MONDAY, JUNE 3, 2013
A former Navy engineer has pleaded guilty to defrauding the U.S. government of up to $20 million over a 12-year period by billing the Navy for work that was never performed.
Ralph M. Mariano pleaded guilty to conspiracy, theft of government funds, and tax evasion in U.S. District Court in Providence, RI, U.S. Attorney Peter F. Neronha announced Thursday (May 30).
The potential sentences that Mariano faces weren't immediately available.
Mariano, a former senior systems engineer with the Navy's Naval Sea Systems Command (NAVSEA) in Newport, RI, and Washington, D.C., admitted to the court that he had defrauded the government of between $7 million and $20 million by directing co-conspirators to bill the Navy false work invoices from 1999 to 2011.
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Former Navy engineer Ralph Mariano pleaded guilty on Thursday to a 12-year-long kickback scheme that cost the U.S. government up to $20 million. |
He is scheduled to be sentenced on Sept. 5.
How it Happened
Using his position with NAVSEA, Mariano told the court that he had directed Russell Spencer, a computer software specialist employed by Electric Boat, to submit fraudulent invoices to Navy contractor Advanced Solutions for Tomorrow (ASFT), a now-defunct company that formerly operated in Georgia and Middletown, RI.
Mariano then directed ASFT to pay Spencer the full amount of the false invoices with money the contractor received from the Navy. The invoices were processed by ASFT's Chief Financial Officer, Patrick Nagle.
The amount of government money falsely obtained and paid to Spencer totaled $17,957,000, Mariano told the court. Mariano admitted receiving $3,081,671 of Navy funds in checks from Spencer, plus bi-weekly cash payments of $3,500 from Navy funds from 2004 to January 2011.
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Mariano told the court that he had sent millions of dollars to his father, brother, sister and others. |
Using a system of codes, Spencer was directed to distribute the funds to Mariano and others close to him, including his father and siblings. However, little work was required on Spencer's part in exchange for the money.
According to court information, Spencer took documents from his company without permission and made "cosmetic" changes to them before providing them to ASFT and billing them upwards of $200,000 per month.
Mariano also pleaded guilty to one count of tax evasion, admitting that he failed to report $1,864,910 in income he received from Spencer from 2006 to 2009. He stated that he owed the Internal Revenue Service $726,650.
Other Parties, Other Pleas
Mariano told the court that, at his direction, $2,567,028 was paid to his father, Ralph Mariano Jr.; $1,692,650 was paid to his brother, Joseph Mariano, and to his companies; and $207,900 was paid to a veterinary laboratory company controlled by his sister, Michelle Mariano.
Mariano's father pleaded guilty May 15 to four counts of tax evasion and is scheduled for sentencing Aug. 16.
In addition, $2,446,445 was paid to private entities controlled by Anjan Dutta-Gupta, CEO of ASFT. Dutta-Gupta pleaded guilty on April 28, 2011, to one count of bribery. He is scheduled to be sentenced July 25.
Mariano said that $478,880 was paid to a company owned by attorney Mary O'Rourke. O'Rourke submitted false invoices to Spencer for work that was never performed from 2005 to 2011, officials said.
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The investigation was part of President Obama's Financial Fraud Enforcement Task Group, which was established to "wage an aggressive" effort to prosecute financial crimes. |
O'Rourke pleaded guilty Thursday in U.S. District Court to one count of theft of government property and is scheduled to be sentenced Sept. 5.
Spencer pleaded guilty July 25, 2012, to one count of conspiracy to commit bribery and one count of lying to the FBI. He is scheduled to be sentenced July 25.
Nagle pleaded guilty on Sept. 13, 2011, to one count of conspiracy to commit bribery and is scheduled for sentencing July 26.
'Aggressive' Prosecution
Contributing to the investigation were agents from the Defense Criminal Services, Naval Criminal Investigative Service, FBI and IRS-Criminal Investigations.
The prosecution was part of President Obama's Financial Fraud Enforcement Task Force, an interagency group established to "wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes."
The task force includes representatives from federal agencies, regulatory authorities, inspectors general, and state and local law enforcement.
Tagged categories: Contractors; Contracts; Enforcement; Government contracts; Laws and litigation; Program/Project Management; U.S. Navy
