Former Maryland Cabinet Secretary Indicted For Bribery Conspiracy
FOR IMMEDIATE RELEASE Contact ELIZABETH MORSE
www.justice.gov/usao/md at (410) 209-4885
Baltimore, Maryland – A federal grand jury indicted Isabel FitzGerald, age 47, of Annapolis, Maryland, Kenneth Coffland, age 62, of Riva, Maryland, Steven Maudlin, age 59, of Indianapolis, Indiana, and James Pangallo, age 57, of Greenwood, Indiana, on charges related to a bribery conspiracy involving information technology contracts with the State of Maryland Department of Human Services, formerly known as the Department of Human Resources.
The indictment was announced by Acting United States Attorney for the District of Maryland Stephen M. Schenning and Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation, Baltimore Field Office.
According to the six-count indictment, from February 2007 through December 2014, FitzGerald held several offices in the State of Maryland government, including Department of Human Resources (DHR), Chief Information Officer (CIO), Executive Consultant to the DHR Secretary, DHR Deputy Secretary of Operations, and the Secretary of the Department of Information Technology. In January of 2011, while serving as DHR CIO, FitzGerald incorporated Aeon Consulting and Technical Services Inc. (Aeon) in Maryland. In February 2012, she incorporated Aeon in Indiana. Between 2009 and 2013, Kenneth Coffland held various positions on DHR contracts including with a contractor identified in the indictment as Company #1. Coffland incorporated Blue Northern Consulting, LLC (“Blue Northern”) in November 2012.
Steven Maudlin was the CEO and majority shareholder of The Consultants Consortium Inc. (TCC), a small Indiana company that provided IT consulting services as a subcontractor. James Pangallo was the Chief Financial Officer, Principal, and shareholder in TCC.
In 2008, DHR awarded Company #1 two contracts through a competitive bidding process known as a Request for Proposal. One contract was a five-year, eight-month hosting contract that was worth up to approximately $129 million. The second contract was a five-year, six-month applications contract that was worth up to approximately $229 million.
According to the indictment, FitzGerald and Coffland received and agreed to receive a stream of financial benefits from Maudlin and Pangallo in exchange for FitzGerald’s performance of official acts for TCC’s benefit.
Benefits to FitzGerald and Coffland
The indictment alleges that FitzGerald and Coffland solicited and demanded that, at various different times, Maudlin and Pangallo pay Coffland and FitzGerald one-third of TCC’s profits on specified subcontracts with Company #1. The defendants agreed that, in order to conceal the nature of these payments, TCC would pay FitzGerald under the guise of consulting work performed by Aeon, and Coffland under the guise of consulting work performed by Blue Northern.
While FitzGerald served as a consultant to the Secretary of DHR, in order to conceal the nature of payments from TCC to FitzGerald, TCC agreed to pay Aeon for purportedly providing and supervising the work of two workers identified in the indictment as Person #1 and Person #2. However, both people had already been working under TCC’s supervision on that contract, and continued to be supervised by TCC employees, not by FitzGerald.
In November 2012, shortly before FitzGerald began work as DHR Deputy Secretary of Operations, she directed Maudlin to transfer the Aeon contract covering the work of Person #1 to Coffland via Blue Northern. In December 2012, TCC agreed to pay Blue Northern $20 per hour worked by Person #1. However, Coffland did not supervise Person #1, who continued to be supervised by TCC employees.
On February 25, 2013, Pangallo directed TCC to issue a $10,000 check to Blue Northern, and ordered a TCC employee to book the payment internally at TCC as consulting work.
Official Actions Taken By FitzGerald
The indictment alleges between October and December of 2011, FitzGerald and Mauldin negotiated an agreement whereby FitzGerald was compensated for using her influence to convince another Company #1 subcontractor on a $27.6 million DHR project (CARES Modernization) to further subcontract work under that project to TCC.
Between December 2011 and August 2013, FitzGerald allegedly caused Company #1 to issue a task order to TCC that had no specified work obligations in the approximate amount of $253,000 by threatening to use her influence to cause the DHR Secretary and Acting DHR CIO to withhold funding approval of the CARES Modernization project if Company #1 did not comply. She also caused Company #1 to give a fixed price subcontract to TCC worth approximately $23.72 million over six years by threatening to use her influence to cause DHR not to renew Company #1’s prime hosting contract if Company #1 did not comply. In addition, FitzGerald directed a Company #1 executive to hire Coffland as the Hosting Director on the hosting contract at an annual salary, including bonuses, of approximately $500,000.
FitzGerald concealed her and Coffland’s financial agreements with TCC from high-ranking personnel in the government of the State of Maryland and DHR with whom she worked, including the DHR Secretary and the Acting DHR CIO.
The maximum possible penalty for conspiracy is 5 years imprisonment, a $250,000 fine, and 3 years supervised release; for Bribery Involving Agent of Program Receiving Federal Funds, the maximum penalty is 10 years imprisonment, $250,000 fine, and 3 years supervised release; for false statements, the maximum penalty is 5 years imprisonment, $250,000 fine, and 3 years supervised release.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
Acting United States Attorney Stephen M. Schenning commended the FBI for their work in the investigation. Mr. Schenning thanked Assistant United States Attorneys Sean R. Delaney and Jefferson M. Gray, who are prosecuting the case.