06-03-04 -- Ruddy, John H. -- Guilty Plea -- News Release

Businessman Admits Conspiring to Defraud Mercer County Improvement Authority

TRENTON - A Princeton man pleaded guilty today to participating in a scheme to defraud the Mercer County Improvement Authority in connection with a demolition project in Trenton and to filing false individual tax returns for tax year 1997, U.S. Attorney Christopher J. Christie announced.

John H. Ruddy, 37, entered his guilty plea before U.S. District Judge Garrett E. Brown, Jr. to Counts One and Two of a three-count Information charging him with conspiracy to commit mail fraud and filing a false personal income tax return, according to Assistant U.S. Attorney David Bocian.

Under the terms of the plea agreement, Ruddy agreed to cooperate with the government investigation.

At the plea hearing, Ruddy admitted that he and Alex J. Abdalla, were the owners and operators of a Middlesex County demolition company (the "Company"). Ruddy admitted that from the fall of 1997 to the summer of 1999, the Company made payments to Michael Maurio, 68, of Trenton, in exchange for his assistance in securing demolition contracts for the Company.

Abdalla, 51, of Washington Twp., Mercer County, pleaded guilty yesterday to similar charges before Judge Brown. Maurio, who worked primarily in real estate, pleaded guilty on April 19 before Judge Brown to a two-count Information charging him with mail fraud conspiracy and tax evasion. Maurio admitted that he conspired with others to execute a scheme to defraud the Mercer County Improvement Authority (MCIA).

Ruddy's admissions regarding the conspiracy charged in Count One echo those of Abdalla's during his guilty plea. Ruddy admitted, as did Abdalla and Maurio, that in August 1997 the Company entered into a contract with a Mercer County company that was serving as the general contractor (the "General Contractor") for an MCIA-funded demolition project in Trenton.

They all admitted that the contract included a "change order" provision which governed situations in which the Company could request authorization for additional payment for unanticipated work required to complete the demotion job.

Each admitted that in March 1998, the Company found unanticipated concrete and steel structures below the elevations of building slabs and foundations of the building it was demolishing. According to the Information, an engineer employed by MCIA inspected the site and ruled that a change order was not appropriate and that the Company should remove the concrete and structures at no extra cost.

Ruddy admitted that following the engineer's inspection, he and his co-conspirators agreed that Maurio would attempt to persuade a Mercer County official, who had influence over an MCIA official, to assist the Company in obtaining the MCIA's approval of a change order. Ruddy admitted that he and his co-conspirators agreed to submit documents to the General Contractor that falsely inflated the cost of the additional work, and that he and his co-conspirators would pay Maurio a share of the profits realized from the inflated change order.

Ruddy admitted that after Maurio was informed by a representative of the MCIA that it was anticipated that the MCIA would approve a change order, he wrote a letter to the General Contractor which substantially inflated the estimated cost of the additional work. Ruddy admitted that shortly thereafter, the conspirators learned that the MCIA was unlikely to approve payment of the full amount of the estimate and in response he sent a second letter to the General Contractor stating that the Company would perform the additional work for $250,000. Ruddy admitted that the second estimate was at least $100,000 more than the actual cost.

On April 14, 1998, the MCIA authorized the payment of $250,000, which the Company received on April 20, 1998, according to the Information. Ruddy admitted that as a result of the $250,000 received for the inflated change order, the Company paid Maurio a total of $25,000.

Ruddy also admitted that he filed a 1997 Joint U.S. Individual Income Tax Return, in which he intentionally failed to report taxable income including approximately $85,286 in cash that he had received from the sale of recyclable steel and other materials from demolition debris obtained by the Company.

Judge Brown scheduled sentencing for Sept. 8 at 9:00 a.m.. Ruddy was released on $100,000 personal recognizance bond pending sentencing.

Ruddy faces a maximum penalty of five years in federal prison on Count One. Count Two carries a maximum penalty of three years in prison. The maximum fine per count is $250,0000 or twice the gross amount of any pecuniary gain that any persons derived from the offense or twice the gross amount of any pecuniary loss sustained by any victims of the offense.

Under U.S. Sentencing Guidelines, Judge Brown will determine Ruddy's actual sentence based upon a formula that takes into account the severity and characteristics of the offense, and the defendant's criminal history, if any. Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

In the filing of a felony Information, a defendant waives the right to have his or her case presented to a federal grand jury and, instead, pleads guilty to charges presented by the Government.

Christie credited Special Agents of the FBI West Trenton Resident Agency, under the direction of Special Agent in Charge Joseph Billy, Jr., and the IRS Criminal Investigation section, under the direction of Special Agent in Charge Patricia J. Haynes.

The Government is represented by Assistant U.S. Attorney David Bocian, of the U.S. Attorney's Criminal Division in Trenton.

Defense Attorney: Henry E. Klingeman, Esq. Madison