Subcontractors linked to kickbacks
Published Feb. 9, 2011
By Joe Baker
Daily News staff
The man accused of orchestrating a multi-million dollar scam on the Navy worked with two Portsmouth subcontractors to funnel money - allegedly for work never done - to pad legitimate awards to a Middletown contractor.
According to an affidavit filed in U.S. District Court in Providence by U.S. Attorney Peter Neronha, Ralph M. Mariano, a civilian system engineer with the Naval Sea Systems Command (NAVSEA), worked with two military subcontractors - C&S Technology Inc. and S.I. Technologies Inc. (SITI) - located at 11 King Charles Drive in Portsmouth to bilk the U.S. Navy of at least $13.5 million. Mariano, 52, allegedly created non-existent change orders to contracts awarded to Advance Solutions for Tomorrow, and used the Portsmouth subcontractors to dole out the money to Mariano, his relatives and friends, and Anjan Dutta-Gupta, the 58-year-old owner of ASFT.
The affidavit refers to the owner of the two subcontractors as CW1 (Complaining Witness 1), but the Rhode Island Secretary of State's corporate database identifies the owner of C&S Technologies as Russell E. Spencer of Portsmouth. Nobody answered the company's phone Tuesday afternoon, and no one responded to a reporter's message seeking comment on the federal investigation.
Mariano and Dutta-Gupta have been charged with bribing a public official in what Neronha Tuesday called "a complex bribery kickback scheme." They face a possible 15 years in prison and hefty fines if convicted.Neither the complaining witness nor any of Mariano's friends or relatives have been charged, but Neronha said the investigation is not over.
As a program manager, Mariano had authority to "add money to existing Naval contracts when warranted," Neronha said. Beginning about 1999, Mariano would add change orders to contracts awarded to ASFT for work never done, Neronha said. The two Portsmouth companies were the apparent conduit for the padded payments.
"I have estimated that since 1999, CW1 and CW1's entities have paid Mariano over $4 million and have further paid Mariano's relatives and associates approximately $4 million. In addition approximately $2 million has been funneled back to entities under Dutta-Gupta's control from entities under the control of CW1," according to an affidavit by Patrick J. Hegarty, special agent for the Defense Criminal Investigative Service.
"I have found no evidence to support a legitimate purpose for the payments to Mariano, and the majority of the payments to Mariano's relatives and associates and to Dutta-Gupta's entities were for services not performed."
The affidavit says ASFT paid CW1's subcontractors about $13.5 million, and that CW1 "at the direction of defendants Dutta-Gupta and Mariano, submitted false and inflated invoices to ASFT to obtain these payments."
Although the scam began in 1999, Mariano began stepping it up two years ago, according to the affidavit.
"From March 2009 through March 2010, Mariano added a total of approximately $7.7 million to ASFT contracts and delivery orders," Hagerty wrote in his affidavit.
Mariano also allegedly used companies set up by his brother, identified at one point in the affidavit as "Joey," and his "long-time girlfriend" identified as "MO." The affidavit describes Mariano's girlfriend as a senior vice president, director of strategic planning at ASFT and says she owned P & C Strategies LLC, "purportedly a technology services consulting company" using a Middletown post office box as an address.
The ASFT website identifies its senior vice president, director of strategic planning as Mary O'Rourke. Early Tuesday afternoon, the website featured a photo of her and other senior staff members. "Mary has been successful building business relationships to receive contract funding in support of ASFT's business, " read a portion of her company profile. But by late afternoon, the page describing the company's corporate management team had been removed from the site.
The affidavit released Tuesday indicates that CW1 would submit invoices to ASFT for work never performed and that ASFT would pay those bills after Mariano approved them. Once CW1 received payment, he would distribute the money according to a complex scheme.
According to Hegerty's affidavit: "CW1 pays the following approximate weekly amounts from either his personal account, the C&S account or the SITI account: $4,750 to Mariano, deposited in a joint account held by Mariano and CW1; $3,250 to Mariano, deposited in Mariano's personal account; $7,000 to Mariano's father; $3,900 to P&C (owned by MO, defendant Ralph Mariano's girlfriend); $3,500 to NDC (owned by Ralph Mariano's brother) and $6,500 to SIC (owned by defendant Dutta-Gupta). In addition CW1 pays $3,500 to Mariano every other week in the form of cash."
Federal agents approached CW1 last June, and he agreed to cooperate in their investigation. The affidavit indicates he recorded conversations with Mariano during which they talked about disbursement of the money. A video surveillance tape of a meeting between Mariano and CW1 on Dec. 23, 2010 shows Mariano taking an envelope containing $3,500 in marked bills from CW1.
U.S. Customs officials arrested Dutta-Gupta Sunday at the Atlanta airport after he returned from a trip to Chile. He was released on $25,000 unsecured bond pending an appearance in U.S. District Court in Providence on Feb. 15. Mariano surrendered to U.S. Marshals in Rhode Island Monday and was released on $50,000 unsecured bond.
U.S. attorney's office spokesman Jim Martin said Mariano has to post $50,000 in either equity or property by Feb. 14 to remain free on bail. Both Mariano and Dutta-Gupta had to surrender their passports.
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