Two Cliffwood Beach Contractors Sentenced for Inflating School Contracts

Two Cliffwood Beach men were sentenced today for rigging bids and inflating school contracts at the direction of an engineer who oversaw construction projects for the Westfield and Scotch Plains-Fanwood school districts, according to Attorney General Jeffrey Chiesa.

Martin W. Starr, 45, of Cliffwood Beach, owner of Starr Contracting, and Stephen M. Gallagher, 51, of Cliffwood Beach, owner of East Commercial Construction, were each sentenced to three years of probation by Superior Court Judge Joseph P. Donohue in Union County, according to the Office of the Attorney General.

Both Starr and Gallagher pleaded guilty on Dec. 1, 2011 to accusations charging them with third-degree making false representations for a government contract. The companies owned by the two men also pleaded guilty to the same charge. The men and their companies are disqualified from public contracts for five years, and Starr and Gallagher are each liable for paying a $25,000 penalty to the state’s fund for anti-trust enforcement efforts, according to the Office of the Attorney General.

The engineer, Kenneth Disko, 48, of Mountainside, pleaded guilty in October to recommending rigged contracts and taking thousands of dollars in contract kickbacks in those districts and the Tinton Falls school district, according to the Office of the Attorney General. He was sentenced on March 16 to three years in state prison.

Deputy Attorney General Vincent J. Militello prosecuted Starr and Gallagher and handled the sentencing for the Division of Criminal Justice Corruption Bureau.

The investigation was led by Deputy Attorney General Militello, Sgt. Lisa Shea and Detective Michael Behar of the Division of Criminal Justice Corruption Bureau.

In pleading guilty, Disko, the former contracted engineer or engineer/architect on record for the Westfield, Tinton Falls and Scotch Plains-Fanwood school districts, admitted that he orchestrated a series of bid-rigging and kickback schemes from 2001 to 2010 in those school districts, according to the Office of the Attorney General. The contracts involved Starr, Gallagher and a third contractor, John Sangiuliano, 57, of Scotch Plains, co-owner of Metropolitan Metal Window Company, who has also pleaded guilty in the case but has not yet been sentenced.

Disko admitted he prepared fraudulent quotes and estimates and directed the contractors to inflate quotes and estimates, according to the Office of the Attorney General. He also admitted that he submitted the fraudulent quotes and estimates to the districts and recommended approval of the contracts in exchange for kickbacks from the contractors.

Starr admitted that in 2009 and 2010, he prepared fictitious quotes from legitimate contractors without their permission and submitted them to Disko in order to appear to be the lowest bidder for contracts worth nearly $25,000, according to the Office of the Attorney General. The contracts were awarded to Starr Contracting by the Westfield and Scotch Plains-Fanwood districts.

Gallagher admitted that he helped Starr to obtain those contracts by preparing fraudulent and fictitious quotes and estimates for his own companies and submitting them to Disko as higher bids than those submitted by Starr. 

Also, in connection with other contracts that were awarded to Gallagher’s company in the Westfield and Scotch Plains-Fanwood districts, Gallagher inflated quotes and the cost of work performed, according to the Office of the Attorney General. The state’s investigation revealed that in return for the inflated contracts, Gallagher gave cash kickbacks to Disko, according to the Office of the Attorney General.

Sangiuliano pleaded guilty on June 28 to an accusation charging him with third-degree making false representations for a government contract.  The state will recommend that he be sentenced to a term of probation, conditioned upon him paying $36,000 in restitution to the Westfield and Tinton Falls districts and a $25,000 penalty to the state’s fund for anti-trust enforcement efforts.  Sangiuliano and his company will be disqualified from public contracts in New Jersey for five years. He is scheduled for sentencing on Sept. 7.

In pleading guilty, Sangiuliano admitted that he falsified bids for contracts in the Westfield and Tinton Falls school districts at the behest of Disko, and paid him approximately $36,000 in kickbacks.

In a related matter stemming from the investigation, the former business administrator for the Westfield School District, Robert A. Berman, 55, of South Plainfield, pleaded guilty to third-degree conspiracy to make false representations for a government contract, according to the Office of the Attorney General.

He admitted that he accepted $13,000 in windows and doors from Sangiuliano, who he recommended be hired by the school district. Berman was sentenced on Jan. 27 to one year of probation and was ordered to pay a $6,000 penalty, according to the Office of the Attorney General. He forfeited his position with the school district and is permanently barred from public employment in New Jersey.