Wednesday, September 26, 2012

New Jersey Bid Rigging and Kickbacks Scandal

An engineer representing three school districts in New Jersey is serving three years in state prison for his role in a bid rigging and kickback scheme.  

Bid rigging, inflated bids, and kickbacks:  Kenneth Disko conspired with a contractor to rig the construction bidding process.  He convinced contractor John Sangiuliano of Metropolitan Metal Window Company to submit high bids in the name of other contractors, making his bid appear low.  At Disko's direction, Metropolitan's bids were also inflated over the reasonable cost of the repair work - all in exchange for at least $36,000 in kickbacks that Disko received in 2009 and 2010.  He also received more than $44,000 in kickbacks between 2001 and 2004.

Contractor sentenced:  Contractor Sangiuliano was sentenced on September 13, 2012 to one year of probation, ordered to pay $36,000 in restitution to two of the school districts, and a $25,000 penalty to a state fund for anti-trust enforcement efforts.  He was also barred from any public contracts in New Jersey for five years.  Two other contractors and the former business administrator for one of the school districts were also caught in the web of the bid rigging scandal and have been sentenced to a combination of probation, penalties, and debarment.

More information:  For more information, click here to read the September 13, 2012 press release from the New Jersey Office of the Attorney General.

Lessons learned:  Clear bidding procedures, and internal checks and balances are critical for the integrity of the public bidding process.  Public agencies with a decentralized model of procurement and no oversight are at higher at risk for ethical lapses and abuses.

Facts Disputed:  On September 28, 2012, after I posted the blog entry above, I received a phone call from a woman identifying herself as the wife of one of the parties involved in this case.  She commented that the facts were not correct as reported in the press release from the New Jersey Office of the Attorney General (on which I based the information included in this blog posting), that there were two sides to the story, and that her husband was the victim of over jealous prosecution by the State.  When I asked for more information that would shed light on what really happened from her perspective, she indicated that she was unable to disclose such information. This update was posted on September 29, 2012. 

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

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