By Forum Staff
On Tuesday, Walter Stanzione and William Neogra, the principals of a fire alarm maintenance company, pleaded guilty in Brooklyn federal court to wire fraud conspiracy.
Stanzione, 66, of Long Island, and Neogra, 65, of Delaware, were charged with a decade-long scheme to defraud the City by seeking payment on millions of dollars of grossly inflated fraudulent bills.
“The defendants abused this position of trust so that they could scheme and steal, defrauding New York City out of millions of dollars,” said Brooklyn U.S. Attorney John Durham. “The guilty pleas announced today make clear that reprehensible conduct like this will be uncovered and prosecuted.”
As set forth in various public court filings and in Tuesday’s proceedings, the defendants exercised control over Fire Alarm Electrical Corp., a company that held numerous contracts with New York City agencies to repair and maintain fire alarm systems. For more than a decade, the defendants overbilled those agencies by submitting fraudulent invoices with dramatically inflated prices. They accomplished this scheme in several ways:
The defendants created numerous shell companies that were secretly owned by Stanzione. After purchasing supplies from legitimate retailers, the defendants would re-invoice the parts through the shell companies for roughly three to five times the real purchase price, ultimately passing along those “costs” to the City.
The defendants took advantage of pre-existing shell companies that were being used in other ongoing frauds. For example, the defendants used shell companies created by convicted EDNY defendant David Motovich, which Motovich had used in an entirely separate fraud scheme that was also investigated and prosecuted by EDNY, FBI, DOI and IRS.
When City auditors became suspicious of the shell companies, the defendants fraudulently modified the documents of legitimate retailers, passing off the altered invoices from these companies as if they were genuine.
These methods enabled the defendants to submit millions of dollars of fictitious payment requests to four separate City agencies over an eleven-year period. Stanzione, the leader of the fraud, then siphoned off much of the ill-gotten gains and used the stolen money to fund his family’s lavish spending habits.
“Millions of dollars went up in smoke as Walter Stanzione and William Neogra fraudulently inflated the cost of their company’s products to finance personal luxurious purchases,” said Acting FBI NY Assistant Director in Charge Leslie Backschies. “For more than ten years, the defendants charged various New York City clients exaggerated pricing for fire alarm systems and obfuscated this misconduct through doctored invoices. The FBI remains determined to protect our city’s citizens and infrastructure from criminals seeking to unlawfully profit with little concern for safety.”
“These defendants systematically inflated costs billed to multiple City agencies—including the Department of Citywide Administrative Services, the Department of Education, the Department of Environmental Protection, and the Department of Sanitation, for more than a decade,” added Department of Investigation Commissioner Jocelyn Strauber. “When vendors exploit their contractual relationship with the City by overbilling, they steal public funds from City taxpayers.”
When sentenced, each defendant faces up to 20 years in prison.
