Father and son charged with crimes
April 27, 2012
By Sean Flynn/Daily News staff
The alleged mastermind behind a multi-million-dollar kickback scheme involving Navy contracts and his 80-yearold father were named in a 37count indictment returned Thursday by a federal grand jury in Providence.
The indictment, announced by U.S. Attorney Peter F. Neronha, charges Ralph Mariano, 54, of South Arlington, Va., a civilian engineer with the Naval Sea Systems Command in Newport and Washington, D.C., with conspiracy, theft of government funds, extortion and multiple counts of wire fraud and tax evasion.
His father, Ralph Mariano Jr. of North Providence, was charged for the first time in connection with the alleged 15-year bribery and fraud conspiracy involving about $10 million in naval contracting funds. He faces multiple counts of tax evasion.
The indictment alleges that Mariano and others, including Anjan Dutta-Gupta, 58, of Roswell, Ga., founder and president of Advanced Solutions for Tomorrow, with offices in Middletown and Roswell, Ga., and Russell E. Spencer, 57, of Portsmouth, a sub-contractor, devised a scheme from 1996 through January 2011 in which Navy funds paid to ASFT were funneled back to Mariano in exchange for official acts taken by Mariano.
For the first time, the most recent indictment says Mariano also served as an engineer for the Naval Undersea Warfare Center, which develops weapons systems for NAVSEA.
The indictment alleges that Mariano used his position in the Navy to assist ASFT by, among other things, requesting that millions of dollars be added to existing ASFT contracts, directing work to ASFT, and assisting ASFT in becoming a subcontractor on other Navy contracts.
In the past, the scheme was alleged to have netted between $7 million and $20 million; the most recent indictment uses a figure of $10 million.
The indictment alleges the methods of payment to Mariano evolved over time and included payments made directly to Mariano and to him through intermediaries. According to the indictment, Mariano first requested payment from Dutta-Gupta in 1996, after ASFT acquired AMTECH, a Newport company that had an existing Navy contract.
The indictment alleges Dutta-Gupta made the payment to Mariano and then, when Mariano sought additional money, Dutta-Gupta instructed another ASFT employee, identified as "G.S." in the indictment, to "take care" of Mariano. The employee, the indictment alleges, proceeded to make payments to Mariano beginning in 1997.
"Mariano demanded that certain employees of AFST be fired, directed that friends or associates of his be hired by AFST and directed what their salaries should be," the indictment says. Dutta Gupta, wanting to hold on to the Navy funding flowing to ASFT and "out of concern of possible reprisal from Mariano, submitted to Mariano's demands."
According to the indictment, Mariano in 1999 became acquainted with Spencer, who proceeded to form three consulting companies. Dutta-Gupta agreed to make the payments to Mariano through Spencer's companies that were to serve as subcontractors to ASFT. Spencer incorporated the first company, ADQ Associates Inc., on July 19, 1999. The company, which had a principal office at 25 Enterprise Center, Suite 104, Middletown, was dissolved Sept. 30, 2003.
On Sept. 22, 2003, Spencer, then of 40 Ferry Landing Circle, Portsmouth, incorporated C&S Technology Inc, with a principal office at that address. The only employees were Spencer, his wife and his daughter, according to the indictment.
Spencer incorporated S.I. Technology Inc., on Nov. 17, 2009, with its principal office listed at 11 King Charles Drive, Unit A3B, Portsmouth. The only employees of this firm also were Spencer, his wife and his daughter, according to the indictment.
Under the scheme that evolved, the subcontractor firms under Spencer's control "would submit inflated invoices to ASFT for work that largely had not been performed," the court documents say. "Dutta-Gupta and ASFT would then pay the subcontractor the amount billed on the invoices."
According to the indictment, once Spencer received the Navy funds from ASFT, he proceeded to make millions of dollars in payments at the direction of Mariano to various individuals and companies, including Mariano and his father.
In late 2010, an earlier court "information" document said Spencer was making the following approximate weekly payments from his personal account, the C&S account or the S.I. Technology account:
? $4,750 to Mariano, deposited in a joint account held by Spencer and Mariano.
? $7,000 to Mariano's father.
? $3,900 to P&C Strategies Inc., owned by Mariano's girlfriend Mary O'Rourke. She was the only employee of the firm, according to the indictment, and also AFST's senior vice president and director of strategic planning.
She and Mariano own adjacent condominiums at 400 Narragansett Parkway, Warwick.
? $3,500 to NDC Consulting Inc., owned by Joseph Mariano, Mariano's brother. He was the only employee of the firm, according to the indictment. Joseph Mariano was employed by Inquest Technologies Inc., of 300 West Exchange St., Providence, which also served as a subcontractor to ASFT, according to court documents.
? $6,500 to Strategic International Concepts, a technical services company owned by Dutta-Gupta.
Spencer kept a portion of the funds for himself and his family members, and for "S.W." - identified last week as Mariano's housekeeper, with whom Spencer admitted to having an extramarital affair and lying about the relationship and the payments to the FBI - as well as other individuals and entities designated by Mariano, according to the indictment.
"While the rates were weekly, most of the payments were made bi-weekly for amounts covering a two-week period," the court documents say. "In addition, since approximately 2006, Spencer paid $3,500 to Mariano every other week in the form of cash."
For example, Mariano sent Spencer a text message on July 7 that said, "Hey bud, can I swing by the office at 12 for the bye (the bi-weekly cash payment)." Spencer paid a portion of the inflated invoices to Dutta-Gupta's SIC firm because "Dutta-Gupta was unable to fund SIC directly due to federal accounting regulations," the document said. "He therefore directed Spencer to make substantial payments to SIC, in addition to the payments that were being made to Mariano."
The 58-page indictment released Thursday details some of the specific payments on a regular basis as well as communications between the alleged fraud conspirators.
Spencer told Mariano in July 2010 that he had not received any work from O'Rourke, the indictment says. Mariano instructed Spencer to temporarily withhold payment from her and said: "Legitimacy is important. I say that with tongue in cheek," according to the indictment.
In a meeting on Aug. 18, 2010, Mariano told Spencer AFST had a lot of work coming from the Navy and that it was "perfect for them," the indictment says. "Mariano also told Spencer that he would take the money due P&C for the next two weeks in advance of his trip to Las Vegas, Nevada."
Mariano helped procure "Indefinite Delivery/Indefinite Quanity" Navy contracts for AFST. The IDIQ contracts allowed him to seek additional funding for "additional work," the indictment says.
Dutta-Gupta and Spencer have pleaded guilty to their roles in the bribery and kickback scheme and are awaiting sentencing. Dutta-Gupta is scheduled to be sentenced on June 21. Spencer is scheduled to be sentenced on Dec. 6 on his guilty plea to a charge of conspiracy to commit bribery and additional charges of lying to the FBI during the investigation.
Another co-conspirator, Patrick Nagle, 50, of Marietta, Ga., a senior vice president and director of contracts for ASFT, also has pleaded guilty. He "knowingly made payments on invoices knowing that the work represented on the invoices had largely not been performed," the U.S. Attorney's office said. He is scheduled to be sentenced July 9.

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