August 16, 2013

Tax evader, 82, sentenced in Navy kickback scheme

The Associated Press

PROVIDENCE, R.I. – An 82-year-old man convicted of tax evasion was sentenced Friday to two years of home confinement for his role in a kickback scheme that cost the U.S. Navy $18 million.

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In this July 9, 2012 file photo, Ralph Mariano Jr., walks up the steps into Federal Court in Providence, R.I. He was later convicted of tax evasion stemming from a kickback scheme that cost the U.S. Navy $18 million. U.S. District Judge Mary Lisi sentenced Mariano Friday, Aug. 16, 2013, in Providence, to two years of home confinement saying that because he is 82, a prison sentence would cost taxpayers even more. (AP Photo/Stephan Savoia, File)

The judge said she spared Ralph Mariano Jr. prison time because of his age and because it would cost taxpayers more to keep him behind bars.

Mariano, of North Providence, is the father of one of the scheme's admitted ringleaders, Ralph M. Mariano, a former civilian employee of the Naval Undersea Warfare Center in Virginia. The younger Mariano has pleaded guilty to using his position to add money to contracts held by Georgia-based contractor Advanced Solutions for Tomorrow, or ASFT. In return, the contractor funneled kickbacks to the elder Mariano, corrupt subcontractors and others.

The elder Mariano is the first of six people convicted in the federal investigation into the scheme to be sentenced.

Prosecutors said he received $2.5 million in payments from a subcontractor over 8 years. He was charged only for the years 2006 through 2009, and received $1.4 million during that time, never reporting the income on his tax returns. Prosecutors calculated that he failed to pay $488,000 in federal taxes during those years.

During Friday's sentencing hearing, U.S. District Judge Mary Lisi asked Mariano why he evaded taxes. He said he had retired with no pension, then acknowledged that he had lost hundreds of thousands of dollars gambling.

"I'm sorry all this happened, because of my family, what I put them through. I do apologize to the court," he said.

Lisi told Mariano it is her usual practice to sentence people to prison when they are convicted of tax evasion, because it is a crime against everyone.

"In order for the system to work, we rely on the honesty of the taxpayer," she said. "All of us have to make up for you not paying."

Prosecutors had recommended against imprisonment because of the cost and Lisi agreed, sentencing him to four years' probation, two of those to be spent on home confinement.

The others who have pleaded guilty in the case are Mariano's son; the son's girlfriend, Mary O'Rourke, a former executive based at ASFT's office in Middletown, R.I.; ASFT's founder, Anjan Dutta-Gupta of Roswell, Ga.; former ASFT executive Patrick Nagle of Marietta, Ga.; and ASFT subcontractor Russell Spencer. ASFT has gone out of business.

The five are scheduled to be sentenced in federal court in Providence in October.

A pending federal whistle-blower lawsuit alleges similar illegal conduct by the younger Mariano, Dutta-Gupta, Spencer, Nagle and others. The 2006 complaint, first filed under seal in Georgia and then transferred to Rhode Island and unsealed, was made under a rule that allows private citizens to sue on the government's behalf. The government this month said it would intervene in a portion of the claims brought in the lawsuit.


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