Former Con Ed Employee Charged in Kickback Scheme
Defendant Accepted Kickbacks to Approve Inflated Invoices and Expedite Payments
Joseph Lioi, a retired Chief Construction Inspector for Consolidated Edison Corporation of New York, Inc. (“Con Ed”), was arrested today for soliciting and accepting approximately $24,000 in kickbacks from a contractor in connection with construction projects in Westchester County, New York during 2007.1 The defendant’s initial appearance is scheduled later today before United States Magistrate Judge Roanne L. Mann at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
The arrests were announced by Benton J. Campbell, United States Attorney for the Eastern District of New York; Peter J. Smith, Special Agent-in-Charge, Office of Investigation, United States Department of Homeland Security, Immigration and Customs Enforcement, New York (“ICE”); Patricia J. Haynes, Special Agent-in-Charge, Criminal Investigation, Internal Revenue Service, New York; and Robert E. Van Etten, Inspector General, The Port Authority of New York and New Jersey, Office of the Inspector General.
Lioi’s arrest is part of the government’s continuing investigation that lead to the filing of federal charges against ten Con Ed supervisors on January 14, 2009, for collectively receiving more that $1 million in kickbacks from contractors in exchange for the supervisors’ agreement to approve inflated and/or fraudulent payment invoices, as well as expediting the payments on those invoices.
As a Chief Construction Inspector, Lioi oversaw various Con Ed projects in southern Westchester County and supervised the Con Ed inspectors who worked under him. These projects pertained to the installation and maintenance of electric and gas facilities throughout the area. Lioi was also responsible for reviewing contractor payment invoices, ensuring that the requested amounts were accurate, and passing approved invoices up the chain of command for payment.
According to the complaint, in December 2006, Lioi agreed with the owner/president of a contracting company (“the contractor”) performing work on the southern Westchester County Con Ed projects to accept kickback payments of approximately $500 per week. Initially, these payments were made directly to Lioi. In mid-2007, the contractor was contacted by one of Lioi’s supervisors (“the supervisor”) at Con Ed, who also solicited payoffs. The contractor then started making approximately $4,000 per month kickback payments directly to the supervisor, which were supposed to be split evenly with Lioi. In exchange for the kickbacks, Lioi and the supervisor agreed to favorably review the contractor’s payment invoices, including invoices submitted with inflated costs, and ensure that Con Ed paid the contractor in a timely manner. The complaint alleges that during 2007, Lioi received approximately $2,000 per month in kickback money, until Lioi retired from Con Ed in December 2007.
Mr. Campbell expressed his grateful appreciation to the investigating agencies and added that the investigation is continuing.
If convicted, Lioi faces a maximum sentence of 10 years’ imprisonment and a $250,000 fine.
The government’s case is being prosecuted by Assistant United States Attorneys Sarah Coyne, Monica Ryan, and Daniel Brownell.
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