A three-judge federal court panel has upheld the prison sentences of two former Schuylkill Products Inc. executives for participating in the largest fraud ever perpetrated under the Disadvantaged Business Enterprise program, U.S. Attorney Bruce D. Brandler announced Thursday.
In a 10-page opinion filed Wednesday, the 3rd U.S. Circuit Court of Appeals panel ruled Joseph W. Nagle, 55, of Deerfield Beach, Florida, and Ernest G. Fink Jr. 71, of Orwigsburg, received appropriate sentences of 84 months and 41 months, respectively.
“The District Court properly relied on (Nagle’s and Fink’s) net profits ... as the loss” to be used in calculating the appropriate sentence for each man, U.S. Circuit Judge Patty Shwartz wrote in the panel’s opinion.
As a result, Nagle and Fink will remain behind bars — the former at Federal Prison Camp/Pensacola, Florida, the latter at Federal Correctional Institution/Schuylkill — as mandated by Senior U.S. District Judge Sylvia H. Rambo’s sentences.
After a 19-day trial, a federal jury in Harrisburg convicted Nagle, Schuylkill Products’ former president and chief executive officer, 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. Rambo sentenced Nagle on June 30, 2014, to serve 84 months in prison.
Fink, Schuylkill Products’ former chief operating officer, earlier pleaded guilty to one count of conspiracy to defraud the United States and was sentenced by Rambo on July 14, 2014, to serve 51 months in prison.
Federal prosecutors charged Nagle, Fink 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-American, 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 CDS Engineers 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.
Prosecutors said the scheme involved more than $136 million in government contracts in Pennsylvania alone and was the largest fraud in the history of the DBE program.
Northeast Prestressed Products LLC bought Schuylkill Products in April 2009 for $9.25 million and now operates from the same site on Route 901 in Cressona.
On Sept. 30, 2015, a different three-judge panel of the 3rd Circuit upheld Nagle’s and Fink’s convictions but ruled they must be resentenced. Rambo resentenced Nagle on Nov. 30, 2015, to the same prison term of 84 months and, on Feb. 24, resentenced Fink to 41 months.
In Wednesday’s opinion, Shwartz wrote that Nagle and Fink were incorrect in arguing that the loss calculated by prosecutors, which is a factor in determining the appropriate sentences, should be reduced by the total price of the contracts Schuylkill Products received.
Nagle and Fink had argued that since the contracts were fully performed, the loss should be zero.
However, Shwartz, wrote, that ignores the DBE program’s goal of promoting minority-owned businesses. The government did not receive the entire benefit of the bargain because Schuylkill Products, which never was a DBE, received the contracts and the profits, according to Shwartz.
Because of that, the net profits received by the defendants, who owned Schuylkill Products, were the appropriate measure of the government’s loss, Shwartz wrote.
The new sentences Rambo imposed took into account the net profits Nagle and Fink received and, therefore, are legal and appropriate, Shwartz wrote.
Additionally, the panel rejected Fink’s request that his sentenced be reduced because of his age, ruling that Rambo considered and rejected that request for reasons that are supported by the record.
Senior U.S. Circuit Judges Robert E. Cowen and Jane R. Roth, the other panel members, joined in Shwartz’s opinion.