| TRENTON
– Attorney General Stuart Rabner announced
today that OSI Collection Services Inc.
has agreed to pay the state nearly $2 million
to resolve issues of overbilling and provision
of illegal gifts to state employees. The
Attorney General also announced a new indictment
charging two employees of OSI with purposely
submitting improper bills to the state.
The
seven-count state grand jury indictment
obtained today by the Division of Criminal
Justice:
- charges
Enos “George” Blake, 59, of
Kendall Park, and Carol Labbe, 39, of
Jackson, with theft by deception, misconduct
by a corporate official, and five counts
of false contract payment claims, all
second-degree offenses.
- alleges
that Blake, as the OSI vice president
responsible for managing state projects,
and Labbe, as his de facto second in command,
purposely submitted improper bills between
January 1999 and May 2005 that caused
the state to overpay OSI by $1,184,662.
Under
the agreement announced by Attorney General
Rabner:
-
OSI is excluded for five years from entering
into new contracts with the state.
-
OSI must pay the state nearly $1.5 million
in restitution for overbilling New Jersey
for tax collection services. OSI will
pay $1,184,662 for the improper bills
that are the subject of the new indictment,
and an additional $315,000 to resolve
a separate billing issue.
-
OSI must pay $500,000 to reimburse the
state for the costs of its investigation
and prosecution of the alleged overbilling
as well as the provision of improper gifts
to state employees by OSI employees. Six
Treasury employees and two OSI sales managers
were indicted in August on charges related
to such gifts.
-
OSI must make all payments within 10 days.
-
Former New Jersey Attorney General John
J. Farmer Jr. will be appointed as an
independent monitor to review and make
recommendations about OSI’s policies
and practices.
“This
agreement provides full restitution to the
state for all overbilling,” said Attorney
General Rabner. “In addition to being
excluded from bidding on state contracts
for five years, OSI must appoint an independent
monitor to guard against the alleged abuses
for which its employees have been indicted.”
In
return for the payments from OSI and other
provisions, the state has agreed not to
bring any criminal action against the corporation
for the alleged misconduct of its officers
or employees.
Under
the non-prosecution agreement, OSI, among
other things, will retain an independent
monitor to review and make recommendations
about OSI’s policies and practices
on billing government agencies and prohibiting
gifts to governmental employees. Attorney
General Rabner has agreed to former Attorney
General Farmer serving as the monitor.
The
Division of Criminal Justice can insist
on implementation of the monitor’s
recommendations, and the monitor will file
quarterly reports with the division on OSI’s
compliance with the agreement and implementation
of recommended controls.
The
state agreed that OSI’s five-year
exclusion from performing work for the state
extends from Jan. 17, 2006, when the state
suspended OSI from bidding on contracts,
to Jan. 17, 2011. The agreement does not
prohibit OSI and an affiliated company from
completing work on five existing state contracts.
They end on various dates between Feb. 28,
2007 and July 1, 2008.
According
to Division of Criminal Justice Director
Gregory A. Paw, Blake and Labbe were responsible
for signing off on payment vouchers submitted
to the state under three contracts to collect
delinquent and deficient taxes. It is alleged
that Blake and Labbe purposely submitted
improper bills in connection with nine OSI
employees that resulted in the state making
payments totaling $1,184,662 that were not
authorized under the contracts.
The
contracts provided for OSI to bill the state
on an hourly basis for work performed in
connection with the state contracts by employees
who fit five defined job titles. It is alleged
that Blake and Labbe signed off on bills
they knew were improper. In some cases,
employees were identified with incorrect
job titles that resulted in them being billed
at a higher rate of pay, while in other
cases employees were billed who should not
have been billed, either because they provided
clerical or managerial support to OSI as
a whole or because they were working for
another client of OSI. For example, the
state was billed for the work of OSI’s
recruiting manager as well as a trainer
who trained all new OSI employees, even
though their work was not specific to the
state contracts.
The
criminal cases have been handled by State
Investigator Benjamin Kukis and Deputy Attorneys
General Thomas Clark and Steven Zweig.
Second-degree
crimes carry a maximum state prison sentence
of 10 years. The indictment is merely an
accusation and the defendants are presumed
innocent until proven guilty.
>> Blake-Labbe
Indictment (291k pdf)
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