New Jersey is "just hassling" Edward Wagner, a lifelong pal of jailed mob boss Joseph "Skinny Joey" Merlino.

That's the view of Wagner's attorney, James J. Leonard Jr., after yesterday's indictment charging Wagner, 41, and Danilo "Danny" Starita, 36, both of S. 17th Street near Hartranft, with conspiracy, theft by deception, promoting gambling and falsifying records.

Starita also was charged with possession of gambling records.

Both defendants were identified as reputed mob associates by law-enforcement authorities. Wagner is the nephew of reputed mob soldier Gaeton Lucibello.

Wagner "visits and writes to Joey in prison" and attended Merlino's racketeering trial in 2001, said Leonard.

Merlino was moved last month from a Kentucky federal prison to the United States Penintentiary in Marion, Ill., one of the toughest federal prisons in the U.S.

Neither Wagner nor Starita have a criminal record, said Leonard.

According to the indictment, the two operated a sports-gambling ring between Oct. 14, 2004, and April 4, 2006, in Philadelphia as well as in Camden, Atlantic and Gloucester counties, and falsified records to obtain a $185,250 mortgage for a Margate, N.J. condo.

The two men allegedly hired others to accept more than five bets a day and to collect gambling proceeds of more than $1,000 a day, the indictment charged.

New Jersey is "intent to stop any competition with the state's gambling book," said Starita's attorney, Michael W. Pinsky, of Haddon Township, N.J. "It's almost a sin."

Attorney General Stuart Rabner said, "They have been living the high life, driving luxury SUVs and splitting their time between a newly renovated home in Philadelphia and the Margate condo."

Rabner said they claimed to have legitimate jobs at ITAL-UIL, USA, Inc., a legitimate business that helps people to transfer financial assets and with other issues when they move from Italy to the U.S.

Starita claimed to have an income of $70,000 a year, and Wagner, $52,000, as employees of the company, when they applied for a Wells Fargo Home Mortgage. But they never worked for the firm.

"They never missed a payment," said Pinsky, referring to the mortgage.

On April 3, 2006, during college basketball's "March Madness," officers in two states seized gambling records at three locations - their home and a South 20th Street location in South Philadelphia and their Margate condo.

Leonard, hired by Wagner after the raids, said the state tried to seize Wagner's assets last August, but a judge postponed the forfeiture because there was no indictment or complaint.

Leonard said he was able to get Wagner's videos, video camera and iPod returned.

A year ago, others involved in the same gambling probe received probation, but Deputy Attorney General Jill S. Mayer "was hung up on the mortgage," said Leonard.

A spokesman for the N.J. attorney general did not return calls.

The defendants are to appear at a later date in Superior Court in Atlantic County. *