A Northampton resident and co-owner of Sands Mechanical Inc. in Bristol was arrested Tuesday in connection with an alleged kickback scheme that occurred during a project at the Fort Dix military base in New Jersey.
Alex Rabinovich, 57, of Richboro, and Leonard Santos, 66, of Yardley, have been charged with conspiracy to obtain kickbacks from public works employees; malicious destruction of a vehicle by fire; travel in interstate commerce to commit a crime of violence; conspiracy to accept kickbacks on federal projects; and conspiracy to commit false payroll records.
According to information provided by the U.S. Department of Justice, Sands Mechanical was hired to do sheet metal, electrical and plumbing work on a restoration project at Marine Corps Reserve Training Center at Fort Dix.
During the course of the work, Santos and Rabinovich demanded that select employees kickback a percentage of their weekly paychecks or face termination. Two Sands’ supervisors, Richard Cottone (Santos’ son-in-law) and Michael Featherston have already pleaded guilty to these charges.
In February 2010, the U.S. Department of Labor’s Wage and Hour Division learned that Sands employees were not being paid the prevailing wage for Burlington County. Santos agreed to repay $80,000 to those deprived employees, according to the Department of Justice.
Santos cut settlement checks to those employees who were owed back wages but told those employees not to cash the checks. Instead, Cottone and Featherston took the employees to a nearby check cashing business, where many of these checks were then endorsed over to Cottone, who cashed them and returned the funds to Santos, the Department of Justice said.
Santos and Cottone also targeted the project’s site manager, who was routinely critical of the work by Sands’ employees. They torched his truck in front of his residence at 4 a.m. in May 2010.
A month later, the site manager was “intentionally run down by a car driven by Cottone’s nephew and two friends” while he was riding his bike, the Department of Justice said.
Santos and Rabinovich are also charged with providing kickbacks to a prime contractor to improperly obtain subcontracts on federally-funded construction projects.
“Between November 2009 and January 2013, Santos and Rabinovich paid off a Philadelphia contractor’s representative to get “last looks” at other competitors’ bids,” according to the Department of Justice.
Santos owed $46,200 in kickbacks owed for the 10 subcontracts awarded to Sands Mechanical, the Department of Justice said.
The counts of conspiracy to demand kickbacks from employees on a federally subsidized project, conspiracy to provide kickbacks to a prime contractor and conspiracy to submit false payroll records each carry a maximum potential penalty of five years in prison and a $250,000 fine.
The count of traveling in interstate commerce to commit a crime of violence is punishable by a maximum potential penalty of 20 years in prison; and the arson count is punishable by up to 20 years in prison, with a mandatory minimum of five years in prison.
Seven defendants have previously pled guilty to various charges ranging from collecting kickbacks, arson and aggravated assault, the Department of Justice said.
Rabinovich and Santos are expected to make their initial court appearances today before U.S. Magistrate Judge Anne Marie Donio in Camden federal court.