August 11, 2021
Seven former SEPTA managers are facing criminal charges for allegedly bribing a pair of vendors to falsely bill nearly $1 million worth of procurement items, federal prosecutors announced Wednesday.
The scheme was allegedly organized within SEPTA's Bridges and Buildings Department and continued at various times from 2013 to 2019. A pair of employees with the two vendors — Upper Darby-based MSI Tool Repair and Supply and Philadelphia-based Advantage Industrial Supply — also face criminal charges.
SEPTA's BBD is responsible for maintaining, repairing and renovating SEPTA facilities throughout Southeastern Pennsylvania. The department's management-level employees receive procurement cards from SEPTA that serve as credit cards, allowing employees to purchase items needed to complete work.
SEPTA's former senior director of maintenance, David Abell, 72, of Chincoteague Island, Virginia, reached separate agreements with the two vendors in 2013 to exploit the procurement card system for their mutual benefit, prosecutors said. The particulars of the deals allegedly were hashed out with Mark Irvello, 56, of Broomall, Delaware County, and Stanley Woloff, 58, of Philadelphia, through their respective companies, MSI and AIS.
Abell allegedly solicited the vendors to provide him with regular cash payments of $1,000 to $2,000 per month. In exchange, the vendors allegedly falsified billing to SEPTA for procurement items that they weren't providing — either at all or as specified in the sham orders.
The false charges made to SEPTA not only covered Abell, but also left enough for kickbacks to the vendors, prosecutors said.
Abell allegedly recruited six other BBD managers to arrange similar false procurement orders with MSI and AIS in order to grow the vendors' business with SEPTA.
To conceal the scheme, the vendors allegedly used several tactics. They would bill SEPTA for items that might be used, but weren't needed at the time, or they billed SEPTA for substantially more of certain products than they were actually providing to the agency. The combination of legitimate and fraudulent billing made the scheme difficult to detect, according to prosecutors.
Participation from other SEPTA managers allegedly ramped up beginning in 2014, when Abell was replaced in his role by Rodney Martinez, 50, of Blackwood, New Jersey. Martinez allegedly inherited the scheme from Abell and regularly solicited cash payments from the vendors under the same arrangement. Martinez personally received more than $144,000 in cash payments, prosecutors said.
The other former BBD managers identified in the scheme are Stephen Kish, 65, of Philadelphia; Jesse Fleck, 43, of Philadelphia; Peter Brauner, 58, of Kintnersville, Bucks County; James Turner, 59, of Horsham, Montgomery County; and John Brady, 60, of Blue Bell, Montgomery County.
SEPTA said the investigation began within its internal audit division, which provided its findings to the FBI.
Investigators said Kish was the most prolific participant in the alleged scheme. He allegedly had MSI's Irvello make over $225,000 in purchases for his personal benefit, mostly consisting of gold coins each worth thousands of dollars. They included American Gold Eagle coins, Gold American Buffalo coins, South African Gold Krugerrand coins, Canadian Gold Maple Leaf coins, Royal Canadian Mint gold bars and PAMP Suisse gold bars, according to prosecutors.
Kish also allegedly laundered money by using proceeds from the scheme to purchase real estate.
The other participants in the scheme allegedly obtained personal items, including a $5,000 backhoe attachment for Brauner, ATV equipment for Fleck and numerous electronics, tools, articles of clothing and automobile repairs for Turner and Brady.
Through the scheme, Irvello and MSI defrauded SEPTA of more than $540,000, and Woloff defrauded SEPTA of more than $330,000, prosecutors said.
“SEPTA is a public trust. Employees who engage in fraud and intentional misuse of funds violate that trust and will face serious consequences," SEPTA said in a statement provided to PhillyVoice. "The vast majority of our workforce are honest, hard-working individuals who are dedicated to providing critical public transportation service to our region. We will continue to do right by them, the taxpayers, and the riding public by holding those who engage in illegal activity accountable for their actions.”
Abell, Kish, Brady and Brauner all retired at various points over the past six years. Martinez, Turner and Fleck resigned earlier this year.
The nine defendants, including the vendors, are each charged with counts of bribery and fraud. If convicted, each defendant faces a maximum sentence of 20-40 years in prison.
"Philadelphians deserve public employees who do their jobs honestly, without gaming the system to line their own pockets," acting U.S. Attorney Jennifer Arbittier Williams said. "At a time when SEPTA is facing significant challenges to continue faithfully serving its riders, many of whom have no other reliable, cost-effective transportation options, the defendants' alleged actions perpetrating this fraud scheme are the definition of selfish greed."