Friday, May 31, 2013
Former Navy Engineer Pleads Guilty To Organizing And Managing Multi-Million-Dollar Fraud Scheme, Associate Admits To Stealing Government Funds
The U.S. Justice Department released the below information yesterday:
PROVIDENCE, RI—Ralph M. Mariano, of Warwick, Rhode Island, a former senior systems engineer with the U.S. Navy’s Naval Sea Systems Command (NAVSEA) in Newport, Rhode Island, and Washington, D.C., pleaded guilty in U.S. District Court in Providence, Rhode Island, today to conspiracy and to defrauding the U.S. government of between $7 million and $20 million by directing co-conspirators to bill the navy for work that was never performed, announced Peter F. Neronha, U.S. Attorney for the District of Rhode Island.
Mariano admitted to the court that from 1999 to 2011, he used his position at NAVSEA to direct Russell Spencer, of Portsmouth, Rhode Island, a computer software specialist, to submit millions of dollars in fraudulent invoices to navy contractor Advanced Solutions for Tomorrow (ASFT), a Georgia and Middletown, Rhode Island company. Mariano admitted to the court that he directed ASFT to pay Spencer the full amount of the false invoices with money ASFT received from the Navy. Mariano admitted that the total amount of government money falsely obtained and paid to Spencer was approximately $17,957,000. The invoices were processed by Patrick Nagle, chief financial officer of ASFT.
At the time of his guilty plea, Mariano admitted to the court that he used a system of codes to direct Spencer to distribute the government funds to Mariano and individuals close to Mariano. Mariano admitted that he himself received $3,081,671 of navy funds by checks from Spencer. In addition, Mariano admitted to receiving bi-weekly $3,500 cash payments of navy funds from Spencer from 2004 to January 2011.
Mariano admitted to the court that little or no work was ever performed by Spencer in exchange for the government funds Spencer received and distributed at his direction. According to information provided to the court, Spencer provided ASFT and its subcontractors with numerous documents that purported to be work product over the years. Spencer typically provided ASFT with documents that he had taken from his employer, Electric Boat, without its consent. Spencer made cosmetic changes to the documents before submitting them to ASFT. Despite the fact that Spencer spent very little time making cosmetic changes to these documents, he billed ASFT upwards of $200,000 per month.
Mariano admitted to the court that at his direction, $2,567,028 was paid to his father, Ralph Mariano, Jr., of North Providence, Rhode Island; $1,692,650 was paid to his brother, Joseph Mariano, and to his companies; $207,900 was paid to a veterinary laboratory company controlled by his sister, Michelle Mariano; $2,446,445 was paid to private entities controlled by Anjan Dutta-Gupta, of Roswell, Georgia, chief executive officer of now-defunct ASFT.
In addition, Mariano admitted to the court that $478,880 in government funds fraudulently obtained was paid to a company owned by Attorney Mary O’Rourke, of Warwick, Rhode Island. O’Rourke pleaded guilty in U.S. District Court today to one count of theft of government property. O’Rourke admitted to the court that she submitted false invoices to Spencer from 2005 to 2011 and that she was paid with government funds for work that was never performed.
In addition to pleading guilty to conspiracy and theft of government funds, Ralph Mariano pleaded guilty today to one count of tax evasion. Mariano admitted to the court that from 2006 to 2009, he failed to report $1,864,910 in income he received from Russell Spencer. Mariano admitted that he owes the IRS $726,650.
Ralph Mariano and Mary O’Rourke are scheduled to be sentenced on September 5, 2013, by U.S. District Court Chief Judge Mary M. Lisi, who presided over today’s change-of-plea hearings.
Anjan Dutta-Gupta, who pleaded guilty on April 28, 2011, to one count of bribery, is scheduled to be sentenced on July 25, 2013, by U.S District Court Chief Judge Mary M. Lisi.
Russell Spencer, who pleaded guilty on July 25, 2012, to one count of conspiracy to commit bribery and on April 19, 2012, to one count of lying to the FBI, is scheduled to be sentenced on July 25, 2013, by U.S District Court Chief Judge Mary M. Lisi.
Patrick Nagle, who pleaded guilty on September 13, 2011, to one count of conspiracy to commit bribery, is scheduled to be sentenced on July 26, 2013, by U.S District Court Chief Judge Mary M. Lisi.
Ralph Mariano, Jr., who pleaded guilty on May 15, 2013 to four counts of tax evasion, is scheduled to be sentenced on August 16, 2013, by U.S. District Court Chief Judge Mary M. Lisi.
The cases are being prosecuted by Assistant United States Attorneys Lee H. Vilker, Terrence P. Donnelly and Dulce Donovan.
This matter was investigated by agents from the Defense Criminal Services, Naval Criminal Investigative Service; FBI; and Internal Revenue Service-Criminal Investigations.
This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force. The President established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.
The task force is working to improve efforts across the federal executive branch and, with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.