FOR FURTHER INFORMATION CONTACT
AUSA VICKIE E. LEDUC at 410-209-4885
November 28, 2006
FOR IMMEDIATE RELEASE
W. DAVID STOFFREGEN, FORMER CEO OF POOLE AND KENT,
PLEADS GUILTY TO A RACKETEERING CONSPIRACY, FRAUD
AND TAX CHARGES
Agrees to Forfeit Over $5 Million Obtained in a Criminal
Money-Making Enterprise
BALTIMORE, Maryland - W. David Stoffregen, age 53, of Towson, Maryland, the former president and chief executive officer of the Poole and Kent Corporation (P&K), pleaded guilty today to racketeering conspiracy, mail fraud and filing a false tax return, announced United States Attorney for the District of Maryland Rod J. Rosenstein.
Corruption Scheme Involving State Senator
According to the statement of facts presented at today’s guilty plea, during the late 1990s and early 2000s, Stoffregen provided various benefits to a then Maryland state senator, in exchange for the senator’s agreement to use his influence and official position to assist Stoffregen and his company, P&K. Those benefits included the following:
In 1999, Stoffregen awarded a $1.3 million subcontract for security work at the Juvenile Justice Center in Baltimore to Network Technologies Group (NTG). Stoffregen would not have awarded that subcontract to NTG, but for the fact that the senator had a sales position with the company.
In 2000 to 2001 Stoffregen provided construction work valued at more than $85,000 on a new house the senator built in Baltimore County with the expectation that the senator would not be billed for most of the work. Under Stoffregen’s direction, David M. Jackman, a P&K project manager, posted the construction costs to a University of Maryland Medical System (UMMS) project. Subsequently, Jackman prepared an invoice for $19,476 to the senator in order to create a record in the event that the relationship between Stoffregen and the senator and the work on the house was ever questioned. It was only after learning in the fall of 2002 that the FBI was investigating the senator that Stoffregen directed that a second invoice be prepared in an effort to conceal the fact that P&K had done work for free or at a reduced cost.
In the fall of 2000, Stoffregen told the senator that he would pay him approximately $80,000 annually to remain in his Senate office rather than leave the Senate to work in the private sector. Between January 2001 and May 30, 2003, Stoffregen paid the senator a total of $192,923 disguised as salary payments to the senator’s wife for a no-show job at Namco Services, Inc.(Namco).
Stoffregen also provided the senator with a 15% interest in International Partners Construction LLC (IPC), a company Stoffregen formed in order to do construction work in Russia. He attempted to conceal the senator’s connection with the company by intentionally omitting any mention of the senator as a founder or member of the company in grant applications and other documents.
Stoffregen admits that in exchange for these benefits, the senator used his influence to: expedite monthly payments from the Maryland Comptroller’s Office to P&K for work performed on the Juvenile Justice Center project in order for Stoffregen to be eligible for bonuses; help Stoffregen and P&K win a multi-million dollar bid over a competitor with a lower bid to perform the mechanical subcontract on the UMMS Weinberg Building in downtown Baltimore, pursuant to which contract P&K realized a profit of about $1.8 million; and intervene in various business disputes on P&K’s behalf, including contract disputes with UMMS involving significant sums.
Minority Contracting Fraud Scheme
According to the statement of facts, Stoffregen participated in a minority “front” company fraud scheme with Michael Forti, his wife Geraldine Forti and the senator’s wife. Michael Forti was executive vice-president and CEO of Forti, Poole and Kent (FP&K), a construction company that often served as a subcontractor to P&K and was jointly owned by Stoffregen and Forti. Geraldine Forti was the owner of Namco, a certified woman-owned business. When Geraldine Forti decided in 1999 that she no longer wanted to run Namco, Stoffregen paid Geraldine Forti to allow him to use her company’s identity to help P&K satisfy certain minority contracting requirements on various public and private construction contracts. Stoffregen and P&K took control of Namco’s operations and used its minority status to obtain over $4,883,000 in contracts with various state, city and private entities. One of the contracts involved the terminal expansion at the Baltimore-Washington International Airport. When state inspectors who were determining the legitimacy of Namco’s minority status asked to arrange for an on-site inspection of Namco’s purported offices, Stoffregen directed P&K employees to deliver and set up office furniture, documents and computers in the largely empty Namco office to make it appear that Namco was a viable business operating out of that location.
Between June 1999 and the fall of 2003, Stoffregen paid the Fortis about $224,776 disguised as weekly salary checks and monthly automobile allowances to Geraldine Forti. At some point during the scheme, the Fortis kicked back half of the salary and auto payments to Stoffregen.
Obstruction of Justice
In the fall of 2003 after the federal grand jury subpoenaed records from P&K relating to Namco and P&K’s minority contracting practices, and during a meeting with Geraldine Forti and two attorneys, Stoffregen insisted that Forti had always chosen which projects Namco would work on for P&K and encouraged Forti to agree with that statement, knowing that it was false.
Fraudulent Expense Report and Invoicing Schemes
From 1999 to March 2005, Stoffregen submitted false expense claims to P&K, resulting in P&K paying Stoffregen more than $261,000 to which he was not entitled.
Also, in late 2000, Stoffregen devised a fraudulent lease arrangement involving welding machines. Stoffregen then shared more than $250,000 as a result of this scheme.
Finally, from 2000 through the spring of 2005 Stoffregen arranged to have his family vehicles brought to a local automobile repair service, which also serviced the P&K fleet of vehicles, for installation of radios, tires, repainting, repairs and maintenance. Stoffregen was not billed for the work. Instead, P&K paid more than $64,000 for the work, pursuant to the fraudulent invoices.
Filed False Tax Returns
Stoffregen defrauded P&K of more than $628,000 through the use of the expense report and invoicing fraud schemes. Stoffregen failed to report this income on his 2000 through 2003 federal income tax returns.
As part of the plea agreement, Stoffregen agreed to forfeit up to $5,604,327 in cash, vehicles and property. Stoffregen faces a maximum penalty of 20 years in prison for the RICO conspiracy and each of the three counts of mail fraud, and three years in prison for filing a false tax return.
A number of individuals have already pled guilty in connection with this and related cases. Geraldine Forti, age 57, and Michael Forti, age 58, both of Middle River, pleaded guilty on September 6, 2005 to filing a false tax return which failed to report income received from labor and services provided by P&K, FP&K and Namco for the construction of the Fortis home. Michael Forti also pleaded guilty to mail fraud in connection to his participation in the Namco minority contracting fraud scheme.
Jeanie Ashfield-Testa, age 63, of Ashburn, Virginia, Stoffregen’s office manager, pleaded guilty on October 20, 2006 to concealing a felony from federal law enforcement in connection with the false expense reports submitted by Stoffregen. Ashfield-Testa admitted that she failed to disclose the fraudulent expense reports or her role in altering credit card statements during an FBI interview and at her federal grand jury testimony.
David M. Jackman pleaded guilty on October 26, 2005 to making a false statement to the FBI, when he falsely stated that he had always intended to bill the senator for the P&K work performed at the senator’s residence.
James Eick, age 49, of Perry Hall, Maryland, pleaded guilty on November 18, 2005 to mail fraud in connection with kickbacks on construction projects at a downtown Baltimore building. These projects involved a construction company owned by the senator.
United States Attorney Rod J. Rosenstein commended the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation for their investigative work, and thanked Assistant United States Attorneys Kathleen O. Gavin and Michael J. Leotta, who are prosecuting the case.
This page last modified—November 28, 2006