Executive with Bromwell ties pleads guilty in fraud case

Forti agrees to become informant in U.S. inquiry

September 09, 2005|By Matthew Dolan | Matthew Dolan,SUN STAFF

A building industry executive has secretly pleaded guilty to fraud charges after agreeing to be a confidential informant for federal investigators looking into the Baltimore construction company he once owned and its ties to a former state senator, according to documents unsealed yesterday.

Michael C. Forti, who was an executive with Poole and Kent Co., pleaded guilty Tuesday in U.S. District Court in Baltimore to one count of mail fraud in connection with an illegal scheme to obtain minority contracts worth nearly $5 million through his wife's company.

He and his wife, Geraldine, also pleaded guilty to tax evasion for not reporting free labor they received from their employees who built the couple a waterfront home in Baltimore County.

It was unclear what the guilty pleas mean for the lengthy grand jury investigation into Poole and Kent, which received high-profile state jobs, and its relationship with former state Sen. Thomas L. Bromwell, who once chaired the Senate Finance Committee and resigned his seat in 2002.

Bromwell, who is head of the state's Injured Workers Insurance Fund, has not been charged in the inquiry, his attorney said this week.

Efforts to reach Forti, his wife and their attorneys have been unsuccessful. Prosecutors declined to say why the documents were unsealed late yesterday.

Michael C. Forti served as a part-owner and executive of two companies: Poole and Kent Corp. and Forti Poole and Kent, a steel-work subcontractor.

During the same time, Forti's wife, Geraldine, ran a small commercial mechanical construction company known as Namco. The subcontractor was a certified woman-owned business enterprise, eligible for work as a minority business.

According to court documents unsealed yesterday, Poole and Kent Corp., as well as Forti Poole and Kent, routinely hired Namco as a subcontractor.

In spring 1999, Geraldine Forti decided that she wanted to close her business. But W. David Stoffregen, then Poole and Kent's president and chief executive, did not want to lose the ability to use Namco, court papers said. Namco enabled Stoffregen's company to meet the minority contracting requirements on its governmental projects.

Court documents say that Stoffregen proposed to Michael Forti that Poole and Kent secretly operate and control Namco in exchange for regular payments to Geraldine Forti.

The Fortis agreed.

Some of Namco's construction work during that time included a $2.2 million contract for terminal expansion at Baltimore-Washington International Airport and a $650,000 contract for construction at the University of Maryland School of Medicine in Baltimore. At some point, Michael Forti began kicking back about one-half of his wife's salary and automobile-allowance payments to Stoffregen, the court documents say.

In exchange for allowing Stoffregen to use Namco as a minority front, Stoffregen paid the Fortis more than $224,000 between June 1999 and about fall 2003. He disguised the payments as weekly salary checks and a monthly automobile allowance from Namco to Geraldine Forti, the documents say.

Vickie LeDuc, a spokeswoman for the U.S. attorney's office in Maryland, declined to comment about Stoffregen. Attempts to reach Stoffregen, who left Poole and Kent in March, were unsuccessful last night.

The court documents unsealed yesterday do not mention Bromwell, but he has been long connected to the Fortis and their companies.

State records show that Bromwell's wife, Mary Pat Bromwell, has been employed by Namco.

Stoffregen is a longtime friend of Bromwell's and a contributor to his campaign committee. Adam E. Snavely, Poole and Kent's executive vice president, declined to comment yesterday.

Poole and Kent also installed the plumbing and ventilation systems in Bromwell's half-million-dollar Baltimore County home. Bromwell belatedly listed a debt to the firm in a 2002 financial disclosure statement filed with the State Ethics Commission.

Court documents show that the Fortis did not pay workers from Poole and Kent to complete construction work on their new waterfront home.

In June 2000, the Fortis purchased property on Shore Road in Middle River. Between 2000 and 2002, the Fortis built a house, later valued at $1.6 million.

The companies' workers "provided much of the labor for the construction of [the Fortis'] new residence. The employees' time was charged to various company jobs and the employees were paid by the companies," court documents said.

The total value of the employees' wages, benefits and taxes associated with their work on the Forti residence was more than $258,000.

According to court papers, "the Fortis did not reimburse or otherwise pay the companies for the value of the labor, services, and materials paid by the companies to the employees, subcontractors and vendors for the construction of the Forti residence."

On their tax returns, the Fortis admitted, they intentionally failed to include about $284,000 of income attributable to the free labor, services and materials for their house.

According to his plea agreement, "Mr. Forti shall act in an undercover capacity to the best of his ability, and allow such authorities to monitor and tape record conversations with persons who are believed to be engaged in criminal conduct."

Geraldine Forti has a similar agreement.

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