PHILADELPHIA—Former Philadelphia Traffic Court Judge Robert Mulgrew, 56, of Philadelphia, was sentenced today to 30 months in prison for defrauding the Pennsylvania Department of Community and Economic Development (“DCED”). Mulgrew pleaded guilty on September 19, 2013 to mail fraud and conspiracy to commit mail fraud and filing a false tax return.

In addition to the prison term, U.S. District Court Judge Darnell C. Jones ordered restitution to the Commonwealth of Pennsylvania Department of Community and Economic Development in the amount of $199,274, three years of supervised release, and $200 special assessment. Mulgrew also paid restitution, penalties and interest to the IRS in the amount of $123,314.

Mulgrew and co-defendant Lorraine Dispaldo, who previously pleaded guilty, engaged in a scheme to fraudulently receive and misuse Pennsylvania state grant funds awarded to non-profit groups. Between 1996 and 2008, the DCED awarded hundreds of thousands of dollars in grants to two community groups with which Mulgrew and Dispaldo were associated. DCED awarded more than $450,000 in grants to the Friends of Dickinson Square (“FDS”) with the understanding that the grants were to be used to purchase equipment and materials for the maintenance of Dickinson Square Park at 4th & Tasker Streets, Philadelphia, and surrounding neighborhood revitalization. Mulgrew, the Vice-President of FDS, signed the FDS grant contracts with DCED. DCED also awarded approximately $397,000 in grants to the Community to Police Communications (“CPC”) with the understanding that the grants were to be used to purchase communications equipment for the police and to purchase materials to secure vacant lots and buildings for the protection of the police. Dispaldo signed the CPC grant contracts with DCED.

The defendants misrepresented their intentions to DCED, and that—contrary to their agreement to spend grant funds solely to purchase equipment and materials for neighborhood revitalization and improved communications with the police—the defendants used thousands of grant dollars to pay Mulgrew’s relatives and associates. They represented that they were paying for work done on behalf of FDS and CPC. After distributing grant funds to relatives and associates, the defendants supplied false and misleading information to DCED to conceal the actual amount of grant funds which they paid to the relatives and associates contrary to the express purposes of the grant.

Mulgrew conceded that he received almost $70,000 in grant funds for his own personal uses. Mulgrew improperly reimbursed himself from FDS funds for thousands of dollars of expenditures which he claimed were incurred by FDS when they were not and for his expenditures for items not authorized under the terms of the FDS grants. Mulgrew and Dispaldo supplied DCED with false documents to conceal their own use of grant funds and other improper uses of the funds.

Mulgrew did not report the additional income from the fraud scheme on his tax return and claimed false business deductions which improperly reduced his tax liability.

Dispaldo was sentenced in November 2013 to 18 months in prison.

The case was investigated by the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. It was prosecuted by Assistant United States Attorneys Paul L. Gray.