Local couple's companies helped funnel bribes
Published April 19, 2011
By Sean Flynn/Daily News staff
Three companies founded by a Portsmouth couple were the conduit for Navy funds that were funneled back to a civilian Navy program manager and a defense industry contractor overseeing a multi-million dollar kickback scheme, according to documents released Monday by the U.S. Attorney's office in Providence.
Russell E. Spencer or his wife, Debra K. Spencer, owned a total of three companies that served as subcontractors to Advanced Solutions for Tomorrow, a technology services company that had offices in Middletown and Georgia until it closed in February. Russell Spencer was referred to only as "Cooperating Witness 1" or "CW1" in earlier court documents, but he was easily identifiable because his firms were named. Spencer is identified by name in the most recent court documents.
Anjan Dutta-Gupta, 58, president of Advanced Solutions for Tomorrow, agreed on Monday to plead guilty to a charge of paying bribes to Ralph Mariano, 52, of Arlington, Va., a civilian program manager and senior systems engineer with the Navy's Naval Sea Systems Command, to ensure payment and additional funding to his defense firm for existing naval contracts.
Dutta-Gupta, who pleaded innocent after his arrest in early February, will plead guilty at a change-of-plea hearing scheduled to take place in U.S. District Court in Providence on Thursday, April 28, at 2 p.m., according to Jim Martin, a spokesman for U.S. Attorney Peter Neronha. Dutta-Gupta is expected to be sentenced at that hearing, Martin said.
From 1996 through January this year, at least $8 million was paid by ASFT - largely through the Spencers' subcontracting firms - to Mariano, a co-defendant in the case, to Mariano's family members and to his longtime girlfriend, Mary O'Rourke, who was a senior vice president and director of strategic planning at ASFT, according to the court documents. In addition, at least $1.2 million was funneled back to SIC, a corporation owned by Dutta-Gupta.
At the beginning, the payment scheme did not involve the Spencers' subcontractor firms, according to the plea agreement and accompanying information sheet.
Mariano initially contacted Dutta-Gupta in 1996 and "demanded that Dutta-Gupta pay him $6,000 per week if ASFT were to continue to receive funding from NAVSEA," according to a "statement of facts agreed upon by the parties" filed with the plea agreement.
ASFT acquired AMTECH, a Newport company, in 1996 and grew exponentially, first winning a $24 million contract providing logistics engineering services to the Naval Undersea Warfare Center in Middletown. ASFT had about $128 million in Navy contracts when it closed, according to the U.S. Attorney.
Initially, Mariano increased the hourly rate paid to an ASFT employee, who in turn used the salary increase to make the payments demanded by Mariano. He demanded increasing payments from ASFT and Dutta-Gupta in the following years, the documents say.
Beginning in 1999, Dutta-Gupta agreed to make the payments to Mariano through the use of companies that were to serve as subcontractors to ASFT.
The first company, ADQ Associates Inc., was incorporated on July 19,1999, with Debra K. Spencer, then of 887 Anthony Road, Portsmouth, listed as president, according to the Rhode Island secretary of state's database. The company, which had a principal office at 25 Enterprise Center, Suite 104, Middletown, was dissolved Sept. 30, 2003.
On Sept. 22, 2003, Russell E. Spencer, then of 40 Ferry Landing Circle, Portsmouth, incorporated C&S Technology Inc, with a principal office at that address. The firm remains active, with Russell Spencer listed as president and treasurer, according to the secretary of state's database.
Spencer incorporated S.I. Technology Inc., on Nov. 17, 2009, with its principal office listed at 11 King Charles Drive, Unit A3B, Portsmouth. He is listed as president, with an address at 40 Ferry Landing Circle.
Under the scheme worked out by Mariano and Dutta-Gupta, the subcontractor firms under Russell Spencer's control "would submit inflated invoices to ASFT for work that largely had not been performed," the court document says. "Dutta-Gupta and ASFT would then pay the subcontractor the amount billed on the invoices."
"Spencer then distributed the funds received from ASFT to Mariano, individuals associated with Mariano (including his father, brother and longtime girlfriend) or entities controlled by Mariano's associates," the court document says.
Spencer paid a portion of the inflated invoices to Strategic International Concepts, a technical services company owned by Dutta-Gupta.
"Dutta-Gupta was unable to fund SIC directly due to federal accounting regulations," the document says. "He therefore directed Spencer to make substantial payments to SIC, in addition to the payments that were being made to Mariano."
In late 2010, the court document says Spencer was making the following approximate weekly payments from his personal account, the C&S account or the S.I. Technology account:
u $4,750 to Mariano, deposited in a joint account held by Spencer and Mariano.
u $7,000 to Mariano's father, Ralph Mariano Jr., 79, of North Providence.
u $3,900 to P&C Strategies Inc., owned by girlfriend Mary O'Rourke. She and Mariano own adjacent condominiums at 400 Narragansett Parkway, Warwick.
u $3,500 to NDC Consulting Inc., owned by Joseph Mariano, Mariano's brother. (Delaine A. Mariano and Joseph James Mariano of 51 Regina Drive, North Scituate, are listed as president and vice president of the firm with the secretary of state.) Joseph Mariano was employed by Inquest Technologies Inc., of 300 West Exchange St., Providence, which also served as a subcontractor to ASFT, according to the court document.
u $6,500 to SIC, owned by Dutta-Gupta.
"While the rates were weekly, most of the payments were made bi-weekly for amounts covering a two-week period," the document says. "In addition, since approximately 2006, Spencer paid $3,500 to Mariano every other week in the form of cash."
Mariano also demanded that certain ASFT employees be fired and that certain friends and associates of his be hired, the document says.
"Dutta-Gupta, due to both concern or possible reprisal from Mariano and a desire to continue to have funding added to the ASFT/Navy contracts, submitted to Mariano's demands," the document says.

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