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TRENTON
- Attorney General Anne Milgram announced
that former Irvington Mayor Michael Steele
pleaded guilty today to rigging school district
contracts and taking thousands of dollars
in kickbacks as business administrator for
the Irvington Board of Education.
According
to Criminal Justice Director Deborah L. Gramiccioni,
Steele, 53, of Easton, Pa., pleaded guilty
today before Superior Court Judge Stephen
B. Rubin in Hunterdon County to charges of
second-degree official misconduct and second-degree
pattern of official misconduct. The charges
were contained in a June 5 state grand jury
indictment that stemmed from an investigation
by the Division of Criminal Justice Corruption
Bureau and the New Jersey State Police Official
Corruption Bureau.
In
pleading guilty, Steele admitted that he took
thousands of dollars in kickbacks on school
district contracts. He agreed to pay $120,000
in restitution to the Irvington Board of Education.
Under
the plea agreement, the state will recommend
that Steele receive a sentence of seven years
in state prison - including five years without
possibility of parole - on each of the charges,
with the sentences to run concurrently. Steele,
who retired from the school district in April
2008, will be permanently barred from public
employment in New Jersey.
“Mr.
Steele admitted that he took thousands of
dollars in bribes generated by inflating contract
costs,” said Attorney General Milgram.
“That money was stolen from state and
local taxpayers who pay for this struggling
school district, and from students who deserve
to see school funding used to improve their
education, not to enrich corrupt administrators.”
Deputy
Attorney General Erik Daab prosecuted the
case and took the plea for the Division of
Criminal Justice Corruption Bureau.
The
state’s investigation revealed that
Steele engaged in two separate bid-rigging
schemes between 2003 and 2007 involving two
contractors and approximately $1.4 million
in contracts. The two contractors pleaded
guilty in August 2008, admitting that they
provided bribes to Steele in connection with
the schemes.
Preston
Lewis, 54, of Dingmans Ferry, Pa., and William
Hardy, 57, of Margate, Fla., each pleaded
guilty to accusations charging them with offering
an unlawful benefit to a public servant for
official behavior. Each of the contractors
was sentenced late last year to three years
of probation and a $5,000 fine. Lewis was
ordered to perform 250 hours of community
service, and Hardy, 150 hours. Both are barred
from government contracts in New Jersey for
five years.
The
investigation was conducted and coordinated
by Detective Kiersten Pentony, Detective Robyn
Greene, Detective Harry Maronpot Jr., and
Deputy Attorney General 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.
The state Department of Education assisted
in the investigation.
“This
case began with a tip from a person who was
suspicious about the large sums of money that
one contractor was receiving from the Irvington
Board of Education,” said Director Gramiccioni.
“We urge anyone who has information
about possible misconduct by public officials
to call our confidential tipline 1-866-TIPS-4CJ.
Our investigators will thoroughly investigate
any leads.”
The
investigation revealed that Steele, whose
annual salary was $120,000, would purchase
maintenance supplies for the district - including
cleaning chemicals, asphalt repair compounds
and salt for melting snow - from Hardy’s
maintenance supplies company, WH Chemical
Group in Margate, Florida, and the company
would pay Steele a “bonus” of
between $5,000 and $20,000 per order. WH Chemical
Group received approximately $900,000 in district
contracts.
Steele
would call Hardy and ask him the quantity
of products he needed to buy to get a kickback
in a particular amount. Steele would then
order supplies in the quantities stated by
Hardy, and Hardy would send the kickback to
Steele. While WH Chemical Group would provide
the agreed upon quantities of supplies to
the district, Steele created false purchase
orders that inflated the quantities. WH Chemical
Company could not match the prices offered
by competitors, so Steele made it appear that
the company was providing more supplies to
beat the other bids.
In
the second scheme, Steele rigged bids to award
contracts to Lewis, a Lakewood-based contractor
who owned Lone Star Consulting, a construction
company, and BMG Security, a security camera
installation company. Steele rigged bids on
at least 29 school contracts involving those
companies between January 2003 and December
2007 and inflated the contract prices to build
in thousands of dollars in kickbacks for himself.
Steele
would contact Lewis about school district
projects and instruct him to prepare a cost
estimate. Steele would then tell Lewis to
inflate the estimate to include a kickback
and submit the inflated bid to the school
district. Steele or Lewis would prepare two
fraudulent competing bids for the project
in higher amounts. Because Lewis’s company
always had the lowest bid, the Board of Education
would award his company the contract. After
he completed the work and received a check
from the district, Lewis would meet with Steele
to provide the kickback in cash.
The
Division of Criminal Justice Corruption Bureau
has established a toll-free Corruption Tipline
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 Tipline or Web page will
remain confidential.
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