Former New Rochelle Schools Director Pleads Guilty To Corruption

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that JOHN C. GALLAGHER JR., the former Director of Environmental Services for the City School District of New Rochelle, pled guilty before U.S. District Judge Kenneth M. Karas in White Plains federal court to bribery in connection with a scheme to solicit bribes from an outside contractor to channel school district business to the contractor’s company.

Acting U.S. Attorney Joon H. Kim said:  “As he admitted today, John Gallagher demanded and received more than $150,000 in cash bribes from a contractor for the school district where Gallagher worked.  As a school district employee, Gallagher was a public servant, whose job it was to do what was in the best interest of schoolchildren and taxpayers.  Instead, Gallagher corruptly did what was in his own interests, lining his pockets with bribes.  Combatting public corruption at all levels in government remains one of the Office’s top priorities.”

According to the allegations contained in the Indictment charging GALLAGHER and in the Information to which Mauro Zonzini pled guilty on May 9, 2017, as well as statements made in related court filings and proceedings:

The City School District of New Rochelle (the “School District”), which receives federal benefits significantly in excess of $10,000 each year, has a Buildings and Grounds Department.  It is responsible for, among other things, maintenance and repair of facilities used by the School District to educate the children.  To do certain maintenance and repair work, the School District uses outside contractors. 

Among the outside contractors used by the School District are companies with specialties – in, for example, masonry, electrical work, plumbing, and carpentry – sometimes referred to as “bid vendors” or “time and materials” contractors.  These contractors bid annually, using set rates, and if awarded contracts, are paid by the School District to handle any projects within the contractors’ specialties that do not exceed a certain threshold cost.  (As of 2009, that amount, per New York State law, was $35,000.)  A more costly project that exceeds the threshold is offered for bid and awarded to the lowest responsible bidder, unless the project is deemed a health and safety emergency (i.e., a major plumbing leak during the school year), in which case, the time and materials vendor may be asked to do the job, regardless of the cost.

GALLAGHER, the defendant, was the School District’s Director of Environmental Services, overseeing the School District’s buildings and grounds.  To fill this position, the School District contracted with a company that provided, among other things, management services (“Company-1”).  GALLAGHER, as an employee of Company-1, was thereby made the School District’s Director of Environmental Services, and worked full-time in the School District, as its agent, with authority to act on its behalf.  GALLAGHER, as Director of Environmental Services, had influence over which contractors were awarded work by the School District, and over whether, when, and how contractors were assigned work and paid for work. 

Mauro Zonzini owned and wholly controlled a construction company in Westchester County (the “Company”).  The Company contracted with the School District to do masonry work, and was hired each year by the School District as its time and materials contractor for masonry work.

From in or about 2009 through in or about 2013, GALLAGHER engaged in a corrupt, criminal scheme, in which he solicited, demanded, and accepted bribes in the form of cash payments, intending to be influenced and rewarded in connection with the School District’s business and transactions with the Company.  The bribe payments that GALLAGHER solicited, demanded, and accepted were paid by Zonzini.  Routinely, after the School District paid the Company for work performed, GALLAGHER met in person with Zonzini in a parking lot, where Zonzini provided GALLAGHER with a kickback in the amount of 10 percent of the payment the Company had received from the School District.  In this way, GALLAGHER received dozens of cash bribe payments from Zonzini, over the course of at least approximately four years, which together amounted to more than $150,000.  GALLAGHER solicited, demanded, and accepted the bribe payments intending to be influenced in and rewarded for the School District’s decisions to award the Company contracts for masonry work, to assign masonry projects to the Company, and to make timely payment to the Company.

To avoid detection of his corrupt scheme, GALLAGHER concealed the cash bribe payments he received from Zonzini.  GALLAGHER did so, as he admitted during a secretly recorded conversation, by keeping the payments “in my car or in my trunk.”  In some instances he used the cash to make payments directly toward living expenses, without depositing it in his bank account.  For example, during the corrupt scheme, GALLAGHER used the bribe money to make credit card payments, car payments, and, as he admitted during the secretly recorded conversation, “I paid for some college.”

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GALLAGHER, 53, of Harrisburg, Pennsylvania, pled guilty to one count of bribery, in violation of Title 18, United States Code, Section 666(a)(1)(B), which carries a maximum sentence of 10 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

GALLAGHER’s sentencing is scheduled for January 9, 2018, at 2:00 p.m., before Judge Karas.      

Zonzini is scheduled to be sentenced on February 16, 2018, at 10:30 a.m., before Judge Nelson S. Román.

 Mr. Kim praised the outstanding investigative efforts of the United States Postal Inspection Service, the Internal Revenue Service, Criminal Investigation, and the Office’s criminal investigators.  He also thanked the U.S. Department of Education’s Office of Inspector General for its assistance. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Martin and Benjamin Allee are in charge of the prosecution.

GALLAGHER’s sentencing is scheduled for January 9, 2018, at 2:00 p.m., before Judge Karas.          

Zonzini is scheduled to be sentenced on February 16, 2018, at 10:30 a.m., before Judge Nelson S. Román.

Mr. Kim praised the outstanding investigative efforts of the United States Postal Inspection Service, the Internal Revenue Service, Criminal Investigation, and the Office’s criminal investigators.  He also thanked the U.S. Department of Education’s Office of Inspector General for its assistance. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Martin and Benjamin Allee are in charge of the prosecution.