FORMER NEW YORK HOSPITAL EMPLOYEE AND A MANHATTAN TELECOMMUNICATIONS
COMPANY PLEAD GUILTY TO BID RIGGING AND RELATED CHARGES
WASHINGTON -- A former New York hospital employee and a
telecommunications company pleaded guilty Friday to charges relating
to their roles in a conspiracy involving kickbacks, bid rigging,
bribery, contract allocation, and related charges for the supply of
telecommunications equipment and services to Mount Sinai School of
Medicine and the Mount Sinai Hospital (Mount Sinai), the Department of
Justice announced.
Anthony Spadola of Morganville, N.J., a former information technology
manager at Mount Sinai, pleaded guilty Friday in U.S. District Court in
Manhattan to a three-count information. Spadola pleaded guilty to one
count of conspiracy to rig bids and allocate contracts for the supply
of telecommunications equipment and services to Mount Sinai from
approximately January 2001 through October 2004. Spadola also pleaded
guilty to one count of conspiracy to commit commercial bribery, mail
fraud, and to making false and fraudulent statements on corporate U.S.
income tax returns from approximately January 2001 until September
2003. Additionally, he pleaded guilty to one count of income tax
evasion for failing to report as income kickbacks that he received,
and for improperly claiming business deductions on his U.S. individual
income tax returns for the years 2001 through 2003.
Broadcom Voice & Data Inc. (Broadcom) of New York City, a
telecommunications installation company, also pleaded guilty today in
U.S. District Court in Manhattan. Broadcom pleaded guilty to one count
of conspiracy to rig bids and allocate contracts for the sale of
telecommunications equipment and services to Mount Sinai from
approximately January 2001 through October 2004.
"The Antitrust Division will hold accountable those who attempt to
undermine open and competitive bidding processes," said Thomas O.
Barnett, Assistant Attorney General in charge of the Department's
Antitrust Division. "Today's sentences demonstrate that commitment."
The Mount Sinai Hospital is a 1,171-bed tertiary care teaching
hospital that serves the New York metropolitan area with a medical
staff of nearly 1,800. In addition to its medical education efforts,
Mount Sinai's School of Medicine performs clinical and basic-science
research. Both the hospital and the school jointly operate an
information technology department, located within the Mount Sinai
Medical Center in Manhattan, that assists various departments and
facilities in creating and maintaining their telecommunications
infrastructures. This assistance includes selecting and contracting
with third party telecommunications vendors in order to install
equipment such as voice and data cables in Mount Sinai facilities.
Spadola's co-conspirator, Stephen Cogliano, also a former Mount Sinai
employee, pleaded guilty on Tuesday to one count of conspiracy to rig
bids and allocate contracts for the supply of telecommunications
equipment and services to Mount Sinai from January 2001 through
October 2004.
Spadola and Cogliano were responsible for obtaining bids from vendors
of telecommunications equipment and services on behalf of Mount
Sinai. They were also responsible for supervising vendors and
reviewing and authorizing their invoices for payment. According to the
Department, Spadola and Cogliano received payments from individuals
associated with Broadcom and another telecommunications vendor in
exchange for steering contracts to those companies. Spadola and
Cogliano opened bank accounts under the name of consulting companies
in April 2001 and May 2003, respectively, that were primarily used to
conceal illegal payments received from Broadcom. Court papers also
state that Spadola failed to report his receipt of all of the
kickbacks and that he took illegitimate business deductions on his
income tax returns.
Between January 2001 and September 2003, Broadcom paid Spadola and
Cogliano a total of approximately $154,000 in kickbacks in order to
ensure that Broadcom would be allocated a portion of Mount Sinai's
total contracts for purchasing telecommunications equipment and
services and that no alternative vendors would be chosen for those
contracts. The kickback money was paid through checks issued by
Broadcom to the sham consulting companies created by Spadola and
Cogliano.
Spadola is scheduled to be sentenced before Judge McKenna on Jan. 8,
2007, and Cogliano is scheduled to be sentenced before Judge Rakoff on
Jan. 25, 2007. Broadcom is scheduled to be sentenced before Judge
Swain on Dec. 28, 2006.
The bid rigging charge, a violation of the Sherman Act, carries a
maximum penalty of 10 years in prison, three years of supervised
release, and a $1 million fine for an individual, and a maximum
penalty of a fine of $100 million and a term of probation of five
years for a corporation. The conspiracy charge carries a maximum
penalty of five years in prison, three years of supervised release,
and a $250,000 fine for an individual. The count of income tax evasion
carries a maximum penalty of five years in prison, three years of
supervised release, and a $100,000 fine, together with the costs of
prosecution. The maximum fine on each count may be increased to twice
the gain derived from the crime or twice the loss suffered by the
victim of the crime, if either of those amounts is greater than the
statutory maximum fine. In addition, the defendants could be ordered
to pay restitution to the victim for the full amount of that victim's
loss.
These charges arose from an ongoing federal antitrust investigation of
bid rigging, bribery, fraud, and tax-related offenses in the
telecommunications equipment and services industry. The investigation
is being conducted by the Antitrust Division's New York Field Office,
with the assistance of the Federal Bureau of Investigation (FBI) and
the Internal Revenue Service Criminal Investigation.
Anyone with information concerning bid rigging, bribery, tax offenses,
or fraud in the telecommunications equipment and services industry
should contact the New York Field Office of the Antitrust Division at
212-264-9308 or the New York Division of the FBI at 212-384-3252.
Department of Justice Press Release (doj@telecom-digest.org)