AIRPORT CONSTRUCTION FRAUD and CORRUPTION INVESTIGATION at the Reading Pennsylvania Regional Airport-RDG

Transcription

1 Inspector General US Department of Transportation Office of Investigations AIRPORT CONSTRUCTION FRAUD and CORRUPTION INVESTIGATION at the Reading Pennsylvania Regional Airport-RDG Presenters: Mike Purcell Robert Goldman Special Agent former prosecutor 28 years USDOT-OIG OIG Partner, FOX ROTHSCHILD LLP Philadelphia Field Office Philadelphia, PA & West Palm Beach, FL Telephone

2 Case Overview Engineering / Construction Management firm inflated billable hours for their employees working on several FAA funded airport improvement projects at RDG from 1997 to 2000 Submitted invoices with inflated hours to RDG and fraudulently billed over $317,000 Large cost overruns caused a County Audit For the audit they created phony time cards to match the inflated invoices already submitted to RDG Removed original time cards and billing documents from the business to hide the fraud 2

3 U.S. v. John Vitillo et al. The 3 Defendants 1. VITILLO CORPORATION parent company 2. VITILLO ENGINEERING INC - subsidiary 3. John Vitillo,, owner of both companies Engineering & Construction firms based in Reading, Pennsylvania Contracted in 1997 to be the Engineer of Record for RDG, making them public officials or agents of RDG As the Airport Engineer conducted engineering oversight on all RDG projects from , containing over $3M in FAA funds Contracted in 1998 to perform construction management over the FAA funded Terminal Expansion Project As the Construction Manager conducted construction oversight over the Terminal Expansion Project, containing over $1M in FAA funds 3

4 Reading, PA Regional Airport - RDG General aviation airport located 60 miles Northwest of Philadelphia hia 3 charter operators & shuttle service to Philadelphia International nal Airport Received over $3 million in FAA grant funds from 1997 to

5 U.S. v. John Vitillo et al. Investigation & Prosecution Team U.S. Attorney s Office AUSA Robert Goldman AUSA Kathleen Rice Federal Agents Mike Purcell - DOT-IG Thomas Neeson - FBI Good Guys The 5

6 The Fraud Scheme Unravels The Berks County Coroner, the Chief Deputy, and the 2nd Deputy were w indicted in a scheme to falsely inflate the number of bodies transported to the morgue in order to collect $150 per ghost body plus mileage - FBI case. The Chief Deputy (JL) charged in the Coroner Case was also on the e RDG Airport Authority Board and became Board Chairman in JL plead guilty and served a 1 year jail term in Coroner case JL cooperated in the Vitillo investigation. Due to high cost overruns on RDG projects, the Berks County Commissioner s Office ordered an audit of the RDG Airport Authority. Audit revealed discrepancies in the billings vs. hours worked by Vitillo on RDG projects. Vitillo mistakenly included an original bill and an altered bill for one e of the audited months. From working the Coroner Case, the FBI developed information of potential fraud at RDG. The FBI then contacted DOT-OIG. OIG. 6

7 U.S. v. John Vitillo et al. The County Audit Contains great evidence of the fraud road map Interviews Developing the case Body Wires Incriminating recorded conversations with Vitillo Search Warrant conducted Originals and Altered records recovered More Interviews Employees tell the real story Subpoenas Investigative Techniques used: Other documents to prove the fraud 7

8 The Evidence Original Time Card filled out by employee Altered Time Card Created at Vitillo s direction One Vitillo employee testified at trial that she was on jury duty, which she recorded on her original timecard Altered timecard charged her jury duty time to the FAA funded Terminal Project 8

9 Original Bill - Vitillo internal copy Note original total is $7, The Evidence Invoice submitted to RDG with inflated hours Note-Vitillo directed Project Mgr to keep track of actual (ACT) vs. billed hours Bill inflated to over $35,000 9

10 Criminal Charges 4 Count Indictment 18 USC 371 Conspiracy One Count 18 USC 666 Program Theft Three Counts Fraud Amount = $317,760 10

11 U.S. v. John Vitillo et al. 11

12 Criminal Trial-US District Court in Philadelphia Trial lasts 2 weeks Jury deliberates for 2 hours, including eating lunch ALL CONVICTED - Vitillo and both companies 12

13 U.S. v. John Vitillo et al. Vitillo Sentenced John Vitillo: 3 years in federal prison 2 years of supervised probation upon release from prison Ordered to pay $317,760 in restitution Vitillo Corporation: Sentenced to 5 years probation Vitillo Engineering Inc: Sentenced to 5 years probation 13

14 U.S. v. John Vitillo et al. Administrative Actions: Vitillo Debarment - FAA debarred John Vitillo and his 2 companies from all government contracting for 3 years Reading Regional Airport FAA revoked a $94,000 grant amendment request from RDG, citing (in part) Vitillo s work on the projects. FAA must now approve all contractor selections for federally funded projects at RDG 14

15 Fraud Indicators in this case High cost overruns Airport official convicted of fraud Coroner Case Billings more than the amount of work performed Excessive change orders Lack of documentation to support billings 15

16 Questions Inspector General US Department of Transportation Office of Investigations Mike Purcell Robert Goldman Special Agent former prosecutor 28 years USDOT-OIG OIG Partner, FOX ROTHSCHILD LLP Philadelphia Field Office Philadelphia & West Palm Beach Telephone