GREENBELT, MD—George Joseph Grillo, age 64, of Upper Marlboro, Maryland pleaded guilty today to wire fraud and money laundering conspiracy arising from a scheme to make it appear that a minority business enterprise (MBE) performed work on Washington Suburban Sanitary Commission (WSSC) contracts, when in fact, the MBE had not performed the work.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service—Criminal Investigation, Washington, D.C. Field Office.
According to the plea agreement, in 2009 and 2010 a non-minority-owned water tank painting company (Company 1) obtained three contracts with the WSSC to paint and repair water tanks or equipment: the Falls Road standpipe contract, the Carole Highlands tank contract and the Hampshire Green contract. The combined value of the three contracts was $2,390,177. Each contract required Company 1 to subcontract 28% or 29% of the contract’s value to certified MBEs or small local business enterprises. The required percentage of the contract, which in this case totaled $679,965.20, was to be paid directly to the MBE.
According to his plea agreement, Grillo was a certified public accountant and from 2002 through 2014 was the chief financial officer of a minority business enterprise that operates as a construction company, and a recycling company. Since the 1980’s Grillo had performed accounting work for the owner of Company 1, including preparation of tax returns, payroll for the company, and financial statements.
Grillo admits that from 2010 to 2014, he conspired with others to make it appear that Company 1 met its minority subcontracting requirements on the WSSC contracts.
For example, the owner of Company 1 directed Grillo to send invoices from his minority-owned company indicating that the company had provided materials on two contracts. Grillo created invoices indicating that his company had provided $78,000 worth of materials on the Falls Road contract and $30,000 worth of materials on the Carole Highlands contract. As directed by the owner of Company 1, these invoices were submitted to another minority subcontractor working with Company 1. In fact, neither Grillo’s company, nor the other minority-owned subcontractor had purchased any materials related to these invoices. To make the fake invoices appear authentic, on June 30, 2011, a check was issued to Grillo’s company for $108,000. On July 5, 2011, Grillo issued a check from his company to Company 1 for $106,920.
In 2010, Grillo agreed that his company would serve as the MBE for Company 1 on the Hampshire Green contract. In 2011, although Grillo’s company had not performed any work on the contract, Grillo caused his company to submit an invoice to WSSC for 28% of the Hampshire Green contract, or $57,504.88, to conceal the fact that Company 1 had not met its contractual obligation to subcontract 28% to an MBE. Again, to make it appear that Grillo’s company had performed the work, Company 1 issued a check for $57,504.88 to Grillo’s company, and a short time later, Grillo’s company issued a check back to Company 1 for $58,291.81.
The conspiracy involved between $1 million and $2.5 million of laundered funds.
Grillo faces a maximum sentence of 20 years in prison. U.S. District Judge George J. Hazel has scheduled sentencing for June 29, 2015 at 10:00 a.m.
United States Attorney Rod J. Rosenstein commended the FBI and IRS-CI for their work in the investigation. Mr. Rosenstein thanked Special Assistant U.S. Attorney James I. Pearce and Assistant U.S. Attorney Mara Zusman Greenberg, who are prosecuting the case.