Examples of Public Corruption Investigations - Fiscal Year 2014
The following examples of public corruption investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Former Illinois County Commissioner Sentenced for a Series of Public Corruption Schemes
On Feb. 19, 2014, in Chicago, Ill., Former Cook County Commissioner Joseph Moreno was sentenced to 132 months in prison and ordered to forfeit $100,000 and pay $138,000 in restitution. On July 1, 2013, Moreno pleaded guilty to conspiracy to commit extortion. According to court documents, between 2008 and 2010, Moreno engaged in a series of public and personal corruption schemes which included kickbacks, bribes, perjury and extortion. Moreno also evaded his federal income taxes between 2007 and 2010 by misreporting the income from his law office.
Former County District Attorney Sentenced in Connection with South Texas Bribery Scheme
On Feb. 11, 2014, in Brownsville, Texas, former Cameron County District Attorney Armando R. Villalobos was sentenced to 156 months in prison, three years of supervised release and ordered to pay $339,000 in restitution. In May 2013, a federal jury convicted Villalobos of one count of violating the Racketeer Influenced and Corrupt Organizations (RICO) Act, one count of conspiracy to violate the RICO Act and five counts of extortion. Evidence presented at trial revealed that from Oct. 2, 2006, through May 3, 2012, Villalobos and others were involved in a scheme to illegally generate income for themselves and others through a pattern of bribery and extortion, favoritism, improper influence, personal self-enrichment, self-dealing, concealment and conflict of interest. Jurors found that Villalobos solicited and accepted over $100,000 in bribes and kickbacks in the form of cash and campaign contributions in return for favorable acts of prosecutorial discretion, including minimizing charging decisions, pretrial diversion agreements, agreements on probationary matters and case dismissals. Furthermore, Villalobos solicited and arranged for private counsel to handle civil and forfeiture matters associated with criminal matters pending in the Office of the District and County Attorney of Cameron County.
Former Mayor of New Jersey City Sentenced for Evading Income Tax
On January 6, 2014, in Trenton, N.J., Carmine C. Inteso Jr., of Toms River, was sentenced to six months in prison, six months of house arrest and two years of supervised release. Inteso pleaded guilty in December 2012 to one count of tax evasion. According to court documents, from 2002 through 2007, Inteso held the positions of Township Committee member, mayor, deputy mayor, and councilman for the Township of Toms River. Beginning in 2005 and continuing through 2008, Inteso accepted hundreds of thousands of dollars in payments from an insurance broker whose companies provided insurance brokerage services for New Jersey municipal entities. Inteso directed the insurance broker to make the payments to a company Inteso controlled and that had ceased operating by 2007. Inteso used the funds to pay for his personal expenses and withdrew significant amounts of cash. Despite receiving approximately $291,000 in income from the insurance broker during calendar years 2006, 2007 and 2008, Inteso failed to file personal income taxes for those years.
New Jersey Insurance Broker Sentenced
On January 6, 2014, in Trenton, N.J., Frank Cotroneo, of Chester, N.J., was sentenced to 37 months in prison and three years of supervised release. Cotroneo was also ordered to pay $3,275,677 in restitution to the Toms River School District and forfeit $9,126,200. Cotroneo, an insurance broker with an office in Morristown, N.J., previously pleaded guilty to one count each of bribery and tax evasion arising from his participation in a scheme to pay hundreds of thousands of dollars in bribes to the former superintendent for the Toms River Regional School District, in exchange for his official assistance. According to court documents, Cotroneo admitted that from 2002 to April 2009, he and his co-conspirators paid bribes and other benefits to the superintendent of the district. The payments were made to allow Cotroneo and another insurance broker for the school district to obtain and keep the lucrative insurance brokerage contracts with the district. To facilitate the scheme, the former school superintendent approved a workers’ compensation insurance contract, which yielded between $500,000 and $600,000 annually in excess fees. Those proceeds were to be used to make hundreds of thousands of dollars in bribes to the former school superintendent. Cotroneo also admitted that for tax years 2005 to 2007, he evaded the assessment of hundreds of thousands of dollars of federal income taxes by concealing the illegal proceeds he received from his co-conspirator and others during the course of the bribery scheme.
Ohio Man Sentenced for Bribing Public Officials
On December 18, 2013, in Cleveland, Ohio, Daniel Gallagher, of Strongsville, Ohio, was sentenced to 48 months in prison and ordered to pay $87,000 in restitution for a series of bribery conspiracies involving public officials. According to court documents, Gallagher, a former Cuyahoga County Engineer’s Office employee, owned a company, Eagle Consulting. Another company paid Gallagher $143,000 to keep the County Engineer’s Office at it’s complex. Gallagher gave a portion of the money to others involved in the scheme for limousines, gambling trips and personal services. Other bribery schemes included using certain software for the Engineer’s Office, with payments then going to Eagle Consulting, and helping steer another county contract to a business that paid $115,000 to Gallagher. Eagle Consulting was also used as a way to funnel bribes to a member of the Parma School Board, from a company that received a $1.8 million contract from the Parma Schools.
Former Michigan Public Schools Accountant Sentenced on Fraud and Money Laundering Charges
On December 18, 2013, in Detroit, Mich., Sandra Campbell was sentenced to 70 months in prison and ordered to pay $530,091 in restitution to the Detroit Public Schools. Campbell, a former Detroit Public Schools contract accountant and School Board candidate, was sentenced on charges of program fraud against the Detroit Public Schools, money laundering and criminal tax fraud. Co-defendant Domonique Campbell, daughter of Sandra Campbell, is currently awaiting sentencing. According to court documents, between 2004 and 2008, Sandra and Domonique Campbell obtained in excess of $530,000 from the Detroit Public Schools through a fraudulent scheme in which orders were placed with the Campbells’ sham company for books and educational materials never provided to the schools. Sandra and Domonique Campbell conspired to launder the fraud proceeds and to defraud the IRS by failing to report the money they fraudulently obtained from the Detroit Public Schools as income on their tax returns.
Former President of Union Sentenced for Accepting Kickbacks and Tax Evasion
On November 21, 2013, in Brooklyn, N.Y., Hector Lopez was sentenced to 48 months in prison, ordered to pay $800,371 in restitution and forfeit an additional $371,517 to the federal government. Lopez was the former president of the Metal Polishers Union (Local 8A-28A) and Chairman of the Board of Trustees of the Local 8A-28A welfare fund. On April 9, 2013, Lopez pleaded guilty to conspiracy to commit mail and wire fraud and tax evasion. According to court documents, Lopez accepted kickbacks from multiple sources. Additionally, Lopez failed to report over $300,000 in income from his fraudulent schemes, resulting in a tax loss to the United States of over $100,000. Finally, Lopez criminally violated the Taft-Hartley Act by living rent-free with his family in a New Jersey home owned by the employer trustee, whose company had a collective bargaining agreement with the Union. Lopez also illegally structured over $82,000 in cash deposits at local banks to evade federal currency reporting requirements.
Former Congressman and Real Estate Investor Sentenced on Federal Charges
On October 28, 2013, in Tucson, Ariz., former U.S. Congressman Rick Renzi was sentenced to 36 months in prison. James Sandlin was sentenced to 18 months in prison. Renzi, of Burke, Va., and Sandlin, of Sherman, Texas, were convicted on June 11, 2013. Renzi was found guilty of 17 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right, racketeering, money laundering and making false statements to insurance regulators. Sandlin was convicted of 13 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right and money laundering. According to evidence at trial, Renzi, then a member of Congress from Arizona’s 1st Congressional District, promised in 2005 to use his legislative influence to profit from a federal land exchange that involved property owned by Sandlin, a real-estate investor. At the time, Sandlin owed Renzi $700,000 in future payments from their business dealings, and Renzi threatened proponents of the land exchange that he would not support it unless they purchased Sandlin’s property in Cochise County, Ariz. When they refused, Renzi promised a second proponent of a land exchange that he would support the exchange if they purchased Sandlin’s property. According to an agreement reached in May 2005, Sandlin was paid $1 million in earnest money, out of which he paid $200,000 to Renzi. Just before Sandlin received the $1.6 million balance owed on the exchange, he paid an additional $533,000 to Renzi. Evidence at trial further showed that from 2001 to 2003, Renzi engaged in insurance fraud by diverting his clients’ insurance premiums to fund his first campaign for Congress, and he subsequently sent false letters to his insurance customers and provided false statements to various state regulators who were investigating his activities.
Former County Worker and School Board Member Sentenced for Accepting Bribes
On October 28, 2013, in Cleveland, Ohio, Santina “Sandy” Klimkowski was sentenced to 48 months in prison and ordered to pay $270,302 in restitution. Klimkowski previously pleaded guilty to Hobbs Act conspiracy, bribery, conspiracy to commit mail fraud, making false statements, tax charges and other crimes. According to court documents, Klimkowski, a Maple Heights school board member, participated in a scheme where contracts for commercial appraisal work went to a company that paid bribes to a co-conspirator; a portion of which went to Klimkowski. She also got cash and home repairs in exchange for using her position on the school board to steer construction contracts to contractors who paid bribes to her.
Former Detroit Mayor and Others Sentenced in Racketeering Conspiracy
On October 10, 2013, in Detroit, Mich., Former Detroit Mayor Kwame M. Kilpatrick was sentenced to 336 months in prison and three years of supervised release. Bobby Ferguson was sentenced to 252 months in prison. On October 17, 2013, Bernard Kilpatrick was sentenced to 15 months and one year of supervised release. In March 2013, Kwame Kilpatrick was convicted by a jury of 24 counts of extortion, mail fraud, tax violations and racketeering. According to court documents, Kwame M. Kilpatrick used his position as Mayor of Detroit and Michigan State House Representative to execute a wide ranging racketeering conspiracy involving extortion, bribery and fraud. The conspiracy was a scheme to use the power and authority of Kwame Kilpatrick’s office as Mayor of Detroit to extort municipal contractors by coercing them to include Ferguson in public contracts and to rig the awarding of public contracts to ensure that Ferguson obtained a portion of the revenue from those contracts. Bobby Ferguson obtained at least $73 million in revenues from municipal contracts through the scheme, a portion of which he shared with his co-conspirators. Bernard Kilpatrick was sentenced for filing false tax returns.