Birdsall Agrees To Pay $2.6 Million Settlement

TRENTON – The State Division of Criminal Justice has reached a settlement with Birdsall Services Group regarding the civil forfeiture action it filed against Birdsall and the bankruptcy petition subsequently filed by the company, Attorney General Jeffrey S. Chiesa announced. The settlement does not resolve any charges in the pending criminal indictment against Birdsall and seven current and former executives, which alleges that the defendants made illegal corporate political contributions through employees to evade New Jersey’s pay-to-play law.

Under the settlement, Birdsall will pay the state $2.6 million to settle the civil forfeiture action. This represents $2.5 million in forfeiture, plus $100,000 to cover the state’s fees for outside counsel in the bankruptcy action. Birdsall will fund most of these payments by drawing on the cash surrender value of certain “key man” life insurance policies it holds on its officers and former officers, many of whom have now been indicted. The remaining monies are being funded through cash on hand.

In addition, Birdsall must set up a $1 million fund dedicated to paying up to $1 million toward any fines, penalties and restitution that arise from the ongoing criminal action. That fund will mean that payment of such sums, up to $1 million, will be given priority treatment in the bankruptcy action. Pursuant to papers filed by the parties, U.S. Bankruptcy Court Judge Michael Kaplan approved the settlement agreement between the debtors and the State of New Jersey, and Superior Court Judge Thomas F. Scully entered a consent judgment settling the civil forfeiture action filed in State Court.

“Through this settlement, the state has gained a substantial sum in civil forfeiture from Birdsall and has secured its right to seek significant additional criminal penalties,” said Chiesa. “At the same time, Birdsall can continue to operate, to perform its contracts and to pay its employees. Our goal has consistently been to punish the guilty and protect the state’s interests, without needlessly harming innocent employees or those doing business with the firm.”

“As a result of extensive negotiations, which continued throughout the weekend, we have achieved a settlement that preserves the state’s rights under its criminal and civil actions against Birdsall, while enabling the company to remain in business,” said Director Elie Honig of the Division of Criminal Justice. “These have always been our twin goals, and I commend the attorneys on this case for their tremendous work.”

The matter was handled for the Division of Criminal Justice by Supervising Deputy Attorney General Christine Hoffman, who is Deputy Director of the Division of Criminal Justice, Deputy Attorney General Anthony A. Picione, who is Acting Chief of the Corruption Bureau, and Deputy Attorney General Derek Miller, who handles forfeiture matters for the Division. They worked closely with Andrew H. Sherman of Sills, Cummis & Gross, P.C., outside counsel for the state in the bankruptcy matter.

On March 26, the Division of Criminal Justice obtained an indictment charging Howard C. Birdsall, the largest shareholder and former CEO of Birdsall Services Group, and six other executives and shareholders on charges that they conspired in a scheme to avoid the restrictions of New Jersey’s Pay-to-Play Act by disguising illegal corporate political contributions as personal contributions of employees of the firm.

Under the alleged scheme, instead of Birdsall Services Group making corporate political contributions to campaigns and political organizations that would disqualify it from public contracts awarded by certain government agencies, shareholders and employees of the firm allegedly made personal political contributions of $300 or less, which are deemed unreportable. Multiple personal checks were bundled together at BSG and sent to the appropriate campaign or political organization. It is alleged that the shareholders and employees were then illegally reimbursed by Birdsall, directly or indirectly, through added bonus payments, and the firm falsely omitted the illegally reimbursed contributions in documents filed with the Election Law Enforcement Commission (ELEC) and with government agencies that awarded the firm engineering services contracts. The scheme allegedly continued for more than six years and involved hundreds of thousands of dollars in contributions.

All of the defendants face first-degree counts of conspiracy and money laundering, as well as other charges. The first-degree charges carry a sentence of 10 to 20 years in state prison, and the money laundering counts also carry fines and penalties of up to $1 million. The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.

Two employees of the marketing department of Birdsall previously pleaded guilty to participating in the scheme and are awaiting sentencing.

The charges stem from an investigation by the Division of Criminal Justice Corruption Bureau. Deputy Attorney General Picione and Deputy Attorney General Victor Salgado presented the case to the state grand jury and took the prior guilty pleas. Detectives Kiersten Pentony, Edward Augustyn, Janine Buchalski and Melissa Calkin have been the lead detectives.

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