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TRENTON - Attorney General Anne Milgram and Criminal Justice Director Gregory A. Paw announced that former Irvington Mayor Michael Steele was indicted today on official misconduct and bribery charges for allegedly taking at least $120,000 in kickbacks for rigging school district contracts as business administrator for the Irvington Board of Education.
An investigation by the Division of Criminal Justice Corruption Bureau and the State Police Official Corruption Unit revealed that Steele engaged in two separate bid-rigging and kickback schemes between 2003 and 2007 involving approximately $1.4 million in contracts. Steele retired from the school district in April.
Steele, 52, of Easton, Pa., allegedly received kickbacks totaling $120,000 from a Florida-based maintenance supplies contractor in return for ordering supplies from the company for the Irvington school district. Steele allegedly falsified purchase orders, overstating the quantity of supplies that were provided in order to make it appear that the company offered the best prices. The Florida company received a total of approximately $900,000 in district contracts.
In the second scheme, Steele allegedly rigged bids with a contractor in Lakewood, N.J., in order to award him contracts for construction projects and installation of security cameras in the school district. The men allegedly rigged the bids on at least 29 school contracts and inflated the contract prices to build in thousands of dollars in kickbacks for Steele.
“Mr. Steele is charged with violating the public trust and taking at least $120,000 in bribes that were generated by inflating the cost of contracts for a school system that is supported in great part by the state as well as taxpayers in Irvington,” Attorney General Milgram said. “Our tax dollars are meant to serve students who deserve nothing less than schools that prepare young people for a future filled with opportunity. They are not meant to serve the selfish interests of corrupt administrators.’’
According to Director Paw, the Division of Criminal Justice obtained a nine-count state grand jury indictment charging Steele with two counts of second-degree official misconduct, two counts of second-degree pattern of official misconduct, two counts of second-degree bribery, two counts of second-degree acceptance or receipt of unlawful benefit by a public servant for official behavior, and one count of second-degree conspiracy.
Each count of the indictment carries a maximum sentence of 10 years in state prison with a mandatory minimum of five years upon conviction. The mandatory minimum was established under a new law signed by Governor Jon S. Corzine in March 2007 that significantly enhances the punishment of government officials who are convicted of abusing their office and violating the public trust. Second-degree offenses also carry a criminal fine of up to $150,000. The indictment is merely an accusation and the defendant is presumed innocent until proven guilty.
“New Jersey school districts spend millions of dollars each year on contracted goods and services,” said Director Paw. “We must be vigilant to ensure the integrity of that contracting process against those who would greedily use it for their own interests. The investigators did an outstanding job in uncovering these criminal schemes.”
The investigation was conducted and coordinated by Detective Kiersten Pentony, Detective Robyn Greene, Sgt. Harry Maronpot Jr., and Deputy Attorney General Erik Daab of the Division of Criminal Justice Corruption Bureau, and Detective Sgt. Geoffrey P. Forker, Detective Sgt. 1st Class Joseph Celli III and Detective Sgt. 1st Class Thomas T. Goletz of the New Jersey State Police Official Corruption Unit. Deputy Attorney General Daab presented the case to the state grand jury. The state Department of Education assisted in the investigation.
The state investigation revealed that Steele, who earned $120,000 a year in his position, would purchase maintenance supplies for the district - including such items as cleaning chemicals, asphalt repair compounds and salt for melting snow - from a company in Margate, Florida, and the company allegedly would pay Steele a “bonus” of between $5,000 and $20,000 per order. The indictment details 17 payments totaling $120,000 between Dec. 31, 2003 and Oct. 15, 2007.
Steele allegedly would call the owner of the Florida company and ask him the quantity of products he needed to buy to get a kickback in a particular amount. It is alleged that Steele would then order supplies in the quantities stated by the owner, and the owner would send the kickback to Steele. While the company would provide the agreed upon quantities of supplies to the district, Steele allegedly created false purchase orders that inflated the quantities. The Florida company could not match the prices offered by competitors, so Steele allegedly made it appear that the company was providing more supplies to beat the other bids.
The second scheme involved a Lakewood contractor who owns two companies, a construction company and a security camera installation company. Steele allegedly would contact the contractor about school district projects and instruct him to prepare a cost estimate. It is alleged that Steele would then tell him to inflate the estimate to include a kickback and submit the inflated bid to the school district.
Steele or the Lakewood contractor would prepare two fraudulent competing bids for the project in higher amounts. Because the contractor always had the lowest bid, the Board of Education would award him the contract. After the contractor completed the work and received a check from the school district, he allegedly would meet with Steele to provide the kickback in cash.
The indictment identifies 29 contracts with the Lakewood contractor’s companies between January 2003 and December 2007 where Steele allegedly rigged the bids and negotiated kickbacks.
View Indictment (483k PDF)
The indictment was handed up to Superior Court Judge Maria Marinari Sypek in Mercer County, who assigned the case to Hunterdon County, where Steele will be ordered to appear in court at a later date to answer the charges.
Attorney General Milgram noted that the Division of Criminal Justice - Corruption Bureau has
established a toll-free Corruption Tipline for the public to report corruption, financial crime and other illegal activities. The statewide Corruption Tipline is 1-866-TIPS-4CJ. Additionally, the public can log on to the Division of Criminal Justice Web site at www.njdcj.org to report suspected wrongdoing. All information received through the Division of Criminal Justice Corruption Tipline or Web page will remain confidential.
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