READ MORE: ‘Are you threatening me?’ Surprise recordings are at the heart of prosecutors’ case against George Norcross.

On paper, Dranoff, 76, who lives in Center City, would appear to be a dream witness for prosecutors. Even high-level Camden officials — Norcross’ putative allies — have acknowledged Dranoff’s sterling reputation as a developer with a record of transforming urban blight into successful redevelopment.

“Iconic,” one former top city bureaucrat, Jason Asuncion, said of Dranoff in a 2019 deposition. A city attorney, Michelle Banks-Spearman, concurred, adding in her own deposition: “I know that he’s had some very, you know, big successful projects in Philadelphia.”

By the early 2000s, Dranoff had established himself as a leader in urban redevelopment with projects including the conversion of the historic Left Bank building in University City, a block from the University of Pennsylvania’s campus, into luxury apartments.

His involvement in Camden began around that same time, when a nonprofit redevelopment organization, then known as Cooper’s Ferry Development Association, recruited Dranoff to execute a similar playbook across the Delaware River.

The city had experienced significant economic decline as manufacturing companies such as the Radio Corporation of America closed their operations. One former RCA site left behind was the Victor, also known as the Nipper building, which was owned by the Camden Redevelopment Agency. Dranoff was interested in rehabilitating the building.

But the project faced significant challenges. Almost 50 banks turned down Dranoff’s requests for financing, he later said in a deposition, with lenders citing corruption in city government and a lack of basic services nearby, such as restaurants, that could support a luxury apartment complex.

Dranoff eventually managed to strike a long-term financial deal with the city that convinced banks the project was viable. Known as a PILOT agreement, it stipulated that, in lieu of property taxes, annual real estate payments on the Victor redevelopment would be fixed at $200,000 — plus any “excess net profits” realized by the new apartment complex.

The project was completed and began renting to tenants in 2003 under the name Victor Lofts. It was the first new market-rate housing in Camden in decades, and city officials touted it as a major victory, even putting a photo of the new development on the city’s annual report.

“If you wanted to bring middle-class people back in the city, you needed somewhere for them to live,” Banks-Spearman, a city attorney, said in a 2019 deposition.

Norcross and his allies have pushed back against any portrayal of the developer as a self-sacrificing hero.

While completing the project may have proved difficult, they’ve argued that Dranoff’s personal risk was limited, and his development company was to be paid $10.2 million in fees under a 2002 agreement.

Dranoff has said that he invested $1 million to open Victor Lofts. And while he initially guaranteed the loans he obtained from lenders, his personal obligations became more limited after he refinanced the property in 2005.

According to prosecutors, Dranoff’s trouble in Camden started in 2015 and 2016 when Norcross and business partners including Liberty Property Trust — the Philadelphia development firm that built both Comcast towers — launched plans to build an office tower and apartments on Camden’s waterfront, projects that would eventually become known as Triad1828 Centre and 11 Cooper.

But they couldn’t do that without buying out or partnering with Dranoff, who held property rights dating back to his redevelopment of the Victor on the land they intended to use. Prosecutors say that while Liberty led the negotiations with Dranoff, Norcross was also involved.

Initially, Dranoff would not agree to their preferred terms. And Norcross, according to the indictment, responded on a 2016 conference call by telling Dranoff he would “f– [him] up like [he’d] never been f– up before” if he refused to give in. Norcross allegedly vowed he’d “make sure [that Dranoff would] never do business in this town again.”

Those quotes — while among the most colorful included in the indictment — have already drawn scrutiny from the lawyers preparing Norcross’ defense.

For instance, the indictment does not say, as it does in other instances where it quotes Norcross, that this conversation was recorded. Instead, it attributes the quote to Norcross “in substance,” suggesting that prosecutors relied on recollections from Dranoff or others.

“They don’t say, ‘George said this.’ They’re saying … somebody else said, ‘George said this,’” Norcross attorney Michael Critchley said in a June interview. He accused prosecutors of “decorat[ing]” those alleged statements from his client “to make it look like it’s first person by putting quotes on it.”

The quotes included in the indictment are also more overtly threatening than anything Dranoff said about the negotiations in previous sworn testimony he gave about their deal.

While he described his interactions with Norcross and his business associates as “kind of a shakedown” during a 2019 deposition, the developer did not say that Norcross personally threatened him — a fact Norcross’ defense lawyers are likely to seize upon should they get the opportunity to cross-examine Dranoff at trial.

“He called me a lot of names,” Dranoff said of Norcross at the time. But it was “pressure” from executives at Liberty that he not “hold up” the waterfront’s redevelopment, Dranoff said, that left him feeling “coercion.”

Prosecutors say Dranoff eventually succumbed to that pressure and agreed to give up the property rights they were seeking for far less than he believed they were worth.

The indictment doesn’t specify what value Dranoff assigned to those rights or what informed that belief. Norcross’ attorneys are likely to argue at trial that he made a business decision to sell and received fair compensation in the deal.

According to a copy of the October 2016 contract, Liberty Property Trust paid Dranoff $1.95 million for the development rights and the rights to tax credits Dranoff obtained for the residential project, as well as for consulting services.

The Michaels Organization, the developer that built 11 Cooper, was to pay Dranoff up to $550,000 to reimburse him for project costs under the contract’s terms.

While prosecutors have described Dranoff’s decision as the result of extortion, Norcross’ lawyers, in a Sept. 24 court filing, maintained it was nothing more than the result of “hard bargaining.”

“Norcross and Dranoff were sophisticated businessmen engaged in a commercial negotiation, with both trying to extract better terms,” the defense lawyers wrote.

Two years later, Dranoff tried to sell the 349-apartment Victor Lofts to Denver, Colo.-based real estate investment firm Aimco for $71 million. But he faced resistance from Camden officials — opposition that prosecutors now say was orchestrated by Norcross, his brother and their allies in city government.

The deal hinged on city officials’ willingness to transfer the same tax agreements that Dranoff first secured while developing the Victor in 2002 to the new owners, including the PILOT agreement that set the development’s annual real estate payments at $200,000 plus any “excess net profits.”

Dranoff saw the transfer as a routine request that Camden was bound to honor under his contract with the city, according to court records. But behind the scenes, the indictment says, Norcross’ brother Philip — an attorney who, like his brother, had no official role in Camden government — instructed city officials to slow down approving the transfer.

He hoped they could use it as leverage to force Dranoff to forfeit rights he held to develop another old RCA property adjacent to the Victor, known as Radio Lofts, prosecutors say.

Dranoff sued the city in June 2018, alleging breach of contract and later testifying that city officials had stonewalled him and Aimco. The city ultimately did not approve the transfer of the Victor’s PILOT agreement, and Aimco pulled out of the deal.

Camden, meanwhile, countersued, accusing Dranoff of failing to pay millions of dollars in “excess net profits” it said he owed under the very tax agreement he’d sought to transfer to a new owner.

Norcross was not named as a party in any of the litigation, but Dranoff, in court filings, accused him of being behind Camden’s efforts to frustrate the sale.

The response from Norcross, his brother and their allies in city government during the five-year legal battle that followed offers clues to how Norcross’ defense team might now seek to challenge aspects of the prosecution’s racketeering case.

For instance, while Banks-Spearman, the city attorney, testified in a 2019 deposition that she took Philip Norcross’ request to slow down the Aimco review “at face value,” she stopped short of saying she was following orders from him.

“I take my instructions from the mayor,” she said.

She maintained it was the Victor’s proposed $71 million sale price — not Philip Norcross — that caused her to look more closely at Dranoff’s transfer request.

“I went, ‘Wow, that’s a lot of money,’” she said. “Is it possible that there were excess profits?”

And in May 2018, Banks-Spearman testified, a state fiscal monitor “agreed we needed an expert” to review the city’s PILOT agreements, prompting the city to hire a consultant.

As Camden’s lawyers did their due diligence, they came to believe Dranoff had abused his financial agreement with the city to cheat Camden out of more than $9 million.

He accomplished this, according to Camden, by creating a side agreement to the 2002 PILOT deal with corporate entities he controlled that allowed him to minimize payments to the city.

Dranoff’s team didn’t share the side agreement — known as a ground lease — with Camden until 2018, meaning the city wasn’t aware that the developer was allocating revenue and expenses in a way that minimized what he owed, according to the city. Dranoff acknowledged that for years he failed to file legally required financial reports — documents that could have alerted the city to his accounting practices. He chalked that up to a mistake.

What’s more, Camden argued, the terms of the ground lease that allowed Dranoff to limit profits owed to the city directly contradicted the PILOT application he submitted back in 2002, suggesting he may have deceived the city.

And now that Aimco was seeking to buy the Victor, it wanted the “identical” ground lease structure that Dranoff had used — an outcome that could mean the new buyers would continue Dranoff’s practice of limiting payments to the city. According to Norcross’ allies, this shows why city officials had good reason to take their time to review the transfer request.

Dranoff maintained that Camden officials were aware of the ground lease arrangement from the start and that his main point of contact in the city — Tom Corcoran, founder of the economic development nonprofit Cooper’s Ferry — had blessed the financial structure before the 2002 deal had been approved.

And he said the building never made money, and he owed Camden nothing beyond the annual PILOT payments. Had he known back in 2002 he’d owe millions under his contract with the city, he said he never would have been able to obtain financing, and the Victor would not have been redeveloped.

Amid that back-and-forth, Dranoff’s Radio Lofts development rights also came under scrutiny.

Though Camden’s Redevelopment Agency had granted Dranoff the development option years earlier, the city-owned building had sat vacant for 16 years and, increasingly, stood out as an eyesore, even as construction on other blighted Cooper Street properties was ramping up.

In spring 2018, Camden sent Dranoff a letter purporting to terminate his development rights. According to prosecutors, city officials took this action at the direction of Philip Norcross.

Two years earlier, according to the indictment, George Norcross had floated a similar idea in order to gain leverage over Dranoff in the then-ongoing negotiations with Liberty Property Trust.

In an October 2016 phone call, quoted in the indictment, Norcross identified Radio Lofts as “another point of attack” and suggested the city “should instigate taking the Lofts building back from him,” though no such action was taken at the time.

However, prosecutors have accused Philip Norcross of instructing Camden Mayor Dana L. Redd to ignore Dranoff’s phone calls as he sought to make progress on the building. She, too, is now charged alongside the Norcross brothers.

In his 2019 deposition, Dranoff testified that he couldn’t begin work on rehabbing the property until the city paid for necessary environmental remediation. He’d even suggested changing the building’s zoning from residential to commercial — which would have required less environmental work. But with city officials ignoring him, that idea went nowhere.

Philip Norcross has since cast that advice as routine lawyering and Redd’s lawyers defend her lack of response, saying she was under no obligation to engage with a developer seeking special access to the highest-ranking official in the city.

Olivette Simpson, executive director of the Camden Redevelopment Agency, said in her deposition that the city moved in 2018 to terminate Dranoff’s rights because of the lack of progress.

She acknowledged that under the CRA’s contract with the developer, it was not his responsibility to come up with funding to clean up the property. But as a practical matter, she said, she expected more from him.

“With everything going on along the waterfront, it seems to me an experienced developer would be at the table having more discussions about how we can collaborate or how can we proceed,” Simpson testified.

Following Norcross’ indictment this summer, his lawyers have struck a similar note, accusing Dranoff of impeding Camden’s revitalization efforts. In fact, just moments after Norcross was charged, Critchley, the Norcross attorney, lit into Dranoff chastising him for letting the Radio Lofts building lay fallow.

“He did nothing with it,” Critchley told reporters outside prosecutors’ news conference to announce Norcross’ indictment. “He did absolutely nothing.”

Despite the acrimony revealed during the litigation between Dranoff and Camden, the parties settled their dispute last year.

Dranoff agreed to pay the city more than $3 million and relinquish his development rights to Radio Lofts. Camden, meanwhile, accepted Dranoff’s original interpretation of how much of the Victor’s revenues he owed under the original PILOT deal and ground lease.

“This case was all about fairness and the ongoing corruption in Camden, and about how people and organizations that disagree with George Norcross are victimized and bullied with frivolous lawsuits and unjust tax bills and accusations,” Dranoff said at the time.

But the day that deal was announced, Norcross blasted the news out to his email list, including a particularly pointed statement from Camden Mayor Victor Carstarphen calling Dranoff a bully and a “do-gooder pretending to be part of our revitalization efforts, when in fact, he was lining his own pockets.”

Norcross personally forwarded that message to Dranoff, the developer later told The Inquirer, under a subject line that could just as easily now be used to describe how he and his defense team hope to paint Dranoff at trial.

It read: “FRAUD EXPOSED!!!”