Romeo P. Cruz, who ran the company Schuylkill Products Inc. used as a front to commit the largest fraud of its kind in U.S. history, learned Wednesday he will go to prison for his role in the scheme.
Cruz, West Haven, Conn., must serve 33 months in a federal correctional institution, plus two years on supervised release following that stint, Senior U.S. District Judge Sylvia H. Rambo ruled.
Rambo also sentenced Cruz to pay $119 million restitution to the U.S. Department of Transportation and $79,450 restitution to the Internal Revenue Service. The sentence will be effective on Feb. 17.
Cruz, the owner of Marikina Construction Corp., West Haven, pleaded guilty in 2008 and 2009 to Disadvantaged Business Enterprise fraud and tax fraud. He is the third person to be sentenced for his role in the fraud perpetrated under the federal DBE program, a scheme that led to the demise of Cressona-based Schuylkill Products.
Federal prosecutors alleged Cruz and Schuylkill Products executives hatched the scheme under which the latter obtained millions of dollars worth of federal contracts to which it otherwise would not have been entitled.
Cruz, a Filipino, owned Marikina, enabling it to be classified as a DBE under federal law and making it eligible to obtain certain construction contracts, according to prosecutors. That, in turn, enabled Schuylkill Products and its subsidiary, CDS Engineers Inc., to use Marikina as a front that let them do the actual construction work, prosecutors said.
Schuylkill Products manufactured concrete bridge beams and other suppliers' products, while CDS Engineers installed them.
U.S. Attorney Peter J. Smith said the fraud lasted more than 15 years and involved more than $136 million in contracts in Pennsylvania alone.
Prosecutors said the companies went to great lengths to conceal the fraud.
Schuylkill Products and CDS Engineers personnel used Marikina passwords, signature stamps, business cards, letterheads and email addresses and covered their companies' logos on trucks with Marikina magnetic placards and decals in efforts to hide what they were doing, prosecutors alleged.
Prosecutors said Schuylkill Products paid a small fixed fee to Marikina in exchange for letting it use its name and DBE status.
Northeast Prestressed Products LLC bought Schuylkill Products in April 2009 for $9.25 million and continues to operate from the same site on Route 901 in Cressona.
On Monday, Rambo sentenced Dennis F. Campbell, Pinebrook, and Timothy G. Hubler, Ashland, to spend 24 months and 33 months, respectively, for their roles in the scheme.
Campbell, Schuylkill Products' former vice president in charge of sales and marketing, also must spend two years on supervised release following his prison term and pay $119 million restitution to the U.S. Department of Transportation, while Hubler, Schuylkill Products' former vice president in charge of field operations, must serve two years on supervised release following his prison term and pay $119 million restitution to the U.S. Department of Transportation and $82,370 restitution to the Internal Revenue Service.
Each man must surrender by Feb. 17 to start serving his sentence.
Campbell pleaded guilty in 2008 to DBE fraud, while Hubler pleaded guilty in 2008 to DBE fraud and tax fraud.
Ernest G. Fink Jr., Orwigsburg, Schuylkill Products' former vice president and chief operating officer, pleaded guilty in 2010 to tax fraud and is awaiting sentencing.
Cruz, Campbell and Hubler each testified against Joseph W. Nagle, Deerfield Beach, Fla., Schuylkill Products' former president and chief executive officer, who was convicted in April 2012 of 26 charges, including wire fraud, mail fraud, engaging in unlawful monetary transactions and conspiracy, resulting from his role in the scheme. Nagle also is awaiting sentencing.