The conspiracy involves two former managers in the PennDOT's District 6, who allegedly took kickbacks from highway inspectors in exchange for turning a blind eye to fraudulent time sheets and mileage reports.
A statewide investigating grand jury delivered a presentment recommending today's charges after it heard testimony from dozens of individuals and saw evidence obtained in a joint investigation of the Pennsylvania Attorney General's office and the U.S. Department of Transportation Inspector General's office.
"The citizens of Pennsylvania expect state employees and contractors to perform the work they are paid to do," Attorney General Kane said. "Those who accept kickbacks and falsify documents are stealing from the taxpayers. My office will continue to uncover and diligently pursue public corruption across the Commonwealth."
The investigation began in March of 2013 when agents in the Attorney General's Bureau of Criminal Investigation obtained evidence of widespread abuse within the Highway Occupation Permit Program (HOP) in District 6, which comprises Philadelphia, Delaware, Montgomery, Chester and Bucks counties.
HOP permits must be obtained from PennDOT for construction and any other encroachment on interstates, U.S. routes and state highways. In order to protect the public and Pennsylvania's highway infrastructure, PennDOT pays inspectors, directly and through outside firms, to ensure permit holders comply with applicable laws, regulations and permit conditions.
The presentment details how a pattern of nepotism and cronyism resulted in many of the defendants being hired by both PennDOT District 6 and two regional consulting firms, Construction Methods and Coordination Inc. (CMC) and CZOP Spector Inc. (CZOP), which allowed their conspiracy to continue and flourish.
According to the presentment, the inspectors were paid more than $500,000 they did not earn, and CMC and CZOP were paid more than $700,000 for their employees' unearned overtime.
In July 2014, the Attorney General's office arrested a PennDOT contractor, Thanh Nguyen, for allegedly stealing at least $3.6 million by submitting false invoices. Nguyen also bribed a CZOP inspector, Robert Slamon, who was also arrested in July, to ignore his own fraud, according to the Grand Jury.
"Our ongoing investigation of PennDOT District 6 has exposed nearly $5 million in fraud in Philadelphia and the surrounding counties," Attorney General Kane said. "I urge anyone with information regarding corruption at District 6 or any other Commonwealth entity to contact my office immediately."
The two managers at the center of the conspiracy, former Assistant District 6 Permits Manager Alex Morrone and former Philadelphia County Permit Manager William Rosetti, facilitated the fraud and theft by taking routine kickbacks from inspectors, and encouraging and facilitating them to falsify their records to be paid for unearned wages and reimbursements, according to the presentment.
Further, Morrone allegedly paid some inspectors to do home improvements at his residence and his mother's home while they were billing the taxpayers for work. Rosetti also is charged with allegedly billing for and receiving payment for hours that he did not work.
The presentment provides specific examples of the corrupt scheme's depth and breadth:
- PennDOT inspector Frank DiMichele allegedly was completely unqualified for his position and was instructed to lie on his resume by a childhood friend at District 6;
- CMC inspector John Cavanaugh, who also was unqualified for the work, was allegedly instructed by Rosetti to add two hours of overtime every day to his timesheet and give between $140 and $150 per pay period as a "street tax" for it;
- CZOP inspector Brandon Grosso, Rosetti's brother-in-law with no construction experience, was hired after Rosetti allegedly instructed him on how to lie on his resume. Grosso also paid Morrone between $120 and $140 per week for "protection" in exchange for allowing him to add approximately three hours of overtime per week to his time sheet and lie about mileage earned;
- CMC inspectors Joseph DeSimone and John LaSpada allegedly provided kickbacks to Morrone to overlook their fraudulent overbilling and rarely visited job sites where they claimed to inspect;
- DeSimone also allegedly billed eight hours for work he did not perform at a construction site that was shut down due to a state of emergency;
- CZOP inspector Chris Lauch allegedly paid Rosetti $100 a week to ignore bogus timesheets and was laid off after falling behind in kickbacks to Rosetti; and
- CZOP inspector David Betzner was provided pre-signed blank timesheets by Rosetti at the instruction of Morrone. He improperly billed and was paid $53,000 for hours and mileage for inspection work at a single job site that workers said he never visited.
A full list of the defendants and each of their charges is available here. This flowchart illustrates the kickback scheme's pecking order.
Attorney General Kane thanked PennDOT for their cooperation with the investigation.
Anyone with information regarding potential corruption in PennDOT District 6 is encouraged to call the Attorney General's office in Norristown at 610-631-6208.
The defendants will be prosecuted in Montgomery County by Chief Deputy Attorney General Erik Olsen.
Most of the defendants are expected to turn themselves in today to be arraigned by Magisterial District Judge James P. Gallagher in Bridgeport, Montgomery County.
Posted from Press Release from Attorney General's Office