Two More Charged in Ongoing Cuyahoga County Corruption Investigation
|U.S. Attorney’s Office September 22, 2011|
A federal grand jury returned an 18-count indictment charging Anthony O. Calabrese III and Sanford Prudoff with crimes related to the ongoing Cuyahoga County corruption investigation, federal law enforcement officials said.
Calabrese, 39, of Chagrin Falls, Ohio, was named in 12 counts for crimes including: racketeering; conspiracy to commit mail fraud and honest services fraud; Hobbs Act conspiracy; bribery concerning programs receiving federal funds; conspiracy to commit mail fraud; mail fraud and tampering with a victim, witness or informant.
Prudoff, 68, of Lorain, Ohio, was employed as Community Development Director for the city of Lorain, Ohio from 1973 through 2009. He was named in five counts: conspiracy to commit mail fraud; false statements to law enforcement and three counts of false statements on a federal income tax return.
Calabrese and Prudoff are both charged in Count 5, conspiracy to commit mail fraud.
The racketeering charge involves conduct that took place between 2001 and 2009 in which Calabrese gave things of value to public officials and their designees in return for public officials taking and promising to take official action that benefitted Calabrese Law Firm 1 (where Calabrese was an associate and partner), their clients and designees, according to the indictment.
Specifically, Calabrese participated in a scheme in which he and Cuyahoga County employee J. Kevin Kelley helped obtain tax exempt status for the property leased by Alternatives Agency around January 2004, according to the indictment.
In September 2004, after a tax refund check was issued to Alternatives Agency for $144,216.26, Calabrese instructed Alternative Agency to issue a check to Business 45 for $72,000 and classify the expense as consulting, despite Calabrese knowing that Business 45 performed no consulting services for Alternatives Agency to justify the expense, according to the indictment.
Business 45, in turn, issued checks payable to Calabrese for $31,500 and J. Kevin Kelley Consulting, LLC, for $35,500. Business 45 kept the remaining $5,000, according to the indictment.
In another scheme, Calabrese lobbied Kelley (a member of the Parma School Board) and other members of the Parma School Board in January 2005 to contract with Business 9 to serve as project manager for a renovation project. Business 9 was a construction company that specialized in stone and brick masonry and was a client of Law Firm 1, according to the indictment.
In September 2005, the Parma School Board, with Kelley voting in favor, awarded a contract worth $1.8 million to Business 9, according to the indictment.
Calabrese and Kelley arranged for Business 9 to hire The Eagle Group, a consulting company formed by Daniel P. Gallagher. In August 2009, Business 9 sent a check for $15,000 to Eagle. Gallagher then paid a portion of that money to Kelley and Kevin Payne, according to the indictment.
Other conduct detailed in the indictment includes Calabrese, Kelley, Brian Schuman, former Cuyahoga County Auditor Frank P. Russo and former Cuyahoga County Commissioner James C. Dimora conspiring to increase the funding for Alternatives Agency, according to the indictment.
In or around January 2008, Calabrese, who served as legal counsel for Alternatives Agency, instructed Schuman, an employee of Alternatives Agency, to increase Kelley’s monthly consulting fee by $2,000 for four months for the purpose of funding expenses associated with a Las Vegas trip for Dimora, Russo and Public Employee 55, according to the indictment.
In or around 2003, Prudoff began receiving payments from Alternatives Agency on a monthly basis, purportedly for consulting work. When BE39 informed Calabrese that Alternatives Agency received no work product from Prudoff, Calabrese told BE39 that Prudoff was consulting on a Lorain expansion project, according to the indictment.
BE39 questioned why Alternatives Agency was paying Prudoff, since he was the Community Development Director for Lorain and it would be within his job requirements to assist companies such as Alternatives Agency, who were interested in developing facilities in Lorain. Calabrese insisted that BE39 continue to cause Alternatives to pay Prudoff, according to the indictment.
Calabrese did not inform the Alternatives board about the payments for consultants on a Lorain expansion project and the board did not approve payments to any such consultant, according to the indictment.
In or around June 2005, Calabrese told BE39 that Prudoff had some issues arise and Prudoff’s monthly payment should be issued to Relative 2, who was related to Prudoff’s girlfriend, according to the indictment.
In or around July 2005, Calabrese and Prudoff assisted Relative 2 in forming Business 46. On or about July 25, 2005, Alternatives Agency began issuing checks to Business 46 for approximately $4,000 on a monthly basis, according to the indictment.
Prudoff provided favorable consideration to Calabrese and his designees on business matter unrelated to Alternatives Agency, in return and in exchange for the consulting fees that Calabrese caused Prudoff and Business 46 to receive from Alternatives, according to the indictment.
In another case, Business 43 was incorporated in the State of Ohio in March 2005 and Calabrese’s relative (Relative 1) was the registered agent for the company. Calabrese caused Alternatives to engage Business 43’s services but concealed from Alternatives his relative’s relationship to Business 43 and did not disclose to them that Relative 1 performed little or no work for Alternatives to justify the fees paid, according to the indictment.
In or around 2002, Calabrese influence Alternatives to hire A.C. Sinagra and Associates. In January 2006, A.C. Sinagra and Associated entered into a contract setting a monthly consulting fee at approximately $1,500, according to the indictment.
In March 2006, Calabrese and Sinagra agreed that Calabrese would cause Alternatives to increase its payments to A.C. Sinagra and Associates, and Sinagra would use the additional funds to pay persons or entities identified by Calabrese in the amounts Calabrese designated, according to the indictment.
Calabrese first suggested Sinagra make consulting payments to Relative 1 through Business 43. He later asked Sinagra to pay Calabrese through Burlwood Holdings, an LLC formed in 2004 and controlled by Calabrese, according to the indictment.
Calabrese also asked Sinagra to pay Relative 2 and Sinagra agreed to both requests. Sinagra performed no legitimate work for Alternatives to justify the increase in his fee, according to the indictment.
In May 2006, Alternatives increased Sinagra’s monthly fee from $1,500 to approximately $6,000. In May 2006, A.C. Sinagra Company issued a check to Relative 2 for $2,000 and Berlwood Holdings (sic) for $2,000. This continued through November 2007, according to the indictment.
In sum, from Calabrese caused Alternatives to make payments to Prudoff and Relative 2 between July 2003 and March 2006 totaling approximately $144,000, according to the indictment.
Calabrese caused Alternatives to make payments to Business 43 between March 2005 and March 2006 totaling approximately $12,950, according to the indictment.
Calabrese caused Alternatives to make payments to A.C. Sinagra and Associates between January 2002 and November 2007 totaling approximately $190,500, according to the indictment.
Calabrese caused Alternatives to make payments to J. Kevin Kelley Consulting between October 2004 and August 2008 totaling approximately $201,473, according to the indictment.
Regarding Count 9, Relative 1’s brother was Attorney 6. Attorney 7 was Calabrese’s relative and formerly related to Relative 1. On or about Feb. 2, 2009, Calabrese told BE39 that Calabrese and Attorney 7 had met with Attorney 6. Calabrese asked BE39 to meet with Attorney 6, according to the indictment.
BE39 met with Attorney 6 on Feb. 2, 2009. Attorney 6 told BE39 that Calabrese and Attorney 7 wanted Attorney 6 to meet with BE39 to go over the script, according to the indictment.
Attorney 6 instructed BE39 that if anyone questioned BE39 about Relative 1, BE39 should say that BE40 and BE39 hired Relative 1 to work out of her home to help with the Lorain expansion, which Calabrese and BE39 knew was not true, according to the indictment.
If convicted, the defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations. In all cases, the sentences will not exceed the statutory maximum and, in most cases, it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
This case was prosecuted by Assistant U.S. Attorneys Antoinette T. Bacon and Nancy Kelley. The investigation was conducted by the Cleveland office of the Federal Bureau of Investigation and the Internal Revenue Service.
The Cuyahoga County corruption investigation is ongoing.