Contractor admits to fraud and aggravated assault

  • Published
  • By Air Force Office of Special Investigations Public Affairs
On April 14, 2014, U.S. Attorney Paul J. Fishman announced that the principal of a Pennsylvania construction company admitted his role in an employee kickback scheme that occurred during a reconstruction project at Joint Base McGuire-Dix-Lakehurst, Burlington County, N.J.

U.S. Attorney Fishman credited special agents of the Air Force Office of Special Investigations, under the direction of Special Agent Seth Neville, detachment commander, Joint Base McGuire-Dix-Lakehurst as well as others in this joint investigation.

Other agency law enforcement partners in this joint investigation included the U.S. Department of Labor Office of Inspector General, the Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia; the Department of Labor-Wage and Hour Division, under the direction of Acting Regional Administrator Mark Watson Jr.; and the Naval Criminal Investigative Service, under the direction of Special Agent in Charge Jeremy Gauthier, Northeast field office.

According documents filed in this case and statements made in court:

Between November 2009 and September 2010, Leonard Santos, 67, of Yardley, Pa., operated Sands Mechanical Inc., as a subcontractor on the restoration and rehabilitation of the Marine Corps Reserve Training Center at Joint Base-McGuire-Dix-Lakehurst. Sands provided Heating, Ventilation Air Conditioning and plumbing services. The general contractor was a company headquartered in Marriotsville, Md. During the project Santos demanded that certain employees kickback a percentage of their weekly paychecks or face termination.

In February 2010, the U.S. Department of Labor's Wage and Hour Division (WHD) was tipped off that the Sands employees were being forced to kickback portions of their salary and were not being paid the prevailing wage for Burlington County. Santos conceded that Sands failed to pay the proper prevailing wage to its employees and agreed to repay $80,000 to those deprived employees. Santos cut settlement checks to those employees who were owed back wages.

However, two other investigation subjects warned those employees not to cash their settlement checks. Instead, Richard Cottone and Michael Featherston took the employees to a nearby check cashing business, where they endorsed their checks over to Cottone, who cashed them and returned the funds to Santos. Since these kickbacks were removed from employees' checks, Santos routinely submitted inaccurate weekly payroll forms that are required whenever the federal government subsidizes a construction project.

The general contractor's site manager was routinely critical of the work performance of Sands' employees, which, at times, necessitated that work be done over. The site manager was targeted by Santos, Cottone and others by having his truck torched in front of his residence at 4 a.m., May 17, 2010.

This tactic failed to warn off the site manager. On June 09, 2010, at 5 a.m., while riding his bike, the site manager was intentionally run down by a car driven by Cottone's nephew and two friends. The victim sustained multiple serious injuries.

The count of conspiracy to demand kickbacks from employees on a federally subsidized project carries a maximum potential penalty of five years in prison and a $250,000 fine. The count of causing others to travel in interstate commerce to commit a crime of violence carries a maximum potential penalty of 20 years in prison.

Sentencing is scheduled for July 28, 2014.

Two Sands' supervisors have already pleaded guilty to these charges: Cottone, 39, of Windsor, Pa., (Santos' son-in-law) pleaded guilty Dec. 11, 2012, and Featherston, 44, of Cumberland County, N.J., pleaded guilty Jan. 10, 2012. Both are awaiting sentencing.

A third Sands supervisor, Alex Rabinovich, 58, of Richboro, Pa., pleaded guilty on Sept. 18, 2013, to Count Four, conspiracy to bribe a representative of a prime contractor of a federally subsidized construction project and is awaiting sentencing.

The government is represented by Senior Litigation Counsel V. Grady O'Malley and Assistant U.S. Attorney Andrew Bruck of the U.S. Attorney's Office Organized Crime-Gangs Unit in Newark, N.J.

(Original release published by United States Attorney District of New Jersey Public Affairs Office, April 14, 2014)