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New Charges in PennDOT Scandal

Wednesday, August 6, 2014

More items for Program/Project Management

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Two more contractors for the Pennsylvania Department of Transportation have been indicted in a continuing state investigation into "massive and widespread theft, fraud, corruption, and money laundering" in PennDOT's Philadelphia region.

The new defendants, a maintenance contractor and a contracted PennDOT inspector, are accused of conspiring in the theft of more than $3.6 million in public funds.

Another PennDOT contracted inspector was indicted in the same case in April.

Thanh Nguyen Robert Slamon
PA Attorney General's Office

"This contractor, already being paid millions of dollars, stole millions more from Pennsylvania taxpayersand found a state inspector whom he could bribe to help him do so," Attorney General Kathleen Kane said of Thanh Nguyen (left) and Robert Slamon, respectively.

Additional arrests are expected, authorities say.

New Charges

Charged and arraigned Thursday (July 31) were:

  • Thanh Nguyen, 62, of King of Prussia, PA, whose companies have received $26 million in contracts for PennDOT maintenance since 2009; and
  • Robert Slamon, 54, of Shillington, PA, most recently a PennDOT consultant inspector for Czop Specter in Norristown, PA.

"The grand jury determined that this contractor, already being paid millions of dollars, stole millions more from Pennsylvania taxpayersand found a state inspector whom he could bribe to help him do so," state Attorney General Kathleen Kane said of Nguyen in announcing the charges.

"As a result, work was not done and the safety of drivers in five southeastern Pennsylvania counties was put at risk."

Maintenance Contracts

According to Kane's office, Nguyen owns V-Tech Services Inc. (V-Tech) and Utility Line Clearance Inc. (ULC). The two companies held a series of road, tunnel and bridge maintenance contracts with PennDOT's District 6, which covers Philadelphia and four surrounding counties.

Since 2009, the AG said, V-Tech has received more than $15.7 million in District 6 contracts; ULC had more than $10.3 million in contracts. The contracted services included graffiti removal, herbicide spraying, litter cleanup, mowing, landscaping, tree removal and other road, tunnel and bridge maintenance.

PennDOT Road Work
PennDOT

A PennDOT contractor and contracted inspector are accused of conspiring to overbill millions of dollars in maintenance work.

The state's investigation showed at least $3.6 million in billing fraud through the contracts, including:

  • $1.1 million billed and paid for Philadelphia graffiti removal and street sweeping contracts where work was not done;
  • $1.5 million billed and paid for herbicide chemicals never bought or used for roadside spraying contracts for all five counties in PennDOT's District 6; and
  • $660,000 from double billing on herbicide contracts.

Nguyen's companies also received a total of $27 million in contracts with the Philadelphia region's SEPTA transit agency since 2001, The Philadelphia Inquirer reported. All but two maintenance contracts have been completed, and the final two, totaling $2.6 million, are being terminated, a SEPTA spokeswoman told The Inquirer last week.

Money Laundering

Authorities also say Nguyen inflated work hours and work crews in his billing. He also is accused of laundering money from PennDOT contracts by directing that company checks—including some as large as $50,000be written in the name of employees, who were then ordered to cash the checks and deliver the money to him.

V-Tech Raid
V-Tech Raid
Fox29

The Pennsylvania Attorney General's Office raided V-Tech Services Inc. outside Philadelphia in April. The company has received more than $15.7 million in PennDOT contracts since 2009. V-Tech owner Thanh Nguyen has been indicted.

Investigators documented his activity through GPS records of his trucks, photographs of state roads in the region, a former employee's private dailywork journal, and "hours of grand jury testimony from PennDOT, V-Tech and ULC employees," according to the Attorney General's Office.

Nguyen is charged with three counts each of theft by unlawful taking, theft by deception, and tampering with public records; two counts of corrupt organizations; and one count each of bribery in official and political matters, dealing in proceeds of unlawful activity, and criminal conspiracy. If convicted on all counts, he faces up to 150 years in prison plus $250,000 in restitution.

The Inspector's Role

Slamon was a PennDOT consultant inspector assigned to Philadelphia for roadside management programs, authorities said. He is charged with conspiring with Nguyen to falsify PennDOT records and enable Nguyen to receive payment for work allegedly never completed.

I-95 bridge work
PennDOT

The allegations involve fraud in PennDOT's Region 6, which covers Philadelphia and four surrounding counties. The region's projects include I-95 bridge construction.

Slamon was seen receiving a $5,000 cash payment from Nguyen, authorities said.

Slamon is charged with two counts each of corrupt organizations and tampering with public records; and one count each of bribery in official and political matters, theft by unlawful taking, theft by deception, and criminal conspiracy. If convicted of all counts, he faces up to 95 years in prison and a $150,000 fine.

Czop Specter, of Norristown, PA, is not charged in the case.

'Fall Guy'

According to The Inquirer, "the grand jury described a top District 6 official, who has not been charged, as interceding on behalf of" Nguyen.

Nguyen "told coworkers he needed $50,000 to pay the PennDot official, the grand jury said," according to The Inquirer.

The official, described as the assistant district engineer for maintenance, was identified in the presentment only as "NM." The Inquirer fully identified the former official, whom PennDOT fired in May, according to his attorney.

The attorney said that his client "never took a penny" and that "it looks like somebody is trying very hard to come up with a fall guy," the news outlet said.

Earlier Arrest

The new arrests and charges are the latest in an ongoing investigation into PennDOT Region 6's officials, employees and contractors.

Joseph DeSimone
PA Attorney General's Office

Contracted PennDOT inspector Joseph DeSimone was charged in April with lying to a grand jury in the investigation. More arrests are expected.

In April, contracted PennDOT inspector Joseph DeSimone, 33, of Philadephia, was arrested and charged with perjury for allegedly lying to a grand jury during the investigation.

DeSimone was an employee of Construction Methods and Coordination Inc. (aka CMC Engineering), of Kimberton, PA, when he testified before the grand jury on Dec. 17, 2013. CMC is not charged in the case.

'Widespread Abuse'

The PennDOT investgation began in March 2013, when a confidential source provided the Attorney General's Office with "evidence of widespread abuse" within District 6's Highway Occupancy Permit Program (HOP).

The source is identified only as a former consultant inspector for a company contracted by PennDOT to perform inspections under the HOP program. The source's information "has been corroborated," the AG's Office said.

The inspector told authorities that "consultant inspectors were systematically overbilling for time they were allegedly performing HOP inspections."

In addition, the office said, "evidence has been obtained that many of the inspectors were providing illegal financial remunerations to PennDOT District 6 supervisors who permitted the overbilling abuse to occur."

PennDot: 'Vigorous Review'

PennDOT began an internal investigation as soon as the allegations arose, spokesman Eugene Blaum told The Inquirer.

"PennDot is committed to honest and efficient management of the transportation system," said Blaum.

"We take these issues very seriously, are cooperating with investigators, and have been aggressively pursuing follow-up action. We are conducting a vigorous, full-scale internal review of operations in our District 6 maintenance unit."

   

Tagged categories: Bridges; Contractors; Department of Transportation (DOT); Government; Government contracts; Graffiti removal; Inspection; Laws and litigation; Maintenance programs; Roads/Highways; Tunnel

Comment from Andrew Piedl, (8/6/2014, 6:16 AM)

This is one of the regions with the highest number of deficient bridges.


Comment from Joseph Brandon, (8/10/2014, 3:21 PM)

Controls, including visual monitoring, auditing, etc, are often thought of a “tools of a distrusting society.” If this article doesn’t provide evidence of the need for facility owners to be distrusting, or at least monitor and be prepared to respond to indications of potential problems, it is hard to imagine what would constitute such evidence. This article portraits a contracting system that is out of control, due, at least in part, to a lack of both contract controls and internal controls. Appropriate controls not only tend to identify potential problems before they happen, they also tend to discourage malfeasance. Conversely, where participants are predisposed to aberrant behavior, a lack of controls can serve to encourage such behavior. Thus, the PennDOT quote, "PennDOT is committed to honest and efficient management of the transportation system," is very difficult to take seriously considering the lack of controls or abject failure of established controls. Neither of these situations occurs when there is a commitment to honest and efficient management. Developing and implementing appropriate controls is more of a series of “thought exercises” than dedicating manpower to the monitoring. Controls and monitoring are process-specific, not contract specific, therefore, when developed for any process, they can be used for every project involving that process. Covered processes could be surface preparation, coating application, coating curing, graffiti removal, herbicide application, and on and on and on. When properly developed, including thoughtful inspection reporting, 80% or more of the monitoring can probably be accomplished by a desk clerk.


Comment from Francis (Frank) Graff, (8/15/2014, 7:01 AM)

Joseph, in 2005 thru 2007 Jack Wagner then auditor general of Penna., did a thorough investigation of contract procedures. Recommendations were made and Penndot did agree to enact and enforce procedures to prevent. It is apparent that Penndot did not heed the suggestions again. Just one spot check of daily work performed and the 609's they mention in the indictment had been done, prevention would have ruled the day. I have found that most Penndot employees are good and honest people, but many tend to get lackadaisical in their duties. Manpower and delegation is always done, but controls fall to the wayside. I blame laziness on the part of political appointees with no knowledge of efficient management. That is what I saw in the articles of indictment. The person who made the quote you cited, "committed to honest and efficient management" obviously fits into the type of person responsible for not adhering to strictness. They may even be busy playing solitare all day, while they should be out controlling the daily work. I am closely following the articles concerning my beloved Penndot, and will be particularly focused on the things you hit right on the head. Many years ago as manager for Phila. Penndot maintenance, I had to literally use highway maintenance workers to supervise ongoing contract paving, roadside etc. Yes, a pot hole repair person to stand there and inspect. The District office who had the proper people qualified were sitting in their construction trailers doing nothing, especially during winter, when most construction was on hold. I argued we needed help down in the counties, but they argued the work was below their qualifications. Therby, I promoted the hiring of a qualified consultant inspection engineering firm to do the needed inspections, and it happened. The same process which is in play today. But, the same people who resented doing the inspections back then are doing it again. All their now asked to do is oversee, and that is not happening. Central office is sitting up there in Harrisburg, and throwing darts at all the Districts for not performing. A beauracratic way to handle a real day to day problem. What would it take to send an even more qualified person than the responsible one's in place out there to check on these problems? We always had Quality Assurance checks, but that didn't seem to be happening here. When all is said and done, I know another suggestive report will be coming out of many offices of legal department's, but administrations will change and the new guy on the block won't take the time to read those Jack Wagner investigations. One more thing for you to ponder is graffiti removal. This was and probably still is a difficult thing to get a handle on and here is why. Graffitti contractors complain their movements of men and equipment from one site to another is non-profitable to remove a patch of graffiti. We had to come up with some solution to correct the method. I came up with the proposal that when then remove graffiti from, let's say, a column or pier, they are to power wash the entire column for uniformity sake. I did feel that was the way to go and it looked great. I would venture to say that still is in the contract today, but not sure. You see, those new guy's on the block always thing their way is better, and throw away the idea's of past people. I could go on and on but there is an ongoing investigation and I have to respect it.


Comment from Chuck Stevens, (8/22/2014, 4:31 PM)

After many years in Quality control work NACE,NICET,NICEPT,as a Inspector, I have always been one who felt that a independent inspection firm was and still is the way to assure work is done according to contract specifications and insure this is done safeguards should be put in place: A.Pre-Job The Inspection firm or the inspector assigned to the project should address any grey area's at this time. with the input of the owner(Gov,State,or Local agency.This also is the time for all parties to express safeguards in place Ex.Daily Reports,available to be viewed by not only the hiring party but also others so designated.by mutual agreement by all.The Inspector will have the option to review legitimate concerns with others further up the chain of command. All parties involved should be given a project update on a weekly bases,There is more to be said;and I will at a later date,Honest people still out number the dishonest ones.Let us help maintain that equation.


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