Craig Callaway was transported to New Jersey from a federal prison in West Virginia, where he has been held since being sentenced a year ago.
Atlantic County Chief Assistant Prosecutor James McClain said prosecutors have offered to let Callaway plead guilty to two counts of conspiracy to commit invasion of privacy, and be sentenced to as long as four years in prison.
That time would be served concurrently with his existing federal prison sentence, McClain said, if they judge aggress.
Callaway, who did not speak during the brief hearing in state Superior Court, entered a not guilty plea through his lawyer, Joseph Grassi.
Afterward, Grassi would not say whether Callaway is inclined to accept the plea bargain at his next scheduled court appearance on March 10.
Callaway is charged with criminal coercion, conspiracy, and invasion of privacy charges stemming from an alleged scheme in November 2006 in which he and four other men - one of them a current Atlantic City councilman - lured another councilman to a motel where he was secretly filmed having sex with a prostitute.
Videotapes of the encounter were then sent to various media outlets in an attempt to force the councilman, Eugene Robinson, to resign. But Robinson refused, and contacted authorities.
Robinson, who also is a Baptist minister, said the sex was consensual and that money he was shown giving to the woman was to buy sodas.
Authorities allege the scheme was orchestrated by Callaway, who was free on bail awaiting sentencing on federal corruption charges at the time.
Also charged in the case are two of Callaway's brothers, David and Ronald; a friend, Floyd Tally, and current Councilman John Schwartz. All have previously entered not guilty pleas.
Still another current councilman ran afoul of the law in connection with the case. Councilman Timothy Mancuso was charged with drunk driving on his way home from a party celebrating the arrests of Callaway and the others in the videotaping case. His trial is scheduled for April.
