09/30/2009

News / South Jersey Alarm Contractor Pleads Guilty to Rigging Bids on Contracts with Department of Corrections and Haddon Township

TRENTON – Attorney General Anne Milgram announced that an alarm system contractor from Collingswood and three companies that he owns have pleaded guilty to rigging bids for contracts with the New Jersey Department of Corrections and the Haddon Township Board of Education.

According to Criminal Justice Director Deborah L. Gramiccioni, Paul Kerth, 58, of Collingswood, and three companies he owns – Independent Alarm Distributors, Inc., Adirondack Alarm, and Automatic Alarm Associates – each pleaded guilty yesterday to third-degree theft by deception before Superior Court Judge Irvin J. Snyder in Camden County.

Kerth was named in a Jan. 14, 2009 state grand jury indictment which also charged Frederick J. Armstrong, 59, of Pemberton Borough, a construction management specialist in the Capital Planning & Construction Unit of the Department of Corrections (DOC). The indictment alleges that Armstrong assisted Kerth in submitting rigged bids to the DOC and used his influence over contracting procedures to steer contracts awarded by the department to Independent Alarm.

In pleading guilty, Kerth admitted that, at Armstrong’s request, he solicited other contractors to submit higher “cover” bids so Independent Alarm would win a 2003 contract with the Department of Corrections for $39,600 to install closed-circuit television components at Mid-State Correctional Facility. Under state law, Independent had to be the lowest qualified bidder among at least three independent bids to win the contract. Kerth further admitted that Automatic Alarm submitted a cover bid so that Independent Alarm would win a 2002 contract for $5,030 to install upgraded alarm systems in two schools in Haddon Township.

Under the plea agreement, the state will recommend that Kerth be sentenced to a term of probation conditioned upon him serving 364 days in the county jail and cooperating in the state’s ongoing investigation. He and his three companies will be barred from all public contracts in New Jersey for a period of five years and must pay $150,000 in restitution into the state’s Anti-Trust Revolving Fund for anti-trust enforcement efforts. Deputy Attorney General Steven J. Zweig took the guilty plea for the Division of Criminal Justice Corruption Bureau. Judge Snyder scheduled sentencing for Kerth for Nov. 20.

The charges are the result of an investigation by the Department of Corrections’ Special Investigations Division and the Division of Criminal Justice Corruption Bureau.

The charges against Armstrong are pending. He is charged in the indictment with conspiracy (2nd degree), official misconduct (2nd degree), conspiracy in restraint of trade (2nd degree), theft by deception (2nd degree), contract fraud (2nd degree), and two counts of misconduct by a corporate official (2nd and 3rd degree).

Armstrong has been suspended without pay from his position at DOC since the indictment was returned in January.

The state investigation revealed that between April 1999 and December 2004, Kerth and his companies, with Armstrong’s assistance, rigged at least nine DOC contracts with contract prices that, in the aggregate, exceeded $230,000.

The investigation was conducted and coordinated for the Division of Criminal Justice Corruption Bureau by Detective Sgt. Keith Lerner, Detective Paul Marfino Jr., Detective David Patella and Deputy Attorney General Zweig. Senior Investigators Manuel Alfonso and Charles Walters conducted the investigation for the Department of Corrections’ Special Investigations Division.

Attorney General Milgram thanked the Department of Corrections for its referral and extensive assistance in the investigation.

The indictment against Armstrong is merely an accusation and he is presumed innocent until proven guilty. Second-degree crimes carry a maximum sentence of 10 years in state prison and a criminal fine of $150,000, while third-degree crimes carry a maximum sentence of five years in prison and a $15,000 fine.

http://www.nj.gov/oag/newsreleases09/pr20090930b.html

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