Former Irvington Mayor Michael Steele was sentenced to state prison Monday for rigging school district contracts and taking thousands of dollars in kickbacks as business administrator for the Irvington Board of Education.
Steele, 54, of Easton, Pa., was sentenced to seven years in state prison, including five years of parole ineligibility, by Superior Court Judge Stephen B. Rubin in Hunterdon County. The judge ordered that Steele pay $120,000 in restitution to the Irvington Board of Education and that he be permanently barred from public employment in New Jersey. Steele pleaded guilty on Sept. 30, 2009 to second-degree charges of official misconduct and pattern of official misconduct.
"This defendant is going to prison because by rigging contracts and taking kickbacks, he stole from the Irvington school district and the taxpayers who fund it," said Attorney General Paula T. Dow. "He had a duty as business administrator to serve the students of this struggling district as an honest steward, but instead he corruptly chose to serve himself."
The charges were part of a June 5, 2008 state grand jury indictment that resulted from an investigation by the Division of Criminal Justice Corruption Bureau and the New Jersey State Police Official Corruption Bureau. In pleading guilty, Steele admitted that he took thousands of dollars in kickbacks on school district contracts. He retired from the district in April 2008.
The state's investigation revealed that Steele engaged in two separate bid-rigging schemes between 2003 and 2007 involving two contractors and approximately $1.4 million in contracts.
The two contractors pleaded guilty in August 2008, admitting that they provided bribes to Steele in connection with the schemes. Preston Lewis, 54, of Dingmans Ferry, Pa., and William Hardy, 57, of Margate, Fla., each pleaded guilty to offering an unlawful benefit to a public servant for official behavior. Each contractor was sentenced late last year to three years of probation and a $5,000 fine. Both are barred from government contracts in New Jersey for five years.
"Fighting corruption is a top priority for the Division of Criminal Justice," Criminal Justice Director Stephen J. Taylor. "We will aggressively investigate and prosecute any public official who unlawfully uses his or her government position for personal gain."
The investigation revealed that Steele, whose annual salary was $120,000, would purchase maintenance supplies for the district - including cleaning chemicals, asphalt repair compounds and salt for melting snow - from Hardy's maintenance supplies company, WH Chemical Group in Margate, Florida. The company would then pay Steele a "bonus" of between $5,000 and $20,000 per order. WH Chemical Group received approximately $900,000 in district contracts.
Steele would call Hardy and ask him the quantity of products he needed to buy to get a kickback in a particular amount. Steele ordered supplies in the quantities stated by Hardy, and Hardy would send the kickback to Steele. While WH Chemical Group would provide the agreed upon quantities of supplies to the district, Steele created false purchase orders that inflated the quantities. WH Chemical Company could not match the prices offered by competitors, so Steele made it appear that the company was providing more supplies to beat the other bids.
In the second scheme, Steele rigged bids to award contracts to Lewis, a Lakewood-based contractor who owned Lone Star Consulting, a construction company, and BMG Security, a security camera installation company. Steele rigged bids on at least 29 school contracts involving those companies between January 2003 and December 2007 and inflated the contract prices to build in thousands of dollars in kickbacks for himself.
Steele would contact Lewis about school district projects and instruct him to prepare a cost estimate. Steele would then tell Lewis to inflate the estimate to include a kickback and submit the inflated bid to the school district. Steele or Lewis would prepare two fraudulent competing bids for the project in higher amounts. Because Lewis's company always had the lowest bid, the Board of Education would award his company the contract. After he completed the work and received a check from the district, Lewis would meet with Steele to provide the kickback in cash.
The Division of Criminal Justice Corruption Bureau has established a toll-free Corruption Tipline at 1-866-TIPS-4CJ. Additionally, individuals can report suspected wrongdoing through the Division of Criminal Justice Web site at www.njdcj.org. All information received through the Tipline or Web page will remain confidential.
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