A pair of brothers, who are former cops, convicted of a bribery kickback scheme that netted them millions of dollars in Mass Save contracts have lost their appeal.
Christopher and Joseph Ponzo — ex-Stoneham police officers — defrauded a company to obtain tens of millions of dollars of Mass Save funds through paying bribes and kickbacks to company employees.
Mass Save is a state-mandated program that’s funded by surcharges on utility bills — supporting energy-conservation programs and initiatives in Massachusetts.
The Ponzo brothers pleaded guilty to felonies arising from the bribery kickback scheme, and a district judge sentenced both of them to 27 months in federal prison. The judge also ordered Christopher to forfeit $13.2 million, and Joseph to forfeit $3.6 million.
The brothers then appealed the sentences and forfeitures to the U.S. Court of Appeals for the First Circuit — which has affirmed the punishments across the board.
“How the Ponzos became crooks and what they want from us is kind of a long story,” the appeals court wrote in its ruling.
The brothers paid tens of thousands of dollars in cash bribes, kickbacks, and other in-kind benefits — including a John Deere tractor, a computer, home bathroom fixtures and free electrical work — to a company’s employees in exchange for the employees’ help in getting the brothers millions of dollars in Mass Save contracts.
Christopher owned CAP Electric, Inc., a business specializing in energy-conservation work. In 2013, he began bribing people at CLEAResult, a firm that picked and oversaw contractors on Mass Save projects.
He later pulled Joseph into the scheme, with Christopher and CLEAResult employee Eric Darlington helping Joseph set up an air-sealing shell company called Air Tight Solutions, LLC as a Mass Save contractor.
Doing next to no work for the company and without telling CLEAResult, Joseph subcontracted the air-sealing projects to Chinasa Construction Services, Inc., and falsely claimed Chinasa employees were Air Tight employees. The Ponzos even created fake email addresses for the Chinasa staffers to make it look like they worked at Air Tight.
To cover his share of the payola, Joseph sent money from Air Tight to Christopher and CAP Electric and labeled it “subcontractor” business expenses. Christopher then bought off CLEAResult employees.
From 2013 to 2017, he gave Darlington $1,000 cash every week and bought him expensive things like an Apple MacBook, a John Deere tractor, bathroom fixtures, and outdoor lights.
And after CLEAResult fired Darlington in 2017, the brothers began bribing CLEAResult employee Peter Marra — sending him cash and gift cards for special favors like getting heads-ups on inspections and audits.
All told, CAP Electric took in about $36 million from CLEAResult, and Air Tight received about $7.4 million.
During the course of the bribery-kickback scheme, Joseph aided in the filing of false tax returns by claiming hundreds of thousands of dollars in false business deductions.
To disguise personal expenses as business deductions, Joseph used his company credit card to make hundreds of thousands of dollars in purchases at Home Depot, Lowes and Staples, claiming to his tax preparers that charges at those establishments were business-related.
In reality, he used the company credit card at those stores to purchase gift cards that he and his spouse then used to make thousands of dollars in personal expenditures.
“Life was good for the millionaire brothers,” the appeals court wrote. “But the government eventually caught on. And arrests, indictments, guilty pleas, sentencings, and forfeitures followed.”
The brothers in their appeal were attacking the sentences and forfeitures from many angles.
“Broadly speaking, the Ponzos argue (either individually or collectively) that the judge procedurally erred — first by miscalculating the tax loss attributable to Joe in setting the base-offense level for his tax crimes, then by misapplying guidelines enhancements to their sentences, and finally by misstating how much money they made from their misdoings,” the appeals court wrote. “But none of their arguments work.”
“Chris claims… that ‘everyone affected by’ his crimes ‘was enriched’ by his work (or to use his alternative phrasing, no one suffered ‘financial loss’) — especially ‘CLEAResult, the supposed victim.’ But… his crimes corrupted the Mass Save program in at least three ways: by damaging the utilities’ confidence in the companies approving and overseeing the projects; by corroding CLEAResult’s faith in its workers; and by eroding the public’s trust in the program — points the government makes in its brief without any denial from Chris in his reply brief,” the court added.
Massachusetts law requires utility companies to collect an energy efficiency surcharge on all Massachusetts energy consumers. These funds, which amount to hundreds of millions of dollars each year, are to be disbursed by the utility companies to fund energy efficiency programs and initiatives in Massachusetts.
Under the Mass Save program, the utility companies select lead vendors to approve and select contractors to perform energy improvement work for residential customers.
