Two Contractors Admit Rigging Bids For School Contracts

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TRENTON –Two contractors pleaded guilty today to rigging bids and inflating school contracts at the direction of an engineer who oversaw construction projects for the Westfield and Scotch Plains-Fanwood school districts, Attorney General Paula T. Dow and Criminal Justice Director Stephen J. Taylor announced.

The engineer pleaded guilty in October to recommending rigged contracts and taking thousands of dollars in contract kickbacks in those districts and the Tinton Falls school district. Charges are pending against a third contractor for contracts in the Westfield and Tinton Falls districts.

According to Taylor, Martin W. Starr, 45, of Cliffwood Beach, owner of Starr Contracting, and Stephen M. Gallagher, 50, of Cliffwood Beach, owner of East Commercial Construction, pleaded guilty today to accusations charging them with third-degree false representations for a government contract before Superior Court Judge John S. Triarsi in Union County.

Under their plea agreements, the state will recommend that each man be sentenced to up to 364 days in the county jail and a term of probation. The companies owned by the individual defendants also pleaded guilty to the same charge. The individual and corporate defendants will be disqualified from public contracts for five years, and will be jointly and severally liable for paying a $50,000 penalty to the Anti-Trust Revolving Fund for anti-trust enforcement efforts.

Deputy Attorney General Vincent J. Militello took the guilty pleas for the Division of Criminal Justice Corruption Bureau. Sentencing for the defendants is scheduled for March 2, 2012 before Superior Court Judge Joseph P. Donohue in Union County.

Kenneth Disko, 48, of Mountainside, the former contracted engineer or engineer/architect on record for the Westfield, Tinton Falls and Scotch Plains-Fanwood school districts, pleaded guilty on Oct. 12 before Superior Court Judge Joseph P. Donohue to an accusation charging him with second-degree false representations for a government contract. Disko will face three to five years in prison and a penalty of at least $50,000 when he is sentenced on Jan. 20.

Disko admitted that he orchestrated a series of bid-rigging and kickback schemes from 2001 to 2010 in those school districts involving Starr, Gallagher and a third contractor, who faces pending charges.

Disko prepared fraudulent quotes and estimates and directed contractors to inflate quotes and estimates. He admitted that he submitted the fraudulent quotes and estimates to the districts and recommended approval of the contracts in exchange for kickbacks from the contractors.

The investigation was led by Deputy Attorney General Militello, Sgt. Lisa Shea and Detective Michael Behar of the Division of Criminal Justice Corruption Bureau.

In pleading guilty, Starr admitted that in 2009 and 2010, he prepared fictitious quotes from legitimate contractors without their permission and submitted them to Disko in order to appear to be the lowest bidder for contracts worth nearly $25,000 that were awarded to Starr Contracting by the Westfield and Scotch Plains-Fanwood districts.

Gallagher admitted that he helped Starr to obtain those contracts by preparing fraudulent and fictitious quotes and estimates for his own companies and submitting them to Disko as higher bids than those submitted by Starr. Also, in connection with other contracts that were awarded to Gallagher’s company in the Westfield and Scotch Plains-Fanwood districts, Gallagher inflated quotes and the cost of work performed. The state’s investigation revealed that in return for the inflated contracts, Gallagher gave cash kickbacks to Disko.

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