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Probation Set in Hospital Bid Rigging

Thursday, April 4, 2013

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Six years of cooperation with federal prosecutors in a bid-rigging case involving two New York City hospitals earned an insulation contractor a pass on prison this week.

Michael Theodorobeakos was sentenced Tuesday (April 2) to one year of probation and fined $20,000 for his role in the case.

Theodorobeakos and his two companies, Monosis Inc. and STU Associates Inc., pleaded guilty April 4, 2007, to conspiring to rig bids on the supply of maintenance and insulation services to New York Presbyterian Hospital and Mount Sinai Medical Center.

In his plea, Theodorobeakos admitted that his companies participated in a broad conspiracy to rig bids for maintenance and/or insulation services at both hospitals from 2000 to September 2005.

NY Presbyterian Hospital
Wikipedia / Julia Sorenson

Two officials from New York Presbyterian Hospital are serving prison time for their role in the scheme. Contractor Michael Theodorobeakos received probation for his cooperation.

In pleading guilty, Theodorobeakos faced to 10 years in prison and a $1 million fine.

Federal Fraud Investigation

Theodorobeakos’s plea was part of a widespread, ongoing federal antitrust investigation into fraud, bribery, tax fraud and bidding irregularities related to contracts administered by New York Presbyterian’s Facilities Operations Department and Engineering Department and by Mount Sinai’s Engineering Department.

The hospitals are among New York City’s largest and most prestigious.

Authorities say purchasing officials at the hospitals received more than a million dollars in kickbacks from companies that then got tens of millions of dollars in contracts for re-insulating pipes, removing asbestos, and other maintenance.

Guilty Pleas, Prison Terms

The multi-year probe has swept in more than a dozen contractors and hospital personnel, including:

  • Michael Vignola and his company Mister AC Ltd., which pleaded guilty in November 2007, to conspiring to rig bids on heating, ventilation and air conditioning (HVAC) services provided to New York Presbyterian and paying kickbacks to former hospital purchasing officials.
  • Aaron S. Weiner, who pleaded guilty in 2008 to participating in a conspiracy in which he “acted as a conduit in another million-dollar kickback scheme also involving one of the same former NYPH purchasing officials involved with the Vignola kickback schemes,” the FBI said in a statement.
  • Mariusz Debowski, who pleaded guilty in 2009 to conspiracy in filing false tax returns. Prosecutors said Debowski had conspired to falsify tax returns through a check-cashing scheme that funneled more than $2.3 million to his co-conspirators as payment for construction services that were never provided, the FBI said.
  • Two officials from New York Presbyterian were sentenced last fall to prison for their roles; a supervisor from the hospital has pleaded guilty and is awaiting sentencing.
  • Asbestos contractor and decorated firefighter Stephen E. McAnulty was sentenced in January to three years of probation and 100 hours of community service for lying to the FBI about his knowledge of the case.

Mount Sinai Hospital's Engineering Department was also implicated in the multiyear bid-rigging scheme, which has resulted in more than a dozen arrests.

Bid Rigging

Authorities said the ring of contractors would share bids and falsify submissions to hospitals. They would collude and decide who would win particular bids and, in some cases, submit “fraudulently high bids by competitor companies,” which allowed one pre-arranged company to appear to be the low bidder, the FBI said.

Some of the activity, including a request to submit phony bids on company letterhead, was directed by hospital purchasing officials, who have since pleaded guilty. In some cases, the “winning” bidder then gave subcontracting work to the losers.

Plea Agreement

Theodorobeakos admitted in his plea that his company got large contracts for insulation and maintenance services by participating in the scheme. His plea required him to “cooperate fully and truthfully” with prosecutors throughout the investigation.

Theodorobeakos’ lawyer, Nicholas De Feis, told the news service Law 360 this week that his client had provided much of the information for the prosecution’s case.

“When he agreed to cooperate, the government had little direct evidence,” De Feis told the news service.

'A Good Man Who Did a Bad Thing'

Theodorobeakos, of Upper Saddle River, NJ, is president of the executive board of the Hellenic-American Chamber of Commerce, according to its website.

Capitol Link Forum

Michael Theodorobeakos (second from left) joins other guests at the 14th annual Capital Link Investor Forum, “Building a New Greece,” Nov. 29 at the Metropolitan Club in New York City.

A biography on the site says Theodorobeakos came to the United States from Greece in the early 1980s to attend the Polytechnic Institute of New York University, where he earned master’s degrees in environmental engineering and mechanical engineering.

In 1988, the site says, Theodorobeakos co-founded Athenica Environmental Services and served as its president until 2005. The company was responsible for overseeing and managing projects funded by the European Union, the site says.

In 2005, he became vice president of Minosis, a general construction contractor with projects throughout New York and New Jersey.

“He is truly a good person who obviously did a bad thing but he has done everything to try to make it right,” Feis said. “He only blamed himself for this misconduct. He never said, like so many of these people, ‘Why me?’”


Tagged categories: Bidding; Commercial contractors; Enforcement; Health Care/Hospitals; Insulation; Laws and litigation; Maintenance programs

Comment from John Fauth, (4/4/2013, 8:28 AM)

Out of curiosity, did any of these criminals do actual jail time? Does anyone think probation and community service is a real deterrent to, or commensurate with, the magnitude of these crimes? Evidently, knowing the right people in government conveys a certain immunity, and characterization as "a good man who did a bad thing". Newsflash... good men don't do those things.

Comment from Donald L Crusan, (4/4/2013, 3:48 PM)

Probation & 20K more white collar crime ~ 'A Good Man Who Did a Bad Thing'? ~ For more than $2.3 million ~ We are in the wrong trade!

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