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For Immediate Release:  
For Further Information:
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January 14, 2010

Office of The Attorney General
- Anne Milgram, Attorney General
Division of Criminal Justice
- Deborah L. Gramiccioni, Director

 

Peter Aseltine
609-292-4791

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Suspended Administrator for State Department of Corrections Pleads Guilty to Directing Bid Rigging and Kickback Scheme

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TRENTON – Acting Attorney General Ricardo Solano Jr. and Criminal Justice Director Deborah L. Gramiccioni announced that suspended Department of Corrections administrator Gerald T. Kennedy pleaded guilty today to orchestrating a bid rigging and kickback scheme involving hundreds of thousands of dollars in state contracts.

According to Director Gramiccioni, Kennedy, 47, of Red Bank, pleaded guilty before Superior Court Judge Ira E. Kreizman in Monmouth County to a second-degree charge of conspiracy to commit various crimes, including official misconduct, bribery, money laundering, theft by deception, making false representations for government contracts, and use of a corporation for the furtherance of a criminal object. The charge was contained in an April 2, 2008 indictment.

Under the plea agreement, the state will recommend that Kennedy be sentenced to seven years in state prison. He must disgorge $80,000 in kickbacks he received and pay a fine in an amount to be set by the judge. He is required to forfeit his job and will be permanently barred from public employment in New Jersey. Sentencing is scheduled for March 5.

“This official manipulated the government contracting process to enrich himself and his friends, at the expense of the State of New Jersey and its taxpayers,” said Acting Attorney General Ricardo Solano Jr. “We have no tolerance for this type of betrayal of the public trust.”

Deputy Attorneys General Steven J. Zweig and Pearl Minato took the guilty plea for the Division of Criminal Justice Corruption Bureau.

In pleading guilty, Kennedy admitted that between December 2002 and March 2006, he steered more than $630,000 in state contracts to three companies that were owned by friends. As Assistant Director of the DOC Division of Operations, in charge of the Capital Planning & Construction Unit, Kennedy had control over soliciting bids and selecting contractors for small capital projects costing under $41,100.

Kennedy admitted he steered state contracts totaling approximately $348,000 to Pro General Contracting Inc., aka Pro Painting & General Contracting Inc. Another defendant in the case, Jasher Guerrero Ramos, was listed in corporate records as owner of Pro Painting. However, Kennedy actually controlled the company. Kennedy admitted he received approximately $40,000 in kickbacks on those contracts with the help of Guerrero Ramos and another man, Ronald Hayes. Both Guerrero Ramos and Hayes have pleaded guilty in the scheme.

Guerrero Ramos funneled cash back to Kennedy through Hayes by writing checks to Hayes as if Hayes performed work for Pro Painting, when he did not actually perform any work for the company. Hayes would keep just 5 to 10 percent of the amount of each check and give the rest of the money directly to Kennedy.

Kennedy admitted that he received more than $34,000 in kickbacks on state contracts totaling $128,850 that he awarded to SBC Construction Inc., the company of another friend, Alfred “Buddy” Canale. Canale has also pleaded guilty.

Finally, Kennedy admitted that he steered approximately $153,000 in state contracts to a third company, SteelGrey LLC, which was owned by his friend Mark Stermer, 43, of Red Bank, who was charged in the same indictment. The charges against Stermer are pending. A full list of charges can be found with the April 3, 2008 press release at www.njpublicsafety.com. The indictment is merely an accusation and Stermer is presumed innocent until proven guilty.

Although Kennedy was required to seek bids from at least three pre-qualified contractors, he frequently solicited bids exclusively from the companies he and his friends controlled, and he often dictated the amount of each bid so he could award the contract as he desired. The contracts were for masonry, painting, "skirting" of a trailer, roofing repairs and other general projects.

The Department of Corrections reported suspected irregularities in the bidding process on small capital projects to the Division of Criminal Justice in early 2006.

“We must ensure that government officials act exclusively in the public interest, not in their own self-interest,” said Director Gramiccioni. “Through investigations and prosecutions such as this one, we are working to deter dishonest behavior by public officials and encourage those with information about corruption to report it to the Division of Criminal Justice.”

Guerrero Ramos pleaded guilty on Dec. 14, 2009 to bribery, a second-degree crime. The state will recommend that he be sentenced to five years in state prison. Canale pleaded guilty to bribery on Dec. 21, 2007. The state will recommend that he be sentenced to three years in prison. Hayes pleaded guilty on Nov. 26, 2007 to a third-degree charge of offering an unlawful benefit to a public servant for official behavior. Another man, Delfim Rodrigues, pleaded guilty on Feb. 28, 2008 to the same charge as Hayes. Rodrigues company, DEL ROD Inc., was a subcontractor on the SBC Construction contracts, and Rodrigues admitted providing kickbacks to Kennedy. The state will recommend that Hayes and Rodrigues be sentenced to probation.

Deputy Attorneys General Steven J. Zweig and Pearl Minato are prosecuting the case. The investigation was conducted and coordinated by Lt. Keith Lerner, Detective Paul Marfino and Deputy Attorney General Zweig of the Division of Criminal Justice Corruption Bureau, assisted by Senior Investigator Manuel Alfonso of the Department of Corrections, Special Investigations Division, who was sworn in as a special investigator for the Division of Criminal Justice.

Director Gramiccioni noted that the Division of Criminal Justice Corruption Bureau has established a toll-free Corruption Tipline 1-866-TIPS-4CJ. The public can also log on to the Division’s Web site www.njdcj.org to confidentially report suspected wrongdoing.

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