Sixteen New York City Public School Custodian Engineers and One Vendor Charged with Theft and Misapplication of Department of Education Funds
More Than One-Half Million Dollars Misapplied, Embezzled or Stolen, and More Than $329,000 Received in Kickbacks
ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, JOHN A. KLOCHAN, Acting Assistant Director-in-Charge, Federal Bureau of Investigation, New York (FBI), RICHARD J. CONDON, Special Commissioner of Investigation for the New York City School District (SCI), and MICHAEL J. THOMAS, Special Agent-in-Charge, Internal Revenue Service (IRS), today announced the unsealing of two complaints charging a total of 16 New York City Public School custodian engineers and one vendor with embezzling, stealing and misapplying more than $529,000 of Department of Education ("DOE") funds, and receiving more than $329,000 in vendor kickbacks, in two separate schemes.1
The defendants' initial appearances are scheduled to take place this afternoon before United States Magistrate Judge Robert M. Levy at the U. S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
THE ROLE OF SCHOOL CUSTODIANS
School custodian engineers in the New York City School system maintain the schools to which they are assigned, and purchase the required goods and services for those schools. They receive funds for such purchases from DOE, typically on a bi-weekly basis.
DOE requires that custodians follow purchasing procedures outlined in the School Purchasing Guide - Procurement Policy ("Procurement Guide") and in separate Plant Operations Circulars to ensure "the acquisition of goods and services of maximum quality at the best possible cost while guarding against favoritism, improvidence, extravagance, fraud and corruption." The rules require that custodians engage in competitive bidding before contracting with vendors who are not on DOE's "approved vendor list." Competitive bidding is described as "soliciting bid proposals from a variety of different vendors . . . [thereby assuring] that procurements are reasonable and not influenced by favoritism, fraud or corruption."
Custodians must submit documentation of their expenditures monthly to the District Plant Manager responsible for the school district where the reporting custodian's school is located. They must also submit invoices, bid summary sheets and/or written bids for each purchase they make, or contract they award, over $250.
UNITED STATES v. DONOVAN, ET AL.
The first scheme uncovered during the government's investigation involved nine custodians, MICHAEL DONOVAN, ROBERT STEWART, WAYNE WILDRICK, MICHAEL FRICIONE, JOSEPH GIATTINO, FELIX TORRES, ANTHONY BONGIORNO, DANIEL DONOVAN and JOHN DEMAIO, and one vendor, ROBERT FERRAMOSCA. The custodians worked at more than 26 elementary, intermediate, junior high and high schools throughout Brooklyn, Staten Island and the Bronx. FERRAMOSCA operated several companies from his Staten Island residence, including Alcehmy Industries, Inc., Altrust Associates, Inc., Neugold Products, Inc., Quita Industries, Inc. and Robert Ferramosca Maintenance Supplies.
The investigation began in March 2001, after the New York City Department of Education, Office of the Auditor General, determined that several of the defendant custodians had submitted invoices and bid documents to their District Plant Managers from companies that appeared to be related to each other through common ownership and control, in violation of the DOE Procurement Guide. The Office of the Auditor General then referred the matter to SCI for further investigation.
On March 19, 2003, FBI agents and SCI investigators executed a search warrant at FERRAMOSCA's residence and seized numerous documents, including ledgers, invoices, check registers, bank statements, canceled checks, tax returns and bid summary forms. The government also subpoenaed records from several custodians and reviewed records submitted to DOE by the custodians in the ordinary course of business. A review of these and other records revealed that five of the companies that submitted bids to the custodians were actually owned, operated and controlled by FERRAMOSCA, and that the defendant custodians had not solicited or received the required number of bids from unrelated vendors.
The investigation further disclosed that in an effort to conceal their scheme, several of the defendant custodians used variations of FERRAMOSCA's name when listing the contact person for the companies he controlled, and in other instances they submitted false invoices from companies not controlled by FERRAMOSCA for goods that were neither purchased nor ordered for the schools.
According to the complaint, between 1999 and 2003, the defendant custodians, with the assistance of FERRAMOSCA, misapplied approximately $357,330 of DOE funds. From October 1999 through July 2000, MICHAEL DONOVAN, WILDRICK, and BONGIORNO embezzled and stole approximately $31,300 from DOE, by paying FERRAMOSCA for goods that were never sold or delivered to the schools. Finally, between 1998 and 2003, FERRAMOSCA paid kickbacks to MICHAEL DONOVAN, STEWART, WILDRICK, TORRES, BONGIORNO and DANIEL DONOVAN totaling approximately $255,000.
UNITED STATES v. DELLAPORTE, ET AL.
The second scheme involved seven custodians, CIRO DELLAPORTE, THOMAS ZERELLA, PASQUALE SPINELLO, NICHOLAS NUZIALE, HUGH BOVICH, JR., CHRISTOPHER ROBLES and EDWARD LUCA, and a vendor ("the vendor") who is not named in the complaint. The custodians worked at 25 elementary, intermediate, junior high and high schools throughout Brooklyn and Queens.
The investigation began in March 2003, when FBI agents and SCI investigators determined that several of the defendant custodians were paying a vendor for cleaning and janitorial products that were never delivered to their schools. In exchange, the vendor typically kicked back to the custodians half of the purchase price of the products. The vendor was subsequently arrested and agreed to cooperate with law enforcement, recording numerous meetings with the defendants. During several of the recorded meetings, the custodians paid the vendor for products that were never delivered, and in return, received kickbacks in the form of cash and, in one case, gift cards from a national home improvement store.
In one recorded conversation, ZERELLA stated that the vendor was making him suspicious, and at the conclusion of the meeting actually frisked the vendor. Despite his suspicions, ZERELLA continued to engage in fraudulent transactions with the vendor.
According to the complaint, between August 2004 and April 2005, in recorded conversations, the defendants paid the vendor more than $40,400 for products that were never delivered to the schools in exchange for over $21,200 in kickbacks. The government's analysis of transactions between the custodians and the vendor that pre-date the vendor's cooperation reveal that between January 2003 and July 2004, the defendants stole an additional $100,725 of DOE funds and received an additional $53,202 in kickbacks.
"Corrupt public employees and their private-sector cohorts who believe that school coffers are fair game to line their own pockets are sorely mistaken," stated United States Attorney MAUSKOPF. "This case sends a clear warning that we will aggressively investigate and prosecute those who plunder the invaluable resources devoted to educating our schoolchildren." Ms. MAUSKOPF thanked the New York City Department of Education, Office of the Auditor General, for its assistance and stated that the investigation is continuing.
FBI Acting Assistant Director-in-Charge KLOCHAN stated, "Against a backdrop of occasional stories about under-equipped schools, where dedicated teachers sometimes feel compelled to buy school supplies out of their own pockets, the crimes of these defendants are appalling. While the financial reality called for austerity, these defendants were guided only by avarice."
Special Commissioner of Investigation CONDON stated, "This was one of the most extensive investigations undertaken by the Office of the Special Commissioner of Investigation in recent years. It details the ways in which corrupt custodians and vendors were able to steal hundreds of thousands of dollars from the Department of Education and points out the need for additional safeguards to be instituted by the Department to prevent a reoccurrence."
IRS Special Agent-in-Charge THOMAS stated, "Our involvement in this investigation is important. We are at the center of this investigation, following the financial trail."
If convicted in connection with the first scheme, MICHAEL DONOVAN, STEWART, WILDRICK, FRICIONE, GIATTINO, TORRES, BONGIORNO, DANIEL DONOVAN, DEMAIO and FERRAMOSCA face a maximum sentence of 10 years' incarceration and a $250,000 fine on the charge of misapplying DOE property; MICHAEL DONOVAN, WILDRICK, and BONGIORNO face a maximum sentence of 10 years' incarceration and a $250,000 fine on the charge of embezzling and stealing DOE property; MICHAEL DONOVAN, STEWART, WILDRICK, TORRES, BONGIORNO and DANIEL DONOVAN face a maximum sentence of 10 years' incarceration and a $250,000 fine on the charge of receiving kickback payments; and MICHAEL DONOVAN faces a maximum sentence of 20 years' incarceration and a $250,000 fine on the charge of obstructing a federal investigation by submitting false bid documents in response to a grand jury subpoena.
If convicted in connection with the second scheme, DELLAPORTE, ZERELLA, SPINELLO, NUZIALE, BOVICH, ROBLES and LUCA face a maximum sentence of 10 years' incarceration on the charge of embezzling, stealing and misapplying DOE property, and 20 years' incarceration and a $250,000 fine on the mail fraud charge.
The government's case is being prosecuted by Assistant United States Attorney Margo K. Brodie.
Residence: 15 Elba Place, Scarsdale, New York
Residence: 510 10th Street, Brooklyn, New York
Residence: 757 Monmouth Pkwy., Middletown, New Jersey
Residence: 296 Manhattan Street, Staten Island, New York
Residence: 1936 Edison Avenue, Bronx, New York
Residence: 1281 Bretton Road, Valley Stream, New York
Residence: 3659 Hyland Blvd., Staten Island, New York
Residence: 2711 Bruckner Blvd., Apt. 2, Bronx, New York
Residence: 2130 E. 37th Street, Brooklyn, New York
Residence: 61 Burgher Avenue, Staten Island, New York
Residence: 955 76th Street, Brooklyn, New York
THOMAS L. ZERELLA
Residence: 95 Horn Lane, Levittown, New York
PASQUALE "PAT" SPINELLO
Residence: 21 Highland Pl., Great Neck, New York
Residence: 50-33 65th Pl., Woodside, New York
HUGH BOVICH JR.
Residence: 84-03 107th Avenue, Ozone Park, New York
Residence: 9 Alister Circle, East Northport, New York
Residence: 2053 Bayridge Pkwy., Brooklyn, New York
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