TRENTON – Attorney General Christopher S. Porrino announced that two former executives of Birdsall Services Group (“BSG”) were sentenced to jail today for participating in a criminal scheme in which more than $1 million in corporate political contributions were illegally made through firm employees to evade New Jersey’s pay-to-play law. Eight former executives, shareholders and managers of BSG have pleaded guilty in the scheme, along with the engineering firm itself, which is no longer in business.
These defendants were sentenced today by Superior Court Judge James Den Uyl in Ocean County. Each man was sentenced to 270 days in the county jail as a condition of a term of two years of probation:
- Robert Gerard, 56, of Wall, N.J., former Chief Marketing Officer for BSG, and
- James Johnston, 55, of New Brunswick, N.J., former President of the Environmental Services Group within BSG.
Gerard and Johnston pleaded guilty on April 12 to fourth-degree charges of making prohibited corporate political contributions through employees. Gerard was required to forfeit $86,200 to the state, and Johnston, $93,720. Each man is debarred for 10 years from personally bidding on public contracts in New Jersey or holding an interest of 5 percent or more in any company that bids for such contracts.
Deputy Attorney General Anthony A. Picione, Chief of the Corruption Bureau, and Deputy Attorneys General Mallory Shanahan and Brian Faulk prosecuted Gerard and Johnston and handled the sentencing hearings for the Division of Criminal Justice. The charge was contained in a March 26, 2013 indictment, which also charged BSG and six other executives and shareholders. The indictment stemmed from an investigation by the Division of Criminal Justice Corruption Bureau, which found that the defendants allegedly conspired to avoid the restrictions of New Jersey’s Pay-to-Play Act by disguising illegal corporate political contributions as personal contributions of employees.
“The many guilty pleas we have secured in this case hammer home an important message that criminal schemes aimed at evading New Jersey’s pay-to-play law will be met with stern punishment,” said Attorney General Porrino. “Our law prevents politically connected firms from garnering public contracts based on campaign contributions, but Birdsall’s executives gamed the system and secured millions of dollars in contracts for which they should have been disqualified.”
“My office recently announced two anti-corruption programs – a reward program offering up to $25,000 for tips about public corruption, as well as a whistleblower program that allows lower-level participants in a corruption scheme to potentially avoid prosecution by self-reporting,” Attorney General Porrino added. “I urge people to help us and help themselves by taking advantage of these programs, which expire on August 1.”
“New Jersey’s pay-to-play law seeks to ensure fair and open public contracting, free of the sway of political interests,” said Director Elie Honig of the Division of Criminal Justice. “By criminally prosecuting this firm and its executives, we have given the law real teeth.”
Individuals may report information and apply for the Anti-Corruption Reward Program or Anti-Corruption Whistleblower Program by August 1 by one of the following methods:
- Call the DCJ hotline 866-TIPS-4CJ to speak with detectives 24 hours/7 days a week; or
BSG pleaded guilty on June 13, 2013 to charges of first-degree money laundering and second-degree making false representations for government contracts. As a result of its plea, BSG paid two major criminal penalties: a $500,000 public corruption profiteering penalty and a $500,000 anti-money laundering profiteering penalty. In each instance, the penalty was the maximum amount authorized by law. BSG also paid the state $2.6 million to settle a civil forfeiture action filed by the Attorney General’s Office in connection with the criminal case.
Six other executives, shareholders and managers of the Birdsall firm previously pleaded guilty:
- On April 22, 2016, Howard Birdsall, formerly CEO and largest shareholder of BSG, was sentenced to four years in prison on a charge of second-degree misconduct by a corporate official. He paid $49,808 to the state in forfeiture of his illegal political contributions.
- On June 10, 2016, Thomas Rospos, formerly executive vice president of BSG and its second largest shareholder, was sentenced to three years in prison on a charge of third-degree tampering with public records or information. He paid $150,000 in forfeiture of his illegal contributions.
- On July 11, 2016, William Birdsall, formerly senior vice president and a large shareholder of BSG, was sentenced to 270 days in the county jail and two years of probation on a charge of third-degree misconduct by a corporate official. He paid $129,115 in forfeiture of his illegal contributions, as well as a $75,000 public corruption profiteering penalty.
- On Jan. 6, 2016, Scott MacFadden, former chief administrative officer of BSG, pleaded guilty to third-degree misconduct by a corporate official. He faces a recommended sentence of up to 364 days in jail and a term of probation. He must pay $30,000 in forfeiture of his contributions.
- On Nov. 30, 2012, Philip Angarone, the former marketing director for BSG, pleaded guilty to third-degree tampering with public records or information and fourth-degree making prohibited corporate political contributions through employees. He is awaiting sentencing and faces a sentence of up to 364 days in jail and a term of probation. He must forfeit $26,775.
- On Feb. 12, 2013, Eileen Kufahl, a former marketing manager for Birdsall, pleaded guilty to a fourth-degree charge of making prohibited corporate contributions through employees. She forfeited $17,119 and was admitted into the Pre-Trial Intervention Program.
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 made personal political contributions of $300 or less, which are deemed unreportable. Multiple personal checks were bundled together at Birdsall Services Group and sent to the appropriate campaign or political organization. The shareholders and employees were then illegally reimbursed by Birdsall Services Group, 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 continued for more than six years and involved more than $1 million in contributions.
For Gerard: Frank P. Arleo, Esq., Arleo & Donohue, LLC, West Orange, N.J.
For Johnston: Donald R. Belsole, Esq., Belsole and Kurnos, LLC, Morristown, N.J.
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