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Pa. court affirms sentences in $136M business fraud case

A Pennsylvania appeals court denied two men’s request to adjust sentences they received for executing “the largest disadvantaged business enterprise fraud in the nation’s history,” according to a news release from the U.S. Attorney’s Office.

Ernest Fink Jr., 71, of Schuylkill County must serve the 41-month sentence he received in February, and Joseph Nagle, 55, of Deerfield Beach, Fla. must serve the 84-month sentence he received in November 2015, according to a ruling announced Thursday by the Third Circuit Court of Appeals.

Fink and Nagle engaged in a 15-year scheme that defrauded the U.S. Department of Transportation of more than $136 million in Pennsylvania government contracts, according to the U.S Attorney’s Office. The pair, owners of concrete beam manufacturer Schuylkill Products, Inc., entered into an illegal arrangement with Marikina Engineers and Construction Corp., a Pennsylvania-certified disadvantaged business entity, to win contracts they would not otherwise receive.

The Department of Transportation helps socially and economically disadvantaged small-business owners receive government contracts through its Disadvantaged Business Enterprise Program. The program awards money to state and municipal programs, including the Pennsylvania Department of Transportation and Southeastern Pennsylvania Transportation Authority, so they can offer contracts to qualifying businesses.

Nagle and Fink struck a deal with Marikina in which Marikina would serve as a subcontractor for PennDOT and SEPTA on projects that had disadvantaged business participation requirements. Schuylkill Products and its subsidiary, CDS Engineers Inc., would then complete the work and keep most of the profits in exchange for paying a fee to Marikina.

Fink and Nagle were initially sentenced in 2014, but the appeals court vacated the sentences in 2015 because of an error in the way the courts initially calculated the loss amount. During resentencing, Fink’s sentence was reduced from 51 to 41 months’ imprisonment, while Nagle’s 84-month sentence stayed the same.

Both men appealed the new sentences, but the court ruled in favor of keeping those sentences this week.

“I’m disappointed in the court’s decision,” said Philadelphia-based attorney Ellen Brotman, who had sought a shorter sentence for Fink. “I think in terms of how to interpret sentencing guidelines, it should have been accepted by the court as it was during the appeal.”

She noted that Fink, given his age, is considered elderly according to legal guidelines, and will consequently feel a larger impact from the lengthy sentence than a younger person would.

The Appellate Court, however, rejected this claim, saying, “a 41-month sentence for a 70-year-old first-time offender, who for at least 15 years presided over the largest reported DBE fraud in the history of the U.S. Department of Transportation, is not unreasonable.”

Nagle’s attorney, William Kent of Jacksonville, Florida, declined to comment.

Three other former Schuylkill Products executives were also sentenced in 2014 for their roles in the scheme.

Jennifer Wentz
Jennifer Wentz covers Lancaster County, York County, financial services, taxation and legal services. Have a tip or question for her? Email her at jwentz@cpbj.com.

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