Ex-Head of Pa. Concrete-Beam Firm Convicted in DBE Fraud Case
The former chief executive of a Pennsylvania company that made concrete bridge beams has been convicted on multiple counts of fraud and money laundering in what the U.S. Dept. of Transportation says is the largest reported Disadvantaged Business Enterprise fraud in the department’s 45-year history.
The Justice Dept. said a jury in U.S. District Court in Harrisburg on April 5 found Joseph W. Nagle guilty on 26 of the 30 charges in a federal indictment. Nagle (pronounced NOGG-ull) was president, CEO and part-owner of Schuylkill Products Inc. (SPI), Cressona, Pa., and its CDS Engineering Inc. subsidiary until 2009 when the parent SPI was sold.
Nagle’s attorney, Michael A. Schwartz, said, “Obviously, we’re disappointed in the verdict.” He added that he filed a motion on April 6 seeking a 90-day extension “for post-trial motions and laying out some grounds we think may be appropriate for an acquittal or a new trial.”
The Justice Dept. said Nagle, of Deerfield Beach, Fla., was convicted of joining in a long-running conspiracy to defraud U.S. DOT, the Pennsylvania DOT (PennDOT) and Southeastern Pennsylvania Transportation Authority (SEPTA) when he became SPI president in 2004.
U.S. officials said the alleged scheme extended from 1993 to 2008 and involved more than $136 million in federal-aid transportation contracts.
Since 1983, U.S. DOT has been required by law to make sure that at least 10% of its authorized highway and transit funds go to DBEs. The department has a single DBE goal that includes companies owned by women or members of minority groups.
Justice says the alleged conspirators used Marikina Construction Corp., a small Connecticut firm, as a front company to gain subcontracts designated to go to DBEs.
Federal officials said that Marikina, owned by Romeo P. Cruz of West Haven, Conn., was certified as a DBE by PennDOT and SEPTA, the Philadelphia area’s transit agency.
Justice said that Marikina received the DBE contracts “on paper,” but all of the contracted-for work was done by SPI and CDS personnel and SPI and CDS got all of the profits from those contracts. Marikina received “a small fixed–fee payment,” the government added.
In addition, Justice said, “SPI and CDS personnel routinely pretended to be Marikina employees by using Marikina business cards, email addresses, stationery and signature stamps, as well as using magnetic placards and decals bearing the Marikina logo to cover up SPI and CDS logos on SPI and CDS vehicles.”
Cruz pleaded guilty in 2008 and 2009 to conspiracy and tax fraud charges. Ernest G. Fink, former SPI vice president, chief operating officer and owner pleaded guilty in 2010 to conspiracy. Two other CDS or SPI vice presidents entered guilty pleas sin 2008.
Peter J. Smith, U.S. Attorney for the Middle District of Pennsylvania, said that Nagle faces up to five years in prison on the conspiracy count; up to 20 years’ in prison on each of the wire- and mail-fraud counts; and as many as 10 years in prison on the money-laundering conspiracy and each of the money-laundering counts on which Nagle was convicted.
Doug Shoemaker, regional special agent in charge for U.S. DOT’s inspector general’s office, said, “This significant conviction…will serve as a clear signal that severe penalties await those who would attempt to subvert U.S. DOT’s laws and regulations.”
The U.S. Attorney’s office, Federal Bureau of Investigation, U.S. DOT IG’s office, and the Internal Revenue Service criminal investigation division took part in the investigation.
