TRENTON – An engineer who oversaw construction projects for three school districts was sentenced to state prison today for taking thousands of dollars in kickbacks on contracts he recommended that involved rigged bids and fraudulently inflated costs, Attorney General Jeffrey S. Chiesa announced.
Kenneth Disko, 48, of Mountainside, was sentenced to three years in state prison by Superior Court Judge Joseph P. Donohue in Union County. Disko pleaded guilty on Oct. 12, 2011 to an accusation charging him with second-degree false representations for a government contract. He was ordered to pay $44,000 in restitution to the Westfield Board of Education and a penalty of $25,000 into the state’s Anti-Trust Revolving Fund for anti-trust enforcement efforts. He is barred from public contracts in New Jersey for 10 years.
In pleading guilty, Disko admitted that he orchestrated a series of bid-rigging and kickback schemes from 2001 to 2010 as the contracted engineer or engineer/architect on record for the Westfield, Tinton Falls and Scotch Plains-Fanwood school districts. The investigation by the Division of Criminal Justice Corruption Bureau revealed that Disko knowingly prepared fraudulent quotes and estimates in connection with school district contracts, and directed contractors to inflate quotes and estimates. Disko admitted that he submitted those quotes and estimates to the three school districts and recommended approval of the fraudulently bid contracts in exchange for thousands of dollars in kickbacks from contractors.
“School districts and their taxpayers cannot afford to pay for crooked consultants and contractors who inflate the cost of projects, forcing districts to spend thousands of additional dollars on fraud that otherwise could be spent to benefit students in the classroom,” said Chiesa. “This prison sentence should deter other dishonest operators.”
“We’re working to safeguard the integrity of government contracts by aggressively prosecuting any form of bid rigging or fraud that impacts them,” said Stephen J. Taylor, director of the Division of Criminal Justice. “We urge anyone with information about suspected corruption involving school contracts to alert us.”
Deputy Attorney General Vincent J. Militello prosecuted the case and represented the State at the sentencing. The investigation was led by Deputy Attorney General Militello, Sgt. Lisa Shea and Detective Michael Behar of the Division of Criminal Justice Corruption Bureau.
On Dec. 1, 2011, two contractors pleaded guilty to rigging bids and inflating school contracts at the direction of Disko. Martin W. Starr, 45, of Cliffwood Beach, owner of Starr Contracting, and Stephen M. Gallagher, 51, of Cliffwood Beach, owner of East Commercial Construction, pleaded guilty to accusations charging them with third-degree false representations for a government contract before Superior Court Judge John S. Triarsi in Union County. They are scheduled to be sentenced on April 13. 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 Starr and Gallagher also pleaded guilty to the same charge. The individual and corporate defendants will be disqualified from public contracts for five years, and are jointly and severally liable for paying a $50,000 penalty to the Anti-Trust Revolving Fund.
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 company 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.
Charges are pending against a third contractor, John Sangiuliano, 57, of Scotch Plains, co-owner of Metropolitan Metal Window Company. It is alleged that Sangiuliano, in bidding on contracts for the Westfield and Tinton Falls school districts, knowingly prepared fraudulent quotes at Disko’s direction bearing the names of other legitimate contractors, making the quotes higher than his own. It is also alleged that, at the direction of Disko, Sangiuliano knowingly inflated Metropolitan’s quotes and the cost of repairs for the contracts. In exchange for the inflated contracts, Sangiuliano allegedly gave kickbacks to Disko in excess of $36,000 in 2009 and 2010. The charges against Sangiuliano are merely accusations and he is presumed innocent until proven guilty. The investigation revealed that Disko also received over $44,000 in kickbacks from a prior owner of Metropolitan, now deceased, for contracts awarded from 2001 to 2004.
In a related matter stemming from the investigation, the former business administrator for the Westfield School District, Robert A. Berman, 56, of South Plainfield, pleaded guilty before Judge Donohue on Oct. 24, 2011 to third-degree conspiracy to make false representations for a government contract. He said that he accepted $13,000 in windows and doors from Sangiuliano, who he recommended be hired by the school district. Berman was sentenced on Jan. 27 to one year of probation and was ordered to pay a $6,000 penalty. He forfeited his school district job and will be permanently barred from public employment in New Jersey.
Chiesa and Taylor noted that the Division of Criminal Justice Corruption Bureau has established a toll-free tipline 1-866-TIPS-4CJ for the public to report corruption, financial crime and other illegal activities. Additionally, the public can log on to the Division of Criminal Justice webpage at www.njdcj.org to report suspected wrongdoing. All information received through the tipline or webpage will remain confidential.
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