Former Birdsall CEO Pleads Guilty to Corporate Misconduct

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The former CEO of Birdsall Services Group pleaded guilty today to corporate misconduct for his role in a criminal scheme in which more than $1 million in corporate political contributions were illegally made through employees of the firm to evade New Jersey’s pay-to-play law.

Howard Birdsall, 72, of Brielle, who formerly was CEO and the largest shareholder of Birdsall Services Group, fessed up to a charge of second-degree misconduct by a corporate official before Superior Court Judge James Den Uyl in Ocean County.  Under the plea agreement, the state will recommend that he be sentenced to four years in state prison.  He also must pay $49,808 to the state, representing forfeiture of the political contributions that he made on behalf Birdsall Services Group that were reimbursed by the firm.  Birdsall is scheduled to be sentenced on April 22.

Deputy Attorney General Anthony A. Picione, Chief of the Division of Criminal Justice Corruption Bureau, and Deputy Attorney General Mallory Shanahan are prosecuting the case and took the guilty plea today.

“As the CEO and largest shareholder of Birdsall Services Group, Howard Birdsall reaped major profits from the millions of dollars in public contracts his firm secured each year – contracts that should have been off limits based on the illegal campaign contributions made by the firm,” said Acting Attorney General Hoffman.  “This plea should serve as a warning to any corporate officials who would engage in this type of criminal scheme to skirt our pay-to-play law and skew public contracting in their favor.”

“Many millions of dollars in taxpayer funds are spent on public contracts each year in New Jersey.  Our citizens have a right to expect that those contracts will be awarded through a transparent process that strictly serves the public interest, not the interests of the politically connected,” said Director Elie Honig of the Division of Criminal Justice.  “We’ll aggressively prosecute anyone who engages in criminal conduct to evade our laws in this area.”

Birdsall Services Group (BSG) – an engineering firm formerly based in Monmouth County that went belly up after the scandal – pleaded guilty on June 13, 2013 to charges of first-degree money laundering and second-degree making false representations for government contracts.  As a result of its plea, BSG paid two major criminal penalties: a $500,000 public corruption profiteering penalty and a $500,000 anti-money laundering profiteering penalty.  In each instance, the penalty was the maximum amount authorized by law.  BSG also paid the state $2.6 million to settle a civil forfeiture action filed by the Attorney General’s Office in connection with the criminal case.

The charges against Howard Birdsall and BSG were contained in a March 26, 2013 indictment, which also charged six other executives and shareholders.  The charges stemmed from an investigation by the Division of Criminal Justice Corruption Bureau, which found that the defendants allegedly conspired to avoid the restrictions of New Jersey’s Pay-to-Play Act by disguising illegal corporate political contributions as personal contributions of firm employees.

Another of the indicted defendants, Scott MacFadden, 61, of Brick, the former chief administrative officer of BSG, pleaded guilty on Jan. 6 to a charge of third-degree misconduct by a corporate official.  The state will recommend that he be sentenced to up to 364 days in jail as a condition of a term of probation.  He also must pay $30,000 to the state, representing forfeiture of the political contributions he made that the firm reimbursed.  MacFadden is scheduled to be sentenced by Judge Den Uyl on June 3.

The charges against the other individual defendants in the indictment are pending.  Thomas Rospos, 64, of Belmar, a former executive vice president of BSG, is scheduled to go on trial before Judge Den Uyl on Feb. 22.  He is the first defendant scheduled for trial.

Two former employees of the marketing department of BSG, Philip Angarone, 43, of Hamilton (Mercer County), the former marketing director, and Eileen Kufahl, 51, of Bradley Beach, pleaded guilty to participating in the scheme before the indictment was returned and are awaiting sentencing.

All of the remaining defendants who are charged in the indictment face first-degree counts of conspiracy and money laundering, as well as other charges.  The first-degree charges carry a sentence of 10 to 20 years in state prison, and the money laundering counts also carry fines and penalties of up to $1 million.  The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.

Under the alleged scheme, instead of Birdsall Services Group making corporate political contributions to campaigns and political organizations that would disqualify it from public contracts awarded by certain government agencies, shareholders and employees of the firm made personal political contributions of $300 or less, which are deemed unreportable.  Multiple personal checks were bundled together at Birdsall Services Group and sent to the appropriate campaign or political organization.  The shareholders and employees were then illegally reimbursed by Birdsall Services Group, directly or indirectly, through added bonus payments, and the firm falsely omitted the illegally reimbursed contributions in documents filed with the Election Law Enforcement Commission (ELEC) and with government agencies that awarded the firm engineering services contracts.  The scheme continued for more than six years and involved more than $1 million in contributions.

Former Birdsall CEO Pleads Guilty to Corporate Misconduct