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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE
Wednesday, December 10, 2014

Malvern Company Sentenced For Defrauding The City Of Philadelphia And Debarred From City Business

PHILADELPHIA - Airmatic, Inc., a company located at 284 Three Tun Road, Malvern, PA, was sentenced today to three years of probation and a $350,000 fine for a mail fraud scheme involving a city contract.  In addition, U.S. District Court Judge Paul S. Diamond ordered the company to pay $556,633.03 in restitution to the City of Philadelphia.  As part of its plea agreement, Airmatic agreed to a debarment by the City of Philadelphia for three years, and all of its contracts with the City were cancelled effective October 31, 2014.

The company pleaded guilty on July 22, 2014 to one count of mail fraud.  Between January 2007 and August 2012, Airmatic supplied unapproved, off-contract products to various City departments in violation of its agreements with the City.  The company submitted false and fraudulent invoices to the City’s accounts payable department in order to conceal that it was providing off-contract products.  Instead of reflecting the unapproved, off-contract products that were actually being provided, the invoices billed for items that were approved pursuant to the City’s agreements with defendant Airmatic.  Airmatic inflated the cost of the unapproved, off-contract items and products it provided to the City by an average of approximately 87% and profited from this scheme in the amount of approximately $556,633.03.  For example, in one instance Airmatic falsely invoiced the City for a bearing assembly (an expensive industrial product and approved contract item), when, in fact, Airmatic delivered 12 asphalt rakes, items for which the defendant had no contract.  To disguise the transaction, Airmatic manipulated the invoice and billed the City for the price of the bearing assembly, which the City never received, resulting in an extravagant profit margin on the sale of the rakes.  Hundreds of similar transactions took place.   

The case was investigated by the City of Philadelphia Office of Inspector General and the FBI.  It was prosecuted by Assistant United States Attorney Jennifer Chun Barry.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Updated December 17, 2014