Atlantic City, New Jersey

Instead of enriching the lives of needy kids, Atlantic City Mayor Frank Gilliam admitted in federal court to defrauding a youth basketball team he helped create of more than $87,000 to enrich himself and fund his lifestyle.

On Thursday, Gilliam, 49, pleaded guilty in Camden before U.S. District Judge Joseph Rodriguez of the District of New Jersey to one count of wire fraud. He faces up to 20 years in prison, and a fine of up to $250,000 or twice the gross gain or loss from the offense.

Gilliam resigned the same day.

Gov. Phil Murphy had been among those who called for his resignation at an afternoon press conference in Trenton on Thursday, calling Gilliam's guilty plea "despicable."

And state Attorney General Gurbir S. Grewal announced that his office has filed an order to show cause in Mercer County Superior Court seeking to remove Gilliam from office under New Jersey's Forfeiture of Public Office Statute.

While Gilliam is no longer mayor, a spokesman for the AG's office said on Friday that it is continuing to seek the forfeiture order recording that he forfeited his office as a result of a criminal conviction. The forfeiture order would cover all public positions, including any public boards Gilliam sits on.

Following his guilty plea, Gilliam left the federal courthouse on a $100,000 unsecured bond pending his sentencing hearing on Jan. 7.

Assistant U.S. Attorney Sean Farrell of the Special Prosecutions Division is representing the government in the case.

Harry Rimm of Sullivan & Worcester in New York is representing Gilliam. Rimm said of his client in a prepared statement: "While Mr. Gilliam serves as Mayor of Atlantic City, the charge to which he has pleaded guilty relates only to his conduct as a private citizen, not conduct in his official capacity.  He is not charged with taking any public or taxpayer funds."

"Mr. Gilliam, who is a lifelong resident of Atlantic City, has admitted his wrongful conduct, is accepting responsibility for his actions and is genuinely remorseful," added Rimm.

He said Gilliam has started paying restitution, making a voluntary payment on Thursday in connection with his plea, and to date, has paid back almost half of the restitution amount that the parties have agreed is owed.

Investigators said Gilliam deceived donors by lying about where the funds were going.

"Mayor Gilliam took advantage of his victims' desire to assist underprivileged children by falsely representing that the money contributed to the AC Starz Basketball Club would go to pay for school supplies or to support youth basketball," U.S. Attorney Craig Carpenito said in a release. "Instead, he spent the money on himself.

"When a public official like Gilliam abuses either a public or a private trust to commit a fraud, this Office and our agency partners will investigate and prosecute that official," added Carpenito. "The people of New Jersey are entitled to better."

Court documents detailed how Gilliam co-founded the nonprofit he called AC Starz Basketball Club, a youth basketball team.

The former Atlantic City councilman, who won an unlikely mayoral race by beating the Republican incumbent on Nov. 8, 2017, then solicited donations for AC Starz from various individuals and entities. Gilliam sold them on the pretense that their contributions were for a youth basketball team, or school supplies for underprivileged children, according to authorities.

Instead, the money really went toward personal expenses such as luxury clothing, expensive meals, and trips, according to court documents and statements filed in the case. Gilliam defrauded the contributors of $87,215.

His annual salary as mayor is $103,000, according to the Atlantic City Council clerk.

"When a scheme depletes charity for children, it's unconscionable," Special Agent in Charge Gregory Ehrie said in the same release. "But when the fraud is perpetrated by someone the public trusts, it damages the community's confidence in their public servants. This defendant betrayed the trust of his community and of people who wanted to improve the lives of children."

The FBI-Newark Atlantic City Resident Agency's Atlantic City Public Corruption Task Force, which includes the Atlantic County Prosecutor's Office, Cape May County Prosecutor's Office and the Atlantic City Police Department, was involved in the investigation, as was the IRS, the release noted.

Since winning office, Gilliam has fended off other investigations over his financial and campaign dealings, as well as his temperament. He was involved in a fistfight with an at-large councilman outside the city's Golden Nugget Casino last November, though the resulting charges against Gilliam ultimately were dropped. Observers say he's now staring at an uncertain political future in a city that's struggling to get its own financial house in order.

Since 2016 Atlantic City has been under state control with the demise of its once former gambling monopoly on the East Coast. Casino competition in bordering states, such as Pennsylvania and Maryland, has cut deeply into its main economy and tax revenue source over the past decade. Atlantic City has among the highest poverty and foreclosure rates in the state.

Gilliam, a Democrat, campaigned on bringing a rebirth to the seaside resort. In speeches, he often alluded to his own rough upbringing mired by violence at home and poverty, and how he turned his life around.