Former employee, contractor indicted in alleged kickback scheme at Newark watershed agency

By Bill Wichert | NJ Advance Media for NJ.com
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on December 15, 2014

U.S. Attorney Paul Fishman today announced the indictment of two men involved in an alleged kickback scheme at the Newark Watershed Conservation and Development Corp.

 

NEWARK — Donald Bernard Sr. allegedly received the money in cash, and used an ATM card to pay for meals, car washes and theater tickets, federal authorities said.

When the owner of one company was sick, Bernard allegedly filled out blank checks signed by the owner to pay himself, authorities said.

Those were among the ways in which Bernard allegedly received at least $730,000 in kickbacks from contractors while working on behalf of the Newark Watershed Conservation and Development Corp. between 2008 and 2013, authorities said.

Bernard, 67, of Newark, and one of those contractors, Giacomo “Jack” DeRosa, 58, of Clinton Township, were indicted today by a federal grand jury for their alleged roles in the kickback scheme, U.S. Attorney Paul Fishman announced.

Bernard’s attorney, Thomas Ashley, said his client intended to plead not guilty to the charges.

“There were no bribes or kickbacks,” said Ashley, adding that he still had to review the indictment more closely.

Anthony Pope, the attorney representing DeRosa, declined to comment.

Members of the Newark Water Group, a citizens’ watchdog organization that has investigated the agency, applauded the U.S. Attorney's Office for the time and effort put into the probe.

“The conduct of the NWCDC was about as flagrant a violation of the public trust as you could ever find,” Newark Water Group spokesman Bill Chappel said in a statement. “This was an entity that veered out of control years ago in the way it operated and in the way it misspent the public’s money when it thought no one was looking.”

Chappel added, "It’s satisfying to see justice being served.”

The indictments come less than a year after the February release of a scathing report by the New Jersey Comptroller’s Office, which alleged rampant mismanagement, corruption and abusive spending practices at the watershed agency.

In that report, state officials alleged the agency’s former executive director, Linda Watkins-Brashear, gave no-bid contracts to firms related to Bernard.

Asked whether federal authorities are investigating Watkins-Brashear or anyone else in connection with possible criminal acts at the agency, Matthew Reilly, a spokesman for Fishman, only said the investigation is ongoing.

Bernard worked for the agency as a consultant between 2008 and 2009, and then worked as a salaried employee from January 2010 to March 2013, court papers say. As an agency employee, Bernard was manager of Special Projects, authorities said.

While working for the agency, Bernard was responsible for finding contractors to hire to conduct agency operations, authorities said.

In that capacity, Bernard is accused of accepting a stream of concealed and undisclosed bribes and kickbacks from contractors in exchange for helping them to secure agency work, authorities said.

As part of the scheme, Bernard had contractors submit fraudulent invoices and bills to the corporation, authorities said. Those documents were fraudulently inflated to cover the payments Bernard received from the contractors, or were based on work that had not been performed, authorities said.

Between August 2008 and January 2011, for example, Bernard received roughly $136,000 in kickbacks from a Newark company, authorities said.

Due to the company owner’s physical condition, Bernard obtained blank checks signed by the owner, and filled them out to make payable to himself or his consulting business, Bernard & Associates, authorities said.

In another case, Bernard received nearly $410,000 in payments from another contractor, which included using an ATM card issued in his name to withdraw money and pay for meals, car washes and theater tickets, authorities said.

Authorities said DeRosa was involved in the scheme through his construction and contracting business, called Essex Home Improvements, which received more than $350,000 in agency payments between 2008 and 2013.

Between January 2008 and August 2012, DeRosa allegedly gave about $85,000 to Bernard, either directly or indirecly, authorities said.

At Bernard’s direction, DeRosa financed those payments in part by submitting invoices to the agency that included the expense of the bribes and kickbacks as “professional services,” authorities said.

Bernard was indicted on six counts of defrauding the corporation of his honest services, four counts of violating the Travel Act, three counts of extortion under color of official right affecting interstate commerce, two counts of wire fraud and three counts of money laundering.

DeRosa was indicted on two counts of wire fraud, one count of violating the Travel Act and three counts of money laundering.

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