Joseph W. Nagle's conduct while president of now-defunct Schuylkill Products Inc. caused $53.9 million in losses to the U.S. government, a federal judge decided Wednesday.
In a 10-page opinion, Senior U.S. District Judge Sylvia H. Rambo ruled Nagle is responsible for all the money Schuylkill Products got due to contracts it obtained in the largest fraud in the history of the federal Disadvantaged Business Enterprise program.
"The entire DBE portions of the contracts were diverted to unintended recipients," including Schuylkill Products, Rambo wrote.
Rambo's ruling increases the possible sentence Nagle could receive. The judge has not yet scheduled his sentencing.
A federal jury in Harrisburg convicted Nagle on April 5, 2012, of 26 charges, including wire fraud, mail fraud, engaging in unlawful monetary transactions and conspiracy, resulting from his role in the scheme.
Prosecutors charged Nagle and several other Schuylkill Products executives with using Marikina Engineers and Construction Corp., West Haven, Connecticut, as a front under the DBE program from 1993 until 2008 to funnel work to the Cressona company and its wholly owned subsidiary, CDS Engineers Inc.
Romeo P. 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. Personnel from the two companies 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 conceal the fraud, prosecutors alleged.
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.
Rambo accepted the government's argument that Nagle is responsible for the entire amount of the loss from the time he joined the conspiracy in 2004. Prosecutors said the total loss to the government from the start of the conspiracy in 1993 is $135.8 million.
"The Government bears the burden of proving loss with reliable and specific evidence," she wrote.
Rambo ruled the entire value of the contracts funneled through Marikina during Nagle's tenure is the benefit received under federal sentencing guidelines and rejected Nagle's request that she use the profits earned during that time by Schuylkill Products and CDS.
"Accordingly, the value of the government benefits obtained by the unintended recipient ... is the proper measure of loss," she wrote.
Furthermore, this method is consistent with that used by the majority of other courts that have examined the issue, according to Rambo.