2002-10-31 -- Gibson, Kenneth -- Guilty Plea -- News Release

Former Newark Mayor Kenneth Gibson and His Engineering Firm Plead Guilty in Connection with $50 Million Irvington School Construction Project

NEWARK - The engineering consulting company owned and operated by former Newark Mayor Kenneth A. Gibson pleaded guilty today to defrauding the Irvington School District, while Gibson himself pleading guilty to a felony charge of filing a false tax return, U.S. Attorney Christopher J. Christie announced.

The pleas, before U.S. District Judge William G. Bassler, come as jury selection was to begin in Gibson's second trial on charges he defrauded the school district in connection with a $50 million construction project. The first trial in the fall of 2001 ended in a hung jury and mistrial.

Following the guilty pleas, Judge Bassler imposed sentence. Gibson Associates was sentenced to five years of probation and ordered to make restitution of $349,000 to the Irvington School Board. Gibson Associates, its officers (Gibson included) and directors are also barred from obtaining any public contracts during the term of probation.

Judge Bassler reduced Gibson's sentence because of his age (he's 70) and poor health, sentencing him to three years of probation, ordered him to file amended and delinquent tax returns and make all tax and penalty payments.

Gibson Associates admitted through its counsel, Cathy Fleming, to engaging in a scheme to defraud the Irvington Board of Education of between $200,000 and $350,000. The Court found, and the government represented, that the loss to the Board of Education was $349,000. At the plea hearing Gibson Associates, of which Kenneth Gibson was 75-percent owner, admitted that it:

• billed the Board of Education for hours worked by Gibson Associates employees when they were not working on the school building project.

• falsely billed certain independent contractors as Gibson Associates employees in order to bill their hours at a higher rate.

• falsely billed about $43,000 in consultant expenses to the Board of Education when that consultant provided no services to the school building project.

Gibson pleaded guilty to a felony charge of filing a false personal income tax return for the year 1993. Gibson admitted that he reported $23,536 in income on the return when in fact he received additional income of $238,911 that year. At the plea hearing, the government asserted that Gibson thereby avoided paying approximately $78,000 in tax for that year.

Camille Savoca was vice president of Gibson Associates and 25-percent owner.

Savoca, as well as William Bernowich, 55, of Washington, N.Y., were both charged in the original Indictment and stood trial last year with Gibson. The jury deadlocked on the counts against them as well.

Today, the government dismissed the remaining tax charges against Savoca, while Bernowich pleaded guilty to making false statements to the FBI during the fraud investigation.

Bernowich was sentenced to two years probation and fined $500.

The investigation of the $49 million school construction project resulted in convictions of two public officials: David Fuller, former president of the Irvington Board of Education, pleaded guilty to bribery in February 2001. During that plea and in his trial testimony last year he admitted to receiving approximately $14,000 in payments from Gibson. In addition, Donald Silas, former vice president of the Irvington Board of Education was convicted of witness tampering in April 2001. At his trial, secretly-recorded taped conversations were introduced during which Silas admitted to receiving a payment from Gibson.

Christie Credited FBI Special Agents, under the direction of Special Agent in Charge Louie F. Allen, and Special Agents of the IRS, under the direction of Special Agent in Charge Anne D. Fahy, with their respective roles in the corruption investigation and prosecution.

-end-

Defense Attorneys:

Gibson - Cathy Fleming, Esq. New York

Gibson Associates - Fleming as well

Bernowich - Thomas Roth, Esq. Newark

Savoca - Lawrence Lustberg, Esq. Newark