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Feds Suspend 13 in PennDOT Scandal

Tuesday, May 5, 2015

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WASHINGTON, DC—Eleven individuals and two companies have been suspended, pending debarment, in the widening corruption scandal engulfing Pennsylvania's Department of Transportation.

The actions are the latest in the long-unfolding scheme that soaked millions of dollars from 27 federally funded maintenance and construction contracts in Pennsylvania, the Federal Highway Administration announced.

The suspensions include the case's alleged ringleaders: former PennDOT permit manager Alex Morrone and former Philadelphia permit manager Williams Rosetti.

William Rosetti  PennDOT scandal
Images (unless otherwise noted): PA Attorney General's Office

Former PennDOT permit manager Alex Morrone (left) and former Philadelphia permit manager William Rosetti are accused of taking kickbacks from highway inspectors to ignore fake time sheets and mileage reports. The two are among 11 individuals suspended by FHWA.

Suspended individuals and firms are barred from receiving federally funded contracts or grants. Debarment is a government-wide action that applies to all federal programs and procurement.

The case began in March 2013, when the state Bureau of Criminal Investigation launched an investigation after receiving evidence of widespread abuse in the Highway Occupation Permit Program (HOP) in PennDOT's District 6. The district consists of Philadelphia and its five surrounding suburban counties.

$5M Fraud

State criminal complaints filed in December 2014 in Bridgeport, PA, charged 10 individuals with various crimes centered around the scheme.

The complaints allege that Morrone and Rosetti demanded kickbacks from project inspectors while requiring them to falsify time, attendance and payroll records to generate illicit cash flow.

The complaints said the inspectors had been paid more than $500,000 through false payroll and invoice submissions.

"A pattern of nepotism and cronyism" secured jobs for most of the defendants with PennDOT and two regional consulting firms, Construction Methods and Coordination Inc. (CMC) and Czop Specter Inc., and kept the conspiracty going, the attorney general's office said.

PennDOT scandal
Davidt8 / Licensed under Public Domain via Wikimedia Commons

"The investigation revealed that at least one CMC inspector participated in the fraud while working on the 100% federally funded Girard Point Bridge construction project," authorities said.

"Our ongoing investigation of PennDOT District 6 has exposed nearly $5 million in fraud in Philadelphia and the surrounding counties," said state Attorney General Kathleen G. Kane.

FHWA Suspensions

In addition to Morrone and Rosetti, the FHWA has suspended:

  • PennDOT Inspector Frank DiMichele;
  • PennDOT Inspector Generoso Palmieri;
  • Czop Inspector Brandon Grosso;
  • CMC Inspector John Laspada;
  • Czop Inspector Christopher Lauch;
  • Czop Inspector David Betzner;
  • CMC Inspector John Cavanaugh;
  • CMC Inspector Joseph DeSimone;
  • Thanh Nguyen;
  • Utility Line Clearance; and
  • V-Tech Services Inc.
FHWA suspension

The FHWA also suspended (clockwise from top left): Frank DiMichele, Generoso Palmieri, John Cavanaugh, Joseph DeSimone, Brandon Grosso, Chris Lauch, Jason Laspada and Thanh Nguyen. Not pictured: David Betzner.

In total, 13 individuals have been indicted in the scheme.

Double Billed and Overpaid

Nguyen owns V-Tech and Utility Line Clearance.

State charges were filed against Nguyen in July 2014 alleging that he used the companies to steal about $3.6 million for work not performed, and double-billed for services and supplies not provided as stipulated in the PennDOT contracts.

Nguyen also bribed Czop inspector Robert Slamon, who was also arrested in July, to ignore the fraud, according to the grand jury. Slamon is charged with conspiring with Nguyen to falsify PennDOT records in order to receive payment for work allegedly never completed.

Since 2009, Nguyen has received about $26 million in PennDOT general maintenance contracts for Pennsylvania roads and bridges.

Robert Slamon

Robert Slamon (left), a Czop inspector, was charged in the scheme in July 2014. Charges were announced in April against Christopher Czop (right), the company's president.

Nguyen is also accused of defrauding PennDOT by inflating work hours and the number of people working at various job sites, and billing for equipment and materials not purchased, rented or used.

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.

Latest Charges

Charges against Christopher M. Czop, president and principal operating officer of Czop Specter Inc., were announced last month.

Czop is charged with two counts of corrupt organizations and one count each of theft by unlawful taking, theft by deception, criminal conspiracy to commit theft, tampering with public records, dealing with proceeds of unlawful activities, and bid rigging.

The charges against Czop were recommended by a statewide grand jury, which said he had engaged in criminal conduct in obtaining and executing several consultant inspection contracts with PennDOT’s District 6.

CMC agreed in February to pay more than $1.3 million to reimburse PennDOT and the FHWA. The company entered into an administrative agreement with the two agencies.

CMC's DeSimone was arrested and charged with perjury for allegedly lying to a grand jury during the investigation in April 2014.

   

Tagged categories: Bridges; Department of Transportation (DOT); Federal Highway Administration (FHWA); Fraud; Government contracts; Inspection; Laws and litigation; North America; Program/Project Management; Roads/Highways

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