Broadview Heights man charged for his role in theft of $3.3 million from the Cuyahoga Heights School District
A two-count criminal information was filed charging a Broadview Heights man for his role in the theft of more than $3.3 million from the Cuyahoga Heights School District, law enforcement officials said.
Dominick Palazzo, 42, was charged with conspiracy to commit mail fraud and conspiracy to commit money laundering.
His brother, Joseph M. Palazzo, was an employee of the Cuyahoga Heights School District. The Palazzos, along with David Donadeo and Dennis Boyles, conspired together to defraud the school district through dozens of fraudulent billings to sham companies controlled by Dominick Palazzo, Donadeo and Boyles, according to court documents.
“This defendant, along with his brother and friends, stole millions of dollars from the children and taxpayers in Cuyahoga Falls,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “They used fraudulent invoices and fake companies to enrich themselves at the expense of kids.”
“This investigation uncovered a multi-million-dollar embezzlement scheme laced with a web of financial lies that left a local school district in financial peril,” said Guy A. Ficco, Acting Special Agent in Charge, IRS-Criminal Investigation, Cincinnati Field Office.
“Dominick Palazzo violated the trust that the citizens and students of Cuyahoga Heights had placed in him by funding his personal account with their tax dollars,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office. “The investigators are to be commended for uncovering this enormous fraud.”
Joseph Palazzo was employed by the Cuyahoga Heights School District as its Information Technology director until February 2011. He was responsible for managing the district’s IT Department, which included purchasing hardware and software and making other IT expenditures to benefit the district and its students, according to the information.
Joseph Palazzo devised a scheme to divert millions of dollars of district funds to his personal use and the personal use of others. This scheme involved Joseph Palazzo submitting to the district for payment false invoices that purported to be for IT-related goods and services purchased from legitimate companies by the district’s IT Department to benefit the district. He represented that the invoices he submitted were legitimate, and he approved the false invoices himself or forged the signature of another in the approval section, according to the information.
However, these invoices were for services never performed, fictitious software and hardware, and software and hardware never received or already purchased by the district from another source. The companies named on the invoices did not supply such goods to or perform such services for the district and were nothing more than “shells,” according to court documents.
Joseph Palazzo’s actions caused the district to issue checks to these shell vendor corporations, which were established and owned by Dominick Palazzo, Boyles and Donadeo. The shell vendor corporation owners kept approximately half of the stolen money themselves and funneled the remainder of the money back to Joseph Palazzo for his personal use, according to court documents.
These shell companies included Laptops and More, Inc., and Impact Global, LLC, which were established by Dominick Palazzo.
The district sustained a total loss of at least $3,333,448, as a result of the fraudulent scheme according to the information.
Joseph Palazzo was previously found guilty and is currently serving a sentence of more than 11 years in prison. Boyles was sentenced to more than two years in prison and Donadeo’s case is pending.
The case is being prosecuted by Assistant United States Attorney Rebecca Lutzko following an investigation by the Internal Revenue Service -- Criminal Investigation and the Federal Bureau of Investigation.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense, and the characteristics of the violation.
An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.