TRENTON
– Attorney General Anne Milgram and
Criminal Justice Director Deborah L. Gramiccioni
announced that an official for the New Jersey
Department of Corrections was indicted today
on charges he assisted an alarm system contractor
to rig bids in connection with more than
$230,000 in state contracts.
According
to Gramiccioni, Frederick J. Armstrong,
58, of Pemberton, a construction management
specialist in the Capital Planning &
Construction Unit of the Department of Corrections,
was charged with conspiracy (2nd degree),
official misconduct (2nd degree), conspiracy
in restraint of trade (2nd degree), theft
by deception (2nd degree), contract fraud
(2nd degree), and two counts of misconduct
by a corporate official (2nd and 3rd degree).
“This
state official corrupted the integrity of
the state contracting process by helping
to rig bids and steer lucrative contracts
to a single alarm system contractor,”
said Attorney General Milgram. “The
bidding rules are designed to ensure that
taxpayers get a fair deal when their money
is spent on public projects. Mr. Armstrong
broke those rules and violated his duties.”
The
indictment is the result of an ongoing investigation
by the Division of Criminal Justice Corruption
Bureau and the Department of Corrections’
Special Investigations Division. It supersedes
an indictment obtained by the Division of
Criminal Justice on Dec. 3, which charged
the contractor, Paul Kerth, 57, of Collingswood,
owner of Independent Alarm Distributors,
Inc., and several companies he owns. The
December indictment did not name Armstrong.
Kerth
is charged in the superseding indictment
with conspiracy (2nd degree), official misconduct
(2nd degree), conspiracy in restraint of
trade (2nd degree), two counts of theft
by deception (2nd and 3rd degree), two counts
of contract fraud (both 2nd degree), and
two counts of misconduct by a corporate
official (2nd and 3rd degree). Independent
Alarm, which is based in Kerth’s home,
is also named as a defendant, along with
two other companies Kerth owns that he allegedly
used for rigging bids: Adirondack Alarm
and Automatic Alarm Associates, both of
Marlton.
The
indictment alleges that Armstrong assisted
Kerth in submitting rigged bids to the Department
of Corrections and used his influence over
contracting procedures to steer contracts
awarded by the department to Independent
Alarm.
“With
this indictment, we send a strong message
to officials who oversee government contracts,
as well as the contractors with whom they
do business,” said Director Gramiccioni.
“Don’t cheat the taxpayers of
New Jersey. We are watching, and we will
prosecute those who break the law. I want
to thank the Department of Corrections,
which partnered with us on this investigation.”
The
indictment alleges that between April 1999
and December 2004, Kerth – with the
assistance of Armstrong – rigged bids
in order to obtain contracts with the Department
of Corrections to install alarm equipment.
The state investigation revealed that Armstrong
assisted Kerth in rigging nine DOC contracts
with contract prices that, in the aggregate,
exceeded $230,000.
Under state law, Independent Alarm had to
be the lowest qualified bidder among at
least three independent bids submitted for
each project in order to win the contracts.
It is alleged that Kerth fraudulently arranged
for his other companies, Adirondack Alarm
and Automatic Alarm, as well as other contractors
not named in the indictment, to submit higher
“cover” bids, so Independent
Alarm would win the contracts. Armstrong
allegedly encouraged Kerth to arrange for
such cover bids so he could steer contracts
to him, and Armstrong was aware that cover
bids were being submitted. In addition,
Armstrong allegedly solicited bids from
contractors whose names were given to him
by Kerth, sending them requests for proposals
or phoning them on contracts where telephone
price quotes were permitted.
On
Dec. 2, a subcontractor that Kerth used,
Edward F. Brewer Sr., 51, of Audubon, pleaded
guilty before Superior Court Judge Thomas
A. Brown Jr. in Camden County to two counts
of fourth-degree falsifying records. He
admitted that he arranged for a contractor
friend, Jozef Caputa, to submit higher bids
so that Independent Alarm would win two
contracts from the Department of Corrections.
Brewer must pay $5,000 in restitution and
faces a five-year ban on doing business
with the state. On July 9, Caputa was charged
with two counts of third-degree theft by
deception. In return for Caputa’s
truthful statements before Judge Brown implicating
himself and others, and his agreement to
not seek public work for five years, the
state did not oppose Caputa’s application
for Pre-Trial Intervention, which was granted
by the court.
The
indictment also alleges that Kerth rigged
bids on contracts with two Camden County
municipalities. Between May 2000 and September
2004, Kerth allegedly used his two other
companies to fraudulently submit higher
bids so that Independent Alarm could obtain
two contracts with Haddon Township totaling
more than $20,000, and two contracts with
Oaklyn Borough totaling more than $30,000.
The
investigation was conducted and coordinated
for the Division of Criminal Justice Corruption
Bureau by Detective Sgt. Keith Lerner, Detective
Paul Marfino Jr., Detective David Patella
and Deputy Attorney General Steven J. Zweig.
Senior Investigators Manuel Alfonso and
Charles Walters led the investigation for
the Department of Corrections’ Special
Investigations Division. Deputy Attorney
General Zweig presented the case to the
state grand jury.
Attorney
General Milgram thanked the Department of
Corrections for its referral and extensive
assistance in the investigation.
The
indictment was handed up to Superior Court
Judge Linda R. Feinberg in Mercer County,
who assigned it to Camden County, where
the defendants will be ordered to appear
in court at a later date to answer the charges.
Second-degree
crimes carry a maximum sentence of 10 years
in state prison and a criminal fine of $150,000,
while third-degree crimes carry a maximum
sentence of five years in prison and a $15,000
fine. The corporate defendants could face
fines of up to triple the aggregate amounts
of any contracts they are found to have
received through bid rigging.
The
indictment is merely an accusation and the
defendants are presumed innocent until proven
guilty. A copy of the indictment is available
with this press release at www.njpublicsafety.com.
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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