Schuylkill Owner Sentenced to 84 Months in Largest DBE Fraud in Nation’s History

Fraud pictureA June 30, 2014 press release from the Federal Bureau of Investigation announced the sentencing of Joseph W. Nagel, 53, of Deerfield Beach, Florida. Nagle, the former president and part-owner of Schuylkill Products, was sentenced to 84 months’ imprisonment and ordered to pay fines totaling $27,600 for his role in a massive conspiracy to defraud the Disadvantaged Business Enterprises (DBE) Program. The ruling was announced by U.S. Attorney Peter J. Smith for the Middle District of Pennsylvania. Nagle must report to prison no later than September 29, 2014.

In April 2012, Nagle was convicted on 26 charges, including conspiracy to defraud the USDOT and commit wire and mail fraud, seven counts of wire fraud, six counts of mail fraud, conspiracy to commit money laundering and 11 counts of money laundering after a four-week jury trial. Nagle’s conviction and sentencing comes as part of the the largest instance of Disadvantaged Business Enterprise (DBE) fraud in the nation’s history. “The audacious, long-term scheme perpetrated by Mr. Nagle and his cohorts stole money from taxpayers, and opportunity from legitimate small-business owners,” said FBI Special Agent in Charge Edward J. Hanko. “This case highlights the FBI’s commitment to fighting DBE fraud, and seeing those responsible brought to justice.”

Nagle was convicted of participating in the scheme, which ran from 1993 to 2008, and in which he and other executives at SPI diverted over 300 PennDOT and SEPTA construction contracts worth $136 million to SPI and CDS that were reserved for DBE’s. Nagle and his co-conspirators executed the scheme by using a small Connecticut highway construction firm known as Marikina Construction Corporation as a front company to obtain these lucrative government contracts.

Marikina was owned by Romeo P. Cruz of West Haven, Connecticut, a naturalized American citizen born in the Philippines. Marikina was certified by PennDOT and SEPTA as a DBE. Although Marikina received the DBE contracts on paper, all the work was performed by SPI and CDS personnel, and SPI and CDS received all the profits. In exchange for letting SPI and CDS use its name, Marikina was paid a small fixed fee, set by SPI.

The scheme was carried out for over 15 years because of the numerous fraudulent steps the co-conspirators took to conceal the scheme. SPI and CDS personnel routinely pretended to be Marikina employees by using Marikina business cards, e-mail addresses, stationery and signature stamps, as well as using magnetic placards and decals bearing the Marikina logo to cover up SPI and CDS logos on SPI and CDS vehicles.

Earlier this year, three former executives associated with SPI, CDS and Marikina were sentenced for their roles in the scheme, and one executive is awaiting sentencing.

Romeo P. Cruz, the former owner of Marikina, was sentenced to serve 33 months’ imprisonment, pay $119 million in restitution and serve two years’ supervised release.

Timothy G. Hubler, of Ashland, Pennsylvania, CDS’ former vice president in charge of field operations, was sentenced to serve 33 months’ imprisonment, pay $119 million in restitution and serve two years’ supervised release.

Dennis F. Campbell, of Orwigsburg, Pennsylvania, SPI’s former vice president in charge of sales and marketing, was sentenced to serve 24 months’ imprisonment, pay $119 million in restitution and serve two years’ supervised release.

Ernest G. Fink, of Orwigsburg, Pennsylvania, SPI’s former vice president, chief operating officer and part-owner is scheduled to be sentenced on July 14, 2014.

Read the entire FBI press release by clicking this link.