Fil-Am to serve 33 months for minority contract fraud

A Filipino-American businessman from West Haven, Connecticut was sentenced to 33 months behind bars in connection with his role in defrauding a federal program designed to help minority-owned small businesses win government contracts.

The United States Attorney’s Office for the Middle District of Pennsylvania said Romeo P. Cruz allowed himself to be used in what the US Department of Transportation (USDOT) has called the largest Disadvantaged Business Enterprise (DBE) fraud in US history.

Cruz, 64, was also ordered by US District Judge Sylvia H. Rambo to pay $119 million in restitution to the USDOT and $79,450 in restitution to the Internal Revenue Service (IRS).

Cruz, who was also sentenced to two years’ supervised release, was ordered to surrender to the Bureau of Prisons on Feb. 17 to begin service of his sentence.

A naturalized American citizen, Cruz was president and owner of the CT highway construction firms Marikina Construction Corp. and Marikina Engineering and Construction Corp. — both run out of the basement of his home in West Haven.

Markina is a popular Metro Manila city where Cruz was a Rotary Club member.

In his guilty plea in August 2008, he admitted that Marikina Construction was actually a front company for a Cressons, Pennsylvania-based firm called Schuylkill Products Inc., and its wholly-owned subsidiary CDS Engineers Inc.

He admitted his company existed solely to qualify the two other firms for contracts meant for small and disadvantaged businesses.

Cruz is the third person to be sentenced in the fraud perpetrated under the federal DBE program, a scheme that led to the demise of Schuylkill Products, Inc. (SPI).

Federal prosecutors said Cruz and SPI executives hatched the scheme under which the latter obtained millions of dollars worth of federal contracts to which it otherwise would not have been entitled.

Marikina Construction, being owned by a Filipino, was classified as a DBE under federal law and making it eligible to obtain certain construction contracts, according to prosecutors.

That, in turn, enabled SPI and CDS Engineers Inc. to use Marikina as a front that let them do the actual construction work, prosecutors said.

SPI manufactured concrete bridge beams and other suppliers’ products, while CDS Engineers installed them.

US Attorney Peter J. Smith said the fraud lasted more than 15 years and involved more than $136 million in contracts in Pennsylvania alone.

Prosecutors said the companies went to great lengths to conceal the fraud.

SPI and CDS Engineers personnel used Marikina passwords, signature stamps, business cards, letterheads and e-mail addresses and covered their companies’ logos on trucks with Marikina magnetic placards and decals in efforts to hide what they were doing, prosecutors said.

SPI paid a small fixed fee to Marikina in exchange for letting it use its name and DBE status.

Northeast Prestressed Products LLC bought SPI in April 2009 for $9.25 million and continues to operate from the same site on Route 901 in Cressona.

On Jan. 13, Judge Rambo sentenced Dennis F. Campbell, Pinebrook, and Timothy G. Hubler, Ashland, to 24 months and 33 months in jail, respectively, for their roles in the scheme.

Campbell was SPI’s former vice president in charge of sales and marketing, while Hubler was SPI’s former vice president in charge of field operations.

Both were also ordered to pay $119 million each in restitution.

Campbell pleaded guilty in 2008 to DBE fraud, while Hubler pleaded guilty in 2008 to DBE fraud and tax fraud.

Ernest G. Fink Jr., Orwigsburg, SPI’s former vice president and CEO, pleaded guilty in 2010 to tax fraud and is awaiting sentencing.

Cruz, Campbell and Hubler each testified against Joseph W. Nagle of Deerfield Beach, Fla., SPI’s former president and CEO, who was convicted in April 2012 of 26 charges, including wire fraud, mail fraud, engaging in unlawful monetary transactions and conspiracy, resulting from his role in the scheme.

Nagle also is awaiting sentencing. — Filipino Reporter