MIL-OSI Security: Security News: Former School Official and Local Restauranteur Indicted in Kickback Scheme

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Source: United States Department of Justice News

Former Director of Food Services for Hempstead Public Schools Alleged to Have Steered More than $1 Million in Contracts to a Preferred Vendor in Exchange for Kickbacks

An indictment was unsealed today in federal court in Central Islip charging Sharon Gardner, the former Director of Food Services for the Hempstead Union Free School District (HUFSD), and Maria Caliendo, the owner of food service providers Smart Starts NY, Inc. (Smart Starts) and Prince Umberto’s restaurant in Franklin Square, with conspiracy to commit honest services wire fraud in connection with a kickback scheme involving HUFSD procurement contracts. The indictment also charges Caliendo with making false statements to a federal agent investigating the fraudulent scheme. The defendants are scheduled to be arraigned this afternoon before United States District Judge Joanna Seybert at the federal courthouse in Central Islip.

Breon Peace, United States Attorney for the Eastern District of New York; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Beth Dinkins, Special Agent-in-Charge United States Department of Agriculture, Inspector General’s Office; Terry Harris, Special Agent in Charge, U.S. Department of Education Office of Inspector General’s Eastern Regional Office; Thomas Fattorusso, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York; Anne T. Donnelly, Nassau County District Attorney; and Thomas P. DiNapoli, New York State Comptroller, announced the arrests and charges.

“As alleged, with little regard for the taxpaying public, the defendants secretly steered lucrative food service contracts to themselves and then illegally shared the profits,” stated United States Attorney Peace. “This Office will continue to vigorously investigate and prosecute those who attempt to corrupt our public institutions through illegal bribes and kickbacks, as well as the officials who enrich themselves at the expense of the public they serve.”

“As alleged, Ms. Gardner and Ms. Caliendo engaged in a scheme in which Ms. Gardner steered more than $1 million in sole-source school breakfast contracts to Ms. Caliendo’s company, in spite of the fact more cost-effective options existed. In exchange, Ms. Caliendo illicitly paid more than $100,000 in kickbacks to Ms. Gardner, which she used to purchase a variety of personal luxuries. Today’s action demonstrates the FBI’s commitment to bringing to justice those who seek to illegally benefit from taxpayer-funded programs intended to serve the public,” stated Assistant Director-in-Charge Driscoll.

“Instead of following the legitimate bidding process for a food services contract, the defendants allegedly used the Hempstead School District as their own piggy bank,” Nassau County District Attorney Donnelly said. “This prosecution sends a strong message to public officials that anyone using tax dollars to unjustly enrich themselves will be prosecuted to the fullest extent of the law.”

“There is no place for corruption in the United States, especially as it relates to programs set up to feed hungry children and provide assistance to the most vulnerable in our society,” stated Special Agent-in-Charge Beth Dinkins.

“It’s alleged this duo conspired together in this fraud scheme where Gardner procured millions of dollars in contracts for Caliendo’s business, choosing Caliendo’s company’s bid in exchange for high-value kickbacks,” said IRS-CI Special Agent in Charge Fattorusso. “While Gardner accepted the higher bid for her own personal gain, the taxpayers of the Hempstead Union Free School District were left holding the bill. IRS-CI continues to work with our law enforcement partners to ensure that those who choose to cheat the public to support their own extravagant lifestyle face the consequences of their criminal acts.”

“Stealing money meant to feed students in need is reprehensible,” said State Comptroller DiNapoli. “Due to my partnership with United States Attorney Peace, District Attorney Donnelly, the FBI and our federal partners, this former school employee and her co-conspirator will be held accountable for their alleged actions. I will continue to work with law enforcement across the state to root out public corruption and protect taxpayers.”

As alleged in the indictment, in her capacity as the Director of Food Services for HUFSD, Gardner helped secure lucrative contracts for Caliendo’s company, Smart Starts, to provide prepackaged breakfast meals for Hempstead public school students. For example, during the 2016-17 school year, Gardner persuaded HUFSD officials to treat Caliendo as a “sole source” vendor (a designation typically reserved for providers of unique or rare supplies for which sourcing is limited) of breakfast foods, thereby avoiding competitive bidding for the district’s business. Subsequently, in the 2017-18 school year, Gardner oversaw a supposedly competitive bidding scenario for the breakfast items, only to award a second procurement contract to Smart Starts despite the existence of more cost-effective bids. In total, pursuant to these procurement contracts, Caliendo’s company received more than $1.2 million from HUFSD.

In exchange, Caliendo kicked back a portion of the contract proceeds totaling more than $100,000 to Gardner through fraudulent payroll deposits and other payments. To conceal the illegal nature of the arrangement, those payments were deposited into a bank account that was created in the name of one of Gardner’s family members. Yet, the kicked back funds were spent by Gardner on international vacations, a leased vehicle and home furnishings, among other things. Approximately $13,000 in kicked back funds were also withdrawn by Gardner in cash from ATMs located near her home and workplace.

In voluntary interviews with investigators, Caliendo made materially false statements concerning the justification for the payments, falsely claiming that they represented repayment for a startup loan from Gardner’s family member, despite having received no capital contribution, work or labor from that individual.

If convicted, the defendants face up to 20 years’ imprisonment for the conspiracy to commit wire fraud charge. The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorneys Anthony Bagnuola and Charles P. Kelly are in charge of the prosecution.

The Defendants:
SHARON GARDNER
Age: 56
Lindenhurst, New York

MARIA CALIENDO
Age: 57
Elmont, New York

E.D.N.Y. Docket No. 22-CR-229 (JS) (JMW)

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