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Corruption to Cost Engineering Firm $1M

Wednesday, September 4, 2013

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A once-powerful, now-ruined New Jersey engineering firm with a major portfolio of public and commercial projects will pay $1 million to settle criminal charges that it illegally funneled hundreds of thousands of dollars in political contributions through employees to avoid the state’s “pay to play” law.

The fines were imposed Friday (Aug. 30) in sentencing Birdsall Services Group (BSG), which pleaded guilty June 13 to charges of first-degree money laundering and second-degree making false representations for government contracts.

The charges, brought by the state's Division of Criminal Justice Corruption Bureau, were contained in a March 26 indictment, which also charged seven executives of the firm. The charges against the individual defendants are pending.

Birdsall Services Group project
Birdsall Services Group

Prosecutors say BSG obtained millions of dollars in public contracts through illegal campaign contributions.

Two employees pleaded guilty earlier in the alleged six-year scheme.

The penalties consisted of a $500,000 public corruption profiteering penalty and a $500,000 anti-money laundering profiteering penalty. Both penalties were the maximum authorized by law. Birdsall paid the state $2.6 million to settle a civil forfeiture action filed by the Attorney General’s Office in connection with the criminal case.

Company Sold

After its guilty plea, Birdsall was purchased by Partner Engineering and Science Inc., based in Torrance, CA. Partner said the acquisition would enable it to expand in the New Jersey, New York and Pennsylvania markets.

The acquisition includes Birdsall's accounts receivable, physical assets, select contracts, existing project files, select intellectual property, and license agreements, according to Partner.

Partner Engineering
Partner Engineering and Science Inc.

Partner Engineering and Science Inc., of Torrance, CA, bought Birdsall after the company pleaded guilty to campaign fund fraud in June. Partner said it saw opportunity in Birdsall's downfall.

"Most importantly," the company said, "through this acquisition, Partner has retained many of Birdsall's expert and dedicated staff."

Projects in Limbo

accounts receivable, physical assets, select contracts, existing project files, select intellectual property, and license agreements. - See more at: http://www.partneresi.com/news/partner-acquisition-of-birdsall-services-group.php#sthash.vetGtmVK.dpuf

Birdsall had provided engineering services on numerous major public and private projects in the U.S. Northeast over its 90-year history. The portfolio includes a substantial number of projects related to rebuilding after Hurricane Sandy.

Union City High School field
Wikimedia Commons

Among Birdsall Services Group's many public projects is the novel Union City (NJ) High School, where the football field crowns the second-floor roof.

The company's rapid implosion this spring—guilty pleas, followed by indictments of its principals, followed by filing for Chapter 11 bankruptcy—left it unable to meet its payroll. It then laid off most of its 300-plus-person staff, jeopardizing the fates of numerous projects then underway.

The state of New Jersey seized the company's $41.6 million in assets and fought the bankruptcy filing, calling it a ruse to shield company assets.

Birdsall's acquisition by Partner, which reportedly completes more than 15,000 projects annually, apparently will now see those projects through.

Partner says it "recognized an opportunity" in Birdsall's legal woes. The company said that 80 percent of Birdsall's employees continued to work without knowing whether they would be paid.

Partner also said that Birdsall's bankrupty process "protects Partner from liability associated with alleged misdeeds by former BSG employees or the company."

Plea Agreement

Under the plea agreement, Birdsall is required to cooperate fully in the state’s prosecution of the individual defendants and, although the issue is somewhat moot, it is banned from working on government contracts in New Jersey for 10 years.

Howard Birdsall Philip Angarone
NJ Office of Attorney General

Former CEO Howard C. Birdsall (left) is charged in the scheme. The company's former marketing director, Philip Angarone (right), has pleaded guilty.

“The maximum penalties that must be paid by Birdsall Services Group are in keeping with the scope of the criminal scheme that led to its ruin,” said First Assistant Attorney General Calcagni.

“Birdsall made more than half a million dollars in illegal political contributions, while securing millions of dollars a year in public contracts for which it should have been disqualified. This case is about upholding our pay-to-play law and safeguarding the integrity of public contracting in New Jersey to ensure that taxpayers don’t foot the bill for political favors.”

Disguising Contributions

The remaining case charges former CEO Howard C. Birdsall and six other executives and shareholders with conspiring to circumvent New Jersey’s Pay-to-Play Act by disguising illegal corporate political contributions as personal contributions of employees of the firm.

Former Birdsall executives
NJ Office of Attorney General

Six former Birdsall executives, in addition to CEO Howard Birdsall, face conspiracy, money laundering and other charges. Clockwise from top left: Alan Hilla Sr., Thomas Rospos, William Birdsall, Robert Gerard, James Johnston and Scott MacFadden.

Under the alleged scheme, BSG bundled together multiple personal checks below the reporting threshold of $300, then reimbursed the employees illegally. The scheme continued for more than six years and involved hundreds of thousands of dollars in contributions, authorities said.

Authorities said the company reaped millions of dollars in government contracts from the scheme.

All of the individual defendants are facing years in prison if convicted and fines of up to $1 million.

Two former employees of Birdsall's marketing department previously pleaded guilty in the case. Philip Angarone, 41, of Hamilton, the former marketing director, and Eileen Kufahl, 49, of Bradley Beach, are awaiting sentencing.

   

Tagged categories: Bridges; Contracts; Enforcement; Engineers; Government; Government contracts; Stadiums/Sports Facilities

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