2002-11-18 -- Hernandez, Joseph -- Guilty Plea -- News Release

Former North Bergen MUA Official Admits to Bribery and Contract-Rigging

NEWARK - A former North Bergen Municipal Utilities Authority official admitted today that he accepted cash payments, a jet ski and home improvements from two MUA contractors and concealed his acceptance of the bribes, U.S. Attorney Christopher J. Christie announced.

Joseph Hernandez, 33, pleaded guilty before U.S. District Judge Joseph A. Greenaway Jr. to a one-count Information charging mail fraud.

When he is sentenced by Judge Greenaway, Hernandez faces a maximum of five years in prison and a $250,000 fine, according to Assistant U.S. Attorney Jeffrey Clark. Judge Greenaway set sentencing for Feb. 24 at 11:30 a.m.

As the purchasing agent of the MUA from 1990 to June 2000, Hernandez was intimately involved in the awarding of MUA contracts and the processing of payments under those contracts. He admitted taking cash payoffs and other improper benefits from two contractors with MUA contracts, in return for facilitating and speeding the payment process for the vendors' work under their MUA contracts. Hernandez admitted that those payments were to one of the vendors which he knew were the result of fraudulent overbilling of the MUA. Neither vendor was named in the Information or in court during the plea proceeding.

Hernandez also admitted that he accepted a $6,000 check and several cash payments, including one payment of $2,500 from one vendor, identified as a heating, ventilation and air conditioning and construction contractor.

From the second MUA vendor, identified as an excavation contractor, Hernandez admitted that he accepted not only cash payments of approximately $4,000, but also the construction of a retaining wall at his personal residence and a jet ski and trailer. The jet ski was provided to Hernandez, he said, in return for his official acts in connection with an excavation contract on 69th Street originally valued at $215,000 but under which the vendor ultimately received over $550,000. Hernandez later sold the jet ski for $3,000.

Hernandez also admitted that in return for the cash payments and other benefits, he participated with the contractors in a contract-rigging scheme. With Hernandez's assistance, the vendors were awarded contracts without any competitive process, while phony competing quotes were manufactured in the names of real but unsuspecting companies to make it appear as if the jobs had been competitively awarded. In some instances Hernandez accepted supposed competing quotes from the vendors knowing that they were bogus; at other times Hernandez manufactured the phony quotes on his MUA computer. According to the Information, 22 MUA contracts valued at approximately $233,000 were awarded to the two vendors under the bogus quote scheme.

In one instance detailed in the Information, Hernandez steered work to the HVAC contractor without competitive bidding by breaking up a single project, the construction of a storage room at an MUA facility, into eight smaller contracts, each of which was below the threshold for sealed, competitive bids and subject only to a requirement that competing quotes be solicited. Hernandez and the vendor then created bogus quotes and awarded all eight contracts, valued at $72,880, to the vendor.

The Information charges that Hernandez's acceptance of the improper benefits in exchange for his official actions to help the vendors, as well as the concealment of those payments, defrauded the MUA and the citizens of North Bergen of their right to Hernandez's honest services. The United States mails were used to further the scheme when the registration for the jet ski was mailed to the Department of Motor Vehicles in the name of the son of the second vendor, despite the fact that Hernandez was then the true owner of the jet ski.

Under U.S. Sentencing Guidelines, Judge Greenaway will determine Hernandez's actual sentence based on a formula that takes into account the severity and characteristics of the offense and Hernandez's criminal history, if any.

Parole has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time.

Christie credited Special Agents of the FBI Newark in Newark, under the direction of Special Agent in Charge Louie F. Allen, for their work in developing the case.

The Government is represented by Assistant U.S. Attorneys Jeffrey D. Clark and Phillip Kwon of the U.S. Attorney's Office in Newark.

Defense Attorney: John Haggerty, Esq. Randolph