INDICTMENTS ANNOUNCED INTO ALLEGED FRAUD INVOLVING THE ADMINISTRATION OF LACKAWANNA COUNTY’S WORKERS’ COMPENSATION FUND AND ALLEGED EXTORTION AND MONEY LAUNDERING INVOLVING CONTRACTS FOR MAINTENANCE AT THE LACKAWANNA COUNTY COURTHOUSE

Martin C. Carlson, Acting United States Attorney for the Middle District of Pennsylvania, J.P. Weis, Special Agent in Charge, Federal Bureau of Investigation, and Leslie DeMarco, Special Agent in Charge, Internal Revenue Service, jointly announced that two felony Indictments and one felony Information have been filed as a result of an on-going federal criminal investigation by the Federal Bureau of Investigation and the Internal Revenue Service into alleged fraud involving the administration of Lackawanna County’s Workers’ Compensation Fund and alleged extortion and money laundering involving contracts for maintenance at the Lackawanna County Courthouse.

The first Indictment charges Charles A. Costanzo, age 47, of Dunmore, Pennsylvania, and former third party administrator for the Lackawanna County Workers’ Compensation Fund, with one count of conspiracy in violation of Title 18, United States Code, Section 317, 19 counts of wire fraud in violation of Title 18, United States Code, Section 1343, one count of health care fraud in violation of Title 18, United States Code, Section 669, one count of insurance fraud in violation of Title 18, United States Code, Section 1033, one count of money laundering in violation of Title 18, United States Code, Section 1956, two counts of filing a false tax return in violation of Title 26, United States Code, Section 7206 and one count of forfeiture in violation of Title 18, United States Code, Sections 981 and 982. In this indictment it is alleged that Costanzo conspired with Marc Stephen Boriosi to misappropriate over $600,000 of Lackawanna County funds. The Indictment states that from on or about April 2004 until on or about September 5, 2005 Costanzo used some of the amounts he misappropriated for such personal expenditures as a new 2005 Cadillac Escalade and personal investments of over $330,000. Costanzo is alleged to have paid Boriosi over $200,000 claiming the payments were for surveillance services performed by Boriosi doing business as Endless Mountains Investigations, LLC. In fact, the Indictment states that Boriosi did little to nothing to justify receiving County money and does not even have a professional investigator’s license. If convicted of all offenses Costanzo faces a maximum term of 431 years incarceration, fines totaling $6,500,000 and a term of supervised release as well as forfeiture of the proceeds and derivative proceeds of the offenses.

At the same time that this Indictment was returned, federal officials announced the filing of criminal charges and a plea agreement charging Marc Stephen Boriosi, age 37, of Clarks Summit, Pennsylvania, with a single count of conspiracy to commit wire fraud in violation of Title 18, United States Code, Section 371 and a single count of income tax evasion in violation of Title 26, United States Code, section 7201. According to Acting U.S. Attorney Carlson, a plea agreement was also filed indicating that Boriosi has reached an agreement with the Government to plead guilty to both of the offenses contained in the Information and cooperate with the on-going investigation. Boriosi faces a maximum of 10 years incarceration, fines totaling $500,000 and a term of supervised release.

According to federal officials, the grand jury has returned a second Indictment in this on-going public corruption investigation. The second Indictment charges Charles A. Costanzo and Philip E. Forgione, age 65, of Dunmore, Pennsylvania, with one count of conspiracy and one count of interference with commerce by threats or violence in violation of Title 18, United States Code, Sections 371 and 1951; one count of money laundering in violation of Title 18, United States Code, Section 1956; and one count of forfeiture. Additionally, Costanzo is charged with five counts of engaging in monetary transactions in property derived from specified unlawful activity in violation of Title 18, United States Code, Section 1957 and two counts of filing a false tax return in violation of Title 26, United States Code, Section 7206. This Indictment alleges that Costanzo and Forgione conspired to extort money paid by Lackawanna County from 2004 through 2006. The Indictment states that Forgione received extortion payments totaling approximately $94,550 and Costanzo received a total of approximately $195,860. In addition, Forgione and Costanzo are both charged with laundering the money through bank accounts they maintained at Penn Security Bank and Fidelity Bank, respectively. Lastly, the second Indictment charges Costanzo with failing to report the money he misappropriated from Lackawanna County and the money he extorted from Alicon Environmental, Inc. to the Internal Revenue Service. If convicted of all offenses, Forgione faces a maximum of 45 years’ incarceration; fines totaling $750,000; and a term of supervised release. Based on the second Indictment, Costanzo faces a maximum of 151 years incarceration, fines totaling $2,500,000 and a term of supervised release. Both Costanzo and Forgione face the possibility of forfeiture of the proceeds and derivative proceeds of the offenses.

Acting U.S. Attorney Carlson stated the charges are the result of a joint investigation conducted by the Scranton Resident Agency of the Federal Bureau of Investigation and the Scranton office of the Criminal Investigation Division, Internal Revenue Service. In announcing these charges, Acting U.S. Attorney Carlson stated: “The citizens of Lackawanna County deserve a county government good, honest, and honorable. When public officials violate the public’s trust for their own personal enrichment, it is the responsibility of the law enforcement community to take action. Yesterday’s Indictment represent the first steps in an on-going investigation designed to hold public officials accountable to the public they serve.”

Agent DeMarco stated: “Public corruption is a crime that is generally motivated by greed and the dedicated men and women of IRS, Criminal Investigation use their financial investigative expertise to assist in the prosecution and conviction of individuals who violate the public's trust. We are committed to working with the U.S. Attorney's Office and other federal agencies to deliver the message that public officials must comply with the same laws as the citizens they serve.”

Special Agent-in-Charge J.P. Weis noted: “These are times when government and municipal agencies are being asked to do more with less. When a public official squanders public funds, such behavior is unacceptable and offensive.”

Prosecution of all charges has been assigned to Assistant U.S. Attorney Lorna N. Graham.

****
An Indictment or Information is not evidence of guilt but simply a description of the charge made by the Grand Jury and/or United States Attorney against a defendant. A charged Defendant is presumed innocent until a jury returns a unanimous finding that the United States has proven the defendant’s guilt beyond a reasonable doubt or until the defendant has pled guilty to the charges.