Birdsall execs indicted in pay-to-play scheme

If a bird in hand is worth two in the bush, Birdsall is worth seven, at least according to the AG’s Office.

That’s the total number of engineering firm indictees, said Attorney General Jeffrey S. Chiesa.

The AG today bagged Howard C. Birdsall, the largest shareholder and former CEO of Birdsall Services Group, a large Monmouth County-based engineering firm, along with the firm and six other executives and shareholders on charges that they conspired in a scheme to avoid the restrictions of New Jersey’s Pay-to-Play Act by disguising illegal corporate political contributions as personal contributions of employees of the firm.

Chiesa said that under the 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 allegedly made personal political contributions of $300 or less, which are deemed unreportable.  

“Multiple personal checks were bundled together at BSG and sent to the appropriate campaign or political organization.  It is alleged that the shareholders and employees were then illegally reimbursed by Birdsall, 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,” according to Chiesa’s press release. “The scheme allegedly continued for more than six years and involved hundreds of thousands of dollars in contributions.”

Joseph Hayden, attorney for Birdsall Services Group, issued a statement in response to the indictments.

“We find it regrettable that the State has made this decision after the company has voluntarily made sweeping changes to its leadership and internal processes over the past 10 months to ensure that such actions could never occur again,” Hayden said. “Birdsall Services Group will continue to serve its many clients in full compliance with the new standards it implemented along with its long history of professional competence.”

Chiesa said all of the defendants 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.  Two employees of the marketing department of Birdsall previously pleaded guilty to participating in the scheme.

“These men allegedly participated in a corrupt scheme in which they made hundreds of thousands of dollars in corporate political contributions, but disguised them as individual contributions to evade our pay-to-play law,” said Chiesa. “The defendants secured millions of dollars in public contracts for which they should have been disqualified.  We have rules to prevent politically connected firms from stacking the deck in their favor in public contracting, but these defendants allegedly broke those rules and committed serious crimes.”

“New Jersey’s pay-to-play law seeks to ensure fair and open public contracting, free of the sway of political interests,” said Director Elie Honig of the Division of Criminal Justice. “As this indictment demonstrates, we will bring serious charges against anyone who engages in criminal conduct to skirt that important law.”

The Division of Criminal Justice Corruption Bureau today obtained a nine-count state grand jury indictment charging Birdsall Services Group, which is headquartered in Eatontown, and the following individual defendants:

  1. Howard C. Birdsall, 69, of Brielle, the largest shareholder of Birdsall, who retired late last year as CEO.  He allegedly made at least $49,808 in illegally reimbursed political contributions.
  2. Thomas Rospos, 61, of Belmar, a former Executive Vice President of Birdsall.  Rospos was charged in a prior indictment in the case, but this indictment supersedes the earlier one.  He allegedly made at least $241,000 in illegally reimbursed political contributions.
  3. William Birdsall, 64, of Manchester, Howard’s brother.  He holds the title of Senior Vice President and is a significant shareholder of the firm.  He is semi-retired.  He allegedly made at least $74,459 in illegally reimbursed political contributions.
  4. Alan Hilla Sr., 73, of Brielle.  He is Executive Vice President for Business Development for Birdsall and a significant shareholder of Birdsall.  He is also semi-retired.  He allegedly made at least $148,309 in illegally reimbursed political contributions.
  5. Scott MacFadden, 58, of Brick, Chief Administrative Officer of Birdsall.  He allegedly made at least $77,957 in illegally reimbursed political contributions.
  6. James Johnston, 51, of North Brunswick.  He is President of the Environmental Consulting Division of Birdsall and a significant shareholder.  He allegedly made at least $45,797 in illegally reimbursed political contributions.
  7. Robert Gerard, 52, of Wall.  He is the former Chief Marketing Officer of Birdsall and was formerly a significant shareholder.  He allegedly made at least $48,700 in illegally reimbursed political contributions.

The amounts listed for illegal contributions by the defendants are approximate figures based on the investigation to date.  The investigation is ongoing.

Each of the defendants is charged with conspiracy (1st degree), two counts of money laundering (1st degree), making false representations for government contracts (2nd degree), misconduct by a corporate official (2nd degree), tampering with public records or information (3rd degree), falsifying records (4th degree), prohibited corporation contributions through employees (4th degree), and concealment or misrepresentation of contributions or expenditures (4th degree).

The charges stem from an investigation by the Division of Criminal Justice Corruption Bureau.  Deputy Attorney General Anthony A. Picione, Deputy Chief of the Corruption Bureau, and Deputy Attorney General Victor Salgado presented the case to the state grand jury and took the prior guilty pleas.  Detectives Kiersten Pentony, Edward Augustyn, Janine Buchalski and Melissa Calkin have been the lead detectives.

Contributor information, including name, address and employer, must be reported to ELEC for contributions of more than $300, but such information does not need to be reported for contributions of $300 or less.  Every for-profit business entity in New Jersey that has received $50,000 or more in government contracts in a calendar year must file the Business Entity Annual Statement (Form BE) with ELEC to report public contracts that it has received and reportable political contributions that it has made.  It is alleged that on Forms BE filed for Birdsall, the defendants fraudulently failed to disclose the illegally reimbursed political contributions.  It is further alleged that, in connection with proposals submitted by Birdsall to receive public contracts, they filed numerous false Certifications of Compliance declaring that the firm was in compliance with pay-to-play rules. 

First-degree crimes carry a sentence of 10 to 20 years in state prison and a criminal fine of up to $200,000.  The charge of first-degree money laundering carries a mandatory term of parole ineligibility of between one-third and one-half of the prison term imposed and an enhanced fine of up to $500,000, in addition to a potential anti-money laundering profiteering penalty of up to $500,000.  Second-degree crimes carry a sentence of five to 10 years in state prison and a criminal fine of up to $150,000.  Third-degree crimes carry a sentence of three to five years in prison and a $15,000 fine, while fourth-degree crimes carry a sentence of up to 18 months in prison and a $10,000 fine.

The indictment was handed up to Superior Court Judge Thomas W. Sumners Jr. in Mercer County, who assigned the case to Ocean County, where the defendants will be ordered to appear in court at a later date for arraignment on the charges.  The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.

On Nov. 30, 2012, Philip Angarone, 40, of Hamilton (Mercer County), the former marketing director for Birdsall, admitted in court that he took part in the scheme, pleading guilty before Superior Court Judge Wendel E. Daniels in Ocean County to third-degree tampering with public records or information and fourth-degree prohibited corporation contributions through employees.  Under the plea agreement, he faces up to 364 days in jail and a term of probation.  He must forfeit $26,775, which represents the total of the illegally reimbursed political contributions that he made under the scheme

On Feb. 12, Eileen Kufahl, 48, of Bradley Beach, a former administrative assistant and later marketing manager for Birdsall, pleaded guilty before Judge Daniels to a fourth-degree charge of making prohibited corporation contributions through employees.  Under the plea agreement, Kufahl must forfeit $17,119, which represents the total of the political contributions that she made under the scheme, which were allegedly reimbursed to her by Rospos.  The state will recommend that Kufahl be sentenced to a term of probation.

"Historically, the media has had two caricatures of Republicans. We are either stupid or evil."
—U.S. Senator Ted Cruz (R-TX)