Former Fumo Associate Pleads Guilty to Conspiring to Defraud Senate of Pennsylvania

PHILADELPHIA—S. Michael Palermo, 69, of Philadelphia, pleaded guilty today to conspiring with former State Senator Vincent Fumo to receive a contract from the Pennsylvania Senate Democratic Appropriations Committee (“SDAC”), under which Palermo received $287,000 in state funds between 1999 and 2004 for providing little or no actual work to the SDAC. Palermo was a friend of Fumo's who worked as an aide to the former senator in the early 1970s, when Fumo was director of a Pennsylvania agency, and, again, as chief of staff in Fumo’s legislative district office in Philadelphia. The contract with defendant Palermo, which became effective in 1999, provided payments of $150 per hour to Palermo’s firm, M.P. Consulting, Inc., for consulting services to the SDAC regarding the fiscal and operational analysis of intrastate transportation issues.

Palermo admitted that, beginning in or about July 1999, he submitted an invoice each month to the SDAC which fraudulently represented that he was entitled to payments under the contract in exchange for legitimate consulting services provided to the SDAC when, in fact, he provided little or no services to the Senate at all.

Palermo is scheduled for sentencing on January 22, 2010.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys John Pease and Robert Zauzmer.