Dive Brief:
- A former project manager for the Newark Conservation and Watershed Development Corp., Donald Bernard Sr., and a home improvement contractor, Giacomo "Jack" DeRosa, pleaded guilty in U.S. District Court to their part in a kickback scheme that netted NCWDC officials hundreds of thousands of dollars, NJ Advance Media reported. DeRosa faces up to 20 years in prison and a $500,000 fine, while Bernard could end up serving 13 years in prison and owing a fine of $250,000.
- Former NCWDC officials Bernard and Linda Watkins-Brashear admitted to receiving kickbacks from watershed contractors totaling more than $1.3 million. In return, Watkins-Brashear and Bernard issued inflated contracts as well as no-work contracts, according to NJ Advance Media. Watkins-Brashear and another contractor, James Porter, had previously pleaded guilty. DeRosa also pleaded guilty to money laundering, as officials said he occasionally paid off Bernard through organizations Bernard controlled.
- Financially crippled by paying out the inflated contracts issued by the corrupt officials, the NCWDC filed for bankruptcy last year, in part to help recover those funds.
Dive Insight:
The Newark Water Group, a citizen advocacy group, sparked the investigation into the NCWDC and said it was pleased with the news of the guilty pleas, NJ Advance Media reported. The group said it hopes Newark officials will ramp up oversight efforts so that similar abuses do not happen again.
"We are very grateful for the time and energy that U.S. Attorney Paul Fishman and his staff, along with other law enforcement agencies across New Jersey, have invested in this case because the corruption uncovered here was so blatant and brazen and such a violation of the public trust," spokesman Guy Sterling said.
The construction industry has recently seen a significant number of bribery and kickback schemes. According to the 2015 Kroll Global Fraud Report, 75% of construction, engineering and infrastructure companies experienced a fraud incident in the year prior to the report being published, and Kroll found construction fraud rates were second only to the retail sector.
Last October, a Staten Island contractor was indicted for trying to bribe a Brooklyn school inspector in exchange for expedited payments. The inspector reported the bribe attempt and participated in the investigation that resulted in charges against the contractor.
In December, a highway contractor was on the other side of the issue. The contractor reportedly wouldn’t pay kickbacks to inspectors in exchange for approving his work during inspections won a $20 million lawsuit against the Louisiana Department of Transportation and Development after DOTD officials withheld his payments in retaliation.