HARRISBURG, Pa. (Legal Newsline) - Joseph W. Nagle was convicted Thursday for perpetrating the greatest Disadvantaged Business Enterprise fraud in United States history, the Department of Justice has announced.
Mr. Nagle, of Deerfield Beach, Fla., was convicted by a federal jury in Harrisburg, Pa., on 26 of 30 charges in the indictment.
He was found guilty of conspiracy to defraud the United States Department of Transportation and commit wire and mail fraud, seven counts of wire fraud, six counts of mail fraud, conspiracy to commit money laundering and 11 counts of money laundering. According to USDOT, the fraud was committed for more than 15 years and involved more than $136 million in government contracts.
USDOT provides billions of dollars a year to states and local governments for highway construction and maintenance of highways, as well as for mass transit systems with the provision that small businesses, "owned and operated by disadvantaged individuals receive a fair share of these federal funds."
Two entities in Pennsylvania -- the Pennsylvania Department of Transportation and the Southeastern Pennsylvania Transportation Authority, which operates mass transit in the Philadelphia area -- receive these funds. They require contractors to award a percentage of their subcontracts to eligible DBE's.
Nagle was president, chief executive officer and part-owner of Schuylkill Products Inc. and its wholly-owned subsidiary CDS Engineers Inc. SPI manufactured concrete bridge beams used on highway construction projects in Pennsylvania and surrounding states.
CDS was SPI's erection division and installed SPI's bridge beams as well as other suppliers' products, on highways in Pennsylvania and surrounding states.
The plot operated from 1993 to 2008. More than 300 PennDOT and SEPTA construction contracts were diverted to SPI and CDS that were reserved for DBE's. Mr. Nagle and his co-conspirators used a front company, Marikina Construction Corporation, to obtain these lucrative government contracts.
Markina was a small Connecticut highway construction firm owned by Romeo P. Cruz of West Haven, Conn., a naturalized American citizen born in the Philippines. He was certified by both PennDOT and SEPTA as a DBE. Despite receiving the DBE contracts on paper, all the work was performed by and paid to SPI and CDS personnel. Marikina was paid a small fixed fee, set by SPI, for letting SPI and CDS use its name,
"Preventing and detecting DBE fraud are priorities for the Secretary of Transportation and the USDOT Office of Inspector General," said Doug Shoemaker, OIG Regional Special Agent in Charge.
"This significant conviction, in what is the largest reported DBE fraud case in USDOT history, will serve as a clear signal that severe penalties await those who would attempt to subvert USDOT laws and regulations.
"Prime contractors and subcontractors are cautioned not to engage in fraudulent DBE activity and are encouraged to report any suspected DBE fraud to the USDOT-OIG. Our agents will continue to work with the Secretary of Transportation, the Administrators of the Federal Highway and Transit Administrations, and our law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes throughout Pennsylvania and the United States."
Nagle could be sentenced to five years imprisonment on the conspiracy count, up to 20 years of imprisonment on each of the wire and mail fraud counts, and up to 10 years of imprisonment on the money laundering conspiracy and each of the money laundering counts of conviction. He could also be fined $250,000 on each of the convictions.
"Schemes to defraud the Department of Transportation's Disadvantaged Business Enterprise program cheat not only the government and taxpayers, but also cheat those small, minority-owned businesses that the program is intended to help," Special Agent in Charge George C. Venizelos of the Philadelphia Division of the FBI said.
"This long-term joint investigation, culminating in the conviction announced here today, shows our determination to work together with our partners to safeguard the taxpayer dollars that support these important programs."