Former Paterson Municipal Utilities Authority Commissioner Sentenced To 35 Months In Prison For Schemes With Vendors To Steal Funds And Accept Kickbacks

NEWARK, N.J. – A former commissioner with the now-defunct Paterson Municipal Utilities Authority was sentenced today to 35 months in prison for engaging in two separate schemes to steal funds from the Paterson Municipal Utilities Authority (MUA), U.S. Attorney Craig Carpenito announced.

Erik Lowe, 51, of Paterson, New Jersey, previously pleaded guilty before former U.S. District Judge Jose L. Linares to an information charging him with one count of conspiring with Carnell Baskerville, a contractor who plead guilty in February 2018 to his role in the scheme, to commit extortion under color of official right during the period from approximately December 2014 through approximately May of 2015. He also pleaded to one count of engaging in a second scheme with another contractor to commit extortion under color of official right from approximately August of 2012 through November of 2014. U.S. District Judge Kevin McNulty imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

Lowe was a commissioner of the MUA from February 2009 through May 2015, during which time he exercised control over the MUA’s finances. The MUA had been created to manage the hydroelectric plant on the Passaic River in Paterson as well as to care for and manage certain surrounding properties. Lowe and Baskerville entered into an agreement whereby Lowe would approve payments from the MUA to Baskerville’s company for services purportedly rendered when both Lowe and Baskerville knew that Baskerville had not performed and would not perform any such services. Between December 2014 and May 2015, Lowe wrote a series of MUA checks totaling $146,500 to Baskerville’s company. Lowe directed Baskerville to deposit these checks into Baskerville’s bank account and to kick back to Lowe a significant percentage of this amount in cash to reward Lowe and a fellow MUA commissioner for their official assistance in carrying out the scheme.

Lowe admitted to engaging in a similar scheme between approximately August of 2012 through approximately November of 2014 with a second contractor whose company installed and repaired fences for residential homes and commercial business. Lowe admitted that initially he inflated the checks provided to this contractor substantially above the value of the jobs the contractor performed on behalf of the MUA so that the contractor could kick back thousands of dollars in cash in kickbacks to Lowe for Lowe’s official assistance in carrying out the scheme. Lowe admitted that near the end of the scheme, he was issuing checks worth thousands of dollars to the contractor knowing that no job had been or would be performed by the contractor in exchange for the checks. Lowe, in turn, accepted kickbacks totaling thousands of dollars from the contractor in exchange for these checks. Between August 2012 and November 2014, Lowe issued checks totaling $141,700 to the contractor, for which Lowe accepted tens of thousands of dollars in cash kickbacks.

In addition to the prison term, Judge McNulty sentenced Lowe to three years of supervised release and ordered him to pay restitution of $236,400.

Baskerville pleaded guilty on Feb. 6, 2018 before Judge Linares to one count of conspiracy to commit extortion under color of official right and to one count of conspiracy to embezzle from an organization receiving federal benefits in excess of $10,000 and was sentenced Oct. 23, 2018, to 21 months in prison.

U.S. Attorney Carpenito credited special agents of the FBI under the direction of Special Agent in Charge Gregory W. Ehrie in Newark with the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorney Mark J. McCarren of the U.S. Attorney’s Office’s Special Prosecutions Division in Newark.

Defense counsel: Linda Foster Esq., Assistant Federal Public Defender