January 27, 2004
|Former Bpa Executive Albert E. Isernio Pleads Guilty to Charges in Health Benefits Scheme That Cost Nassau County over $70 Million|
ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, DENIS DILLON, District Attorney for Nassau County, New York, PASQUALE J. D'AMURO, Assistant Director-in-Charge, Federal Bureau of Investigation, New York, and GLENDA PAPPILLION, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York, announced that ALBERT E. ISERNIO, the former president and chief executive officer of Melville, Long Island-based Benefit Plan Administrators, Inc. ("BPA"), pleaded guilty today to conspiring to bribe Robert J. McDonald, the former Chief Deputy County Executive, and money laundering, in connection with his participation in a health benefits scheme that cost Nassau County more than $70 million. ISERNIO entered his guilty pleas this afternoon before United States District Judge Joanna Seybert at the United States Courthouse in Central Islip, New York.
The plea comes on the heels of ISERNIO's federal conviction on January 21, 2004, for filing false federal tax returns and structuring currency transactions. For the tax year 1997, he failed to report $668,000 in personal income; for 1999 he failed to report $930,000 in income and under-reported $1 million in capital gains. The total tax loss was $875,000. In 1998 ISERNIO structured $56,000 in gambling proceeds; in 2000 he structured $161,000 in gambling proceeds. ISERNIO was immediately remanded into the custody of the U. S. Marshal's Service upon conviction.
On October 26, 2001, a federal grand jury returned an indictment charging ISERNIO and six co-defendants, including Robert J. McDonald and William M. Blake, with conspiracy to defraud Nassau County, mail fraud and money laundering conspiracy. In April, 2003, ISERNIO's trial on these charges ended in a mistrial, when jurors were unable to reach an unanimous verdict. A superseding indictment was returned by the grand jury on September 24, 2003, and jury selection was scheduled to begin on Monday, February 2, 2004.
The mail fraud/money laundering superseding indictment charged ISERNIO with depriving the County of the honest services of McDonald, the Nassau County official in charge of the committee that recommended the awarding of two health benefits contracts to BPA, by secretly initiating a series of bribes to McDonald. The scheme was agreed to shortly after the signing of the first contract, and the bribes were actually paid in 1997, shortly after the signing of the second contract. Approximately $112,000 of the bribe monies were funneled by ISERNIO to McDonald through companies set up and controlled by three co-defendants. An additional $38,000 in bribe monies were paid to McDonald through a company controlled by a fourth co-defendant.
The defendants' scheme involved two multi-million dollar contracts between Nassau County and BPA, under which BPA administered the County's health benefits plan for its employees and retirees, and their dependents. As part of the scheme, between February 1995 and April 1999, ISERNIO was charged with making false and fraudulent statements to the County, both in BPA contract proposals and correspondence, and in testimony before the County Legislature, to induce the County to award these contracts to BPA, including falsely representing BPA's size, prior business experience and client base, and falsely guaranteeing that the County would save at least $15 million in health insurance costs if the contracts were awarded to BPA. It was further alleged that BPA's president and CEO also falsely represented that BPA would adhere to the County's specific prohibition against paying commissions in connection with any contract it was awarded. In fact, the government charged that BPA paid over $2 million in secret commissions in connection with the contracts. As a result of the fraudulent scheme, the County was forced to pay over $70 million more than it would have under its prior health benefits plan, and BPA fraudulently received fees from the County of more than $12 million.
"ALBERT ISERNIO was the architect of the largest corruption scheme that Long Island has seen in more than twenty years," stated United States Attorney ROSLYNN R. MAUSKOPF. "ISERNIO used bribery and deception to defraud the hard working people of Nassau County with a scheme that cost the taxpayers many millions of dollars. He will now pay for his crimes with a lengthy term in prison."
Nassau County District Attorney DENIS DILLON stated, "This plea successfully concludes a joint prosecution in which my office worked with federal authorities to bring to justice those who sought to enrich themselves by defrauding the taxpayers of Nassau County. This defendant's guilty plea and subsequent punishment should send a clear message to all public officials and government contractors, that such betrayal of the public trust will not be tolerated."
FBI Assistant Director-in-Charge PASQUALE J. D'AMURO stated, "The scheme perpetrated by ISERNIO resulted in a gross violation of the public trust, induced Nassau County to divert funds under false pretenses, and cost the County millions of dollars. ISERNIO entered into a secret side deal that undermined the primary aim of a public employee health benefits plan - - to provide maximum benefit to employees at the lowest cost to those employees and the taxpayers. Policing public corruption remains one of the FBI's most important responsibilities."
Internal Revenue Service Acting Special Agent-in-Charge GLENDA PAPPILLION stated, "The crimes committed by ISERNIO violated the public trust. His attempt to corrupt officials and gouge the government damages the integrity of the system. The IRS stands ready to ferret out these individuals and insure honest taxpayers that every one pays their fair share."
In pleading guilty to conspiring to defraud Nassau County, ISERNIO admitted that while he endeavored to obtain the contracts from Nassau County, he agreed to pay a $150,000 bribe to McDonald, and thereby deprived Nassau County of McDonald's honest services. In pleading guilty to money laundering, ISERNIO admitted that the bribe monies were sent to DJB Inc., a company controlled by William M. Blake, who then channeled the funds to McDonald through another of his companies, Robert McDonald Associates.
When sentenced by Judge Seybert on April 23, 2004, ISERNIO faces a maximum sentence of 25 years imprisonment, $1,000,000 in fines, forfeiture of $2 million -- representing the prohibited commissions he paid -- and five years supervised release.
The government's case is being prosecuted by Assistant United States Attorneys Joseph R. Conway, Timothy Driscoll and Kevin P. Mulry, and Special Assistant United States Attorneys Peter Mancuso and Colin O'Donnell of the Nassau County District Attorney's Office.
|Name: ALBERT E. ISERNIO|
|Address: 5 LaColline Road, Mill Neck, New York|