Former Business Executive Pleads Guilty to Federal Charges, Admits Engaging in Contract Kickbacks and Phony Billing Schemes
Defendant Received More Than $700,000 From Criminal Activities
WASHINGTON – John T. Fitzgerald, a former vice president of the Washington, D.C. office of an investment banking firm, pled guilty today to federal charges stemming from a scheme in which he allegedly accepted kickbacks for construction management contracts he steered to another firm, as well as other allegedly fraudulent activities.
The guilty plea was announced by Alessio Evangelista, Acting U.S. Attorney in this case, Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office, and Kimberly Lappin, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Washington, D.C. Field Office.
Fitzgerald, 48, of Washington, D.C., pled guilty in the U.S. District Court for the District of Columbia to charges of wire fraud and tax evasion. Wire fraud carries a statutory maximum of 20 years in prison and tax evasion carries a statutory maximum of five years; both also carry potential financial penalties. Under federal sentencing guidelines, he faces a range of 37 to 46 months in prison and a fine of up to $75,000. The plea agreement calls for Fitzgerald to pay $713,806 in restitution, representing his share of proceeds from the scheme, and an identical amount in a forfeiture money judgement. He also has agreed to pay $114,411 in taxes to the IRS. The Honorable Amy Berman Jackson scheduled sentencing for Feb. 23, 2018.
A co-defendant, Bryan D. Wright, 55, of Laytonsville, Md., pled guilty in February 2016 to one count of conspiracy to engage in wire fraud and one count of conspiracy to engage in money laundering. He is awaiting sentencing.
In his guilty plea, Fitzgerald acknowledged that he began work at the investment banking firm in 2008 and oversaw its real estate development activities and investments. His responsibilities included oversight of a commercial development project in Hanover, Md., known as the Station Ridge development project. The investment banking firm was the managing investor-owner of the project, which ultimately included three buildings for use as offices by various tenants.
In or around mid-2011, Fitzgerald admitted, he began to invoice the general contractor on Station Ridge through a company Fitzgerald owned, and thereby obtained roughly $41,000 for himself on the project.
Later in 2011, Fitzgerald installed Wright as construction manager on Station Ridge, and the two agreed to an invoicing and kickback scheme that lasted into 2013. Wright was president of P&E Services, LLC. Between 2011 and 2013, through their scheme, Wright and Fitzgerald took $769,000 from the investment banking firm employing Fitzgerald, and another $417,000 from the general contracting company (which was reimbursed by the investment banking firm). Wright, through P&E and other companies, paid Fitzgerald nearly $600,000 in proceeds from the Station Ridge project, roughly half of the total amount that P&E Services obtained.
In a related scheme involving purported projects on the Bridgewater office building in Fairfax, Va., which was another development project of the investment banking firm, Wright and Fitzgerald submitted invoices for work that was not completed, and obtained additional money from Fitzgerald’s employer. Once again, Fitzgerald and Wright split the proceeds between them, with Fitzgerald receiving approximately $70,000.
In his plea today, Fitzgerald admitted that the total loss to his employer as a result of his conduct on these projects was over $1.3 million, and his share of the illegal proceeds was $713,806. The tax charges stem from Fitzgerald’s failure to report the income in calendar 2012 and 2013.
In announcing the plea, Acting U.S. Attorney Evangelista, Assistant Director in Charge Vale, and Special Agent in Charge Lappin commended the work of those who investigated the case from the FBI’s Washington Field Office and the Internal Revenue Service-Criminal Investigation. They acknowledged the work of those who handled the case for the U.S. Attorney’s Office, including former Assistant U.S. Attorney David A. Last, Paralegal Specialists Tasha Harris, Aisha Keys, and C. Rosalind Pressley; Legal Assistants Angela Lawrence and John Lowell, and Litigation Technology Specialist Ron Royal. Finally, they acknowledged the work of Assistant U.S. Attorneys John Marston, Kendra D. Briggs, and Zia Faruqui, who are investigating and prosecuting the matter.