AG’s Office: engineer pleads guilty to taking kickbacks

An engineer who oversaw construction projects for three school districts pleaded guilty today to taking thousands of dollars in kickbacks on contracts he recommended that involved rigged bids and fraudulently inflated costs. 

According to the state Attorney General’s Office, Kenneth Disko, 48, of Mountainside, pleaded guilty today before Superior Court Judge Joseph P. Donohue in Union County to an accusation charging him with the second-degree offense of making false representations for a government contract.  In pleading guilty, Disko admitted that he orchestrated a series of bid-rigging and kickback schemes from 2001 to 2010 as the contracted engineer or engineer/architect on record for the Westfield, Tinton Falls and Scotch Plains-Fanwood school districts.

Charges are pending against the suspended business administrator for the Westfield School District and three contractors who were charged along with the engineer in March.  

Under the plea agreement, the state will recommend that Disko be sentenced to three to five years in state prison. The state will also recommend that he be ordered to pay a penalty of at least $50,000 into the state’s Anti-Trust Revolving Fund for anti-trust enforcement efforts.  Disko will be barred from public contracts in New Jersey for 10 years.  He must cooperate fully in the ongoing investigation and prosecution by the Division of Criminal Justice Corruption Bureau.  Deputy Attorney General Vincent J. Militello took the guilty plea.

“School districts and taxpayers can’t afford to pay more for goods and services because corrupt officials such as this defendant inflate contracts and build in kickbacks for their personal enrichment,” said Attorney General Paula Dow. “We will continue to root out public corruption through this type of investigation and prosecution.”

“Our message is clear,” said Criminal Justice Director Stephen J. Taylor. “We will aggressively prosecute public officials who unlawfully serve themselves at the expense of the taxpayers they are sworn to serve.”

Judge Donohue scheduled sentencing for Disko for Jan. 20.

The state’s investigation revealed that Disko knowingly prepared fraudulent quotes and estimates in connection with school district contracts, and directed contractors to inflate quotes and estimates. He admitted that he submitted those quotes and estimates to the three school districts and recommended approval of the fraudulently bid contracts in exchange for thousands of dollars in kickbacks from contractors.

Three contractors were charged by complaint on March 9, 2011 with making false contract payment claims (2nd degree):

John Sangiuliano, 57, of Scotch Plains, co-owner of Metropolitan Metal Window Company;

Martin W. Starr, 45, of Cliffwood Beach, owner of Starr Contracting; and

Stephen M. Gallagher, 50, of Cliffwood Beach, owner of East Commercial Construction and Tara Construction.

In addition, Westfield School District Business Administrator and Board Secretary Robert A. Berman, 55, of South Plainfield, was charged by complaint on that date with second-degree bribery for allegedly accepting over $13,000 worth of window glass and doors installed at his home by Metropolitan from 2004 to 2008, in return for making written recommendations that the Westfield Board of Education appoint Metropolitan as the district’s “contractor of record.”  Berman was suspended by the Westfield School District after the charge was filed.

The charges against Berman, Sangiuliano, Starr and Gallagher are pending.  Second-degree charges carry a maximum sentence of 10 years in state prison and a criminal fine of $150,000.  The charges are merely accusations and the defendants are presumed innocent unless proven guilty.  The charges will be presented to a state grand jury for potential indictment.

In bidding on contracts for the Westfield and Tinton Falls school districts, Sangiuliano, at Disko’s direction, allegedly knowingly prepared fraudulent quotes bearing the names of other legitimate contractors, making the quotes higher than his own. He submitted the quotes to Disko, who recommended that the contracts be awarded to Sangiuliano’s company, Metropolitan.  It is also alleged that, at the direction of Disko, Sangiuliano knowingly inflated Metropolitan’s quotes and the cost of repairs for the contracts.  In exchange for the inflated contracts, Sangiuliano allegedly gave kickbacks to Disko in excess of $36,000 in 2009 and 2010.  The investigation revealed that Disko also received over $44,000 in kickbacks from a prior owner of Metropolitan who is now deceased for contracts awarded from 2001 to 2004.

In bidding one contract in the Westfield schools, Disko told Sangiuliano he would include the replacement of seven windows in the scope of work for the bidding specifications, even though those seven windows had been recently replaced by Sangiuliano. This allegedly enabled Sangiuliano to bid lower than other contractors, knowing he would not have to replace the windows. Sangiuliano was awarded the job.  He allegedly also kept an additional $18,000 in “bid allowances” for unforeseen work that was approved by Disko as the architect/engineer of record.  Sangiuliano, in fact, did not perform any unforeseen or additional work on the project.

Between 2004 and 2008, Sangiuliano allegedly installed free window glass and doors, valued at over $13,000, in Berman’s home in exchange for Berman’s recommendation of Metropolitan as contractor of record for the Westfield School District.  The contractor of record is contracted on an ongoing basis to handle school repairs and construction projects that arise.

The charge against Starr involves contracts worth approximately $39,530 that were awarded to Starr Contracting by the Westfield and Scotch Plains-Fanwood districts.  In 2009 and 2010, Starr allegedly prepared fictitious quotes from legitimate contractors without their permission and submitted them to Disko in order to appear to be the lowest bidder for the contracts.

Gallagher alledgedly helped Starr to obtain those contracts in the Westfield and Scotch Plains-Fanwood districts by preparing fraudulent and fictitious quotes and estimates for his own companies and submitting them to Disko as higher bids than those submitted by Starr.  Also, in connection with other contracts that were awarded to Gallagher’s companies in the Westfield and Scotch Plains-Fanwood districts, Gallagher allegedly inflated quotes and the cost of work performed. In return for the inflated contracts, Gallagher allegedly gave cash kickbacks to Disko. AG’s Office: engineer pleads guilty to taking kickbacks