Former Fumo Associate Charged with Conspiring with
Fumo to Defraud Senate of Pennsylvania
PHILADELPHIA—United States Attorney Michael L. Levy today announced the filing of an
Information against S. Michael Palermo charging that defendant Palermo conspired with former State
Senator Vincent Fumo to receive a no-work contract from the Pennsylvania Senate Democratic
Appropriations Committee (“SDAC”), under which Palermo received $287,000 in state funds between
1999 and 2004.
It is alleged that defendant Palermo was a friend of Fumo's for many years, who had worked as
an aide to Fumo in the early 1970s when Fumo was a gubernatorially appointed director of a Pennsylvania
agency, and then again as Fumo's chief of staff in Fumo's legislative district office in Philadelphia from 1978
to 1985. In addition, it is alleged that, beginning in the late 1990s, and continuing until in or about 2004,
Fumo, when in the Harrisburg area, stayed in the house that Palermo occupied in that area, and Palermo
provided various personal assistance to Fumo during that time. The indictment alleges that Palermo also
was extensively involved, beginning in early 2003, in assisting Fumo in acquiring and developing a farm in
the Harrisburg area.
According to the Information, the contract with defendant Palermo became effective in 1999. It
allegedly provided that Palermo's firm, M.P. Consulting, Inc., would provide consulting services to the
SDAC regarding the fiscal and operational analysis of intrastate transportation issues. The annual contracts
called for payments of $150 per hour, up to a stated limit. While the limit increased annually, the hourly
rate did not; Palermo, according to the Information, just billed more hours in order to obtain the full contract
amounts. The annual payments, beginning on July 1 of each year, are alleged to be as follows:
| 1999 |
$50,000 |
| 2000 |
$60,000 |
| 2001 |
$66,000 |
| 2002 |
$66,000 |
| 2003 |
$45,000 |
Beginning in or about July 1999, defendant Palermo allegedly submitted an invoice each month
to the SDAC which fraudulently represented that he was entitled to full payment under the contract in
exchange for legitimate services provided to the SDAC. Through August 2002, it is alleged that Palermo's
monthly invoices simply stated "services rendered" and provided a total number of hours. Beginning in
September 2002, Palermo provided an itemization of where he allegedly worked, simply stating a location
(either a Senate office or the supposed office of M.P. Consulting) and a total number of hours. Palermo
allegedly never provided any specification of what he purportedly did, and in fact, he provided little or no
services to the Senate at all. In particular, it is alleged that there is no written record of any work he ever
did under the contract. Palermo allegedly received all funds provided for in the contracts, to reward him
for his friendship with and personal services to Fumo.
On March 16, 2009, a federal jury found Fumo guilty of 137 counts of fraud, tax offenses, and
obstruction of justice, and he was subsequently sentenced to 55 months in prison. In part, the jury found
Fumo guilty of fraud in connection with the contract and payments extended to Palermo, based on the same
transactions addressed in the Information filed today against Palermo.
INFORMATION REGARDING THE DEFENDANTS
| NAME |
ADDRESS |
AGE OR YEAR OF BIRTH |
| S. Michael Palermo |
Philadelphia, PA |
69 |
If convicted of the charge of conspiracy to commit mail fraud stated in the Information, the
defendant faces a maximum possible sentence of five years' imprisonment, three years' supervised release, a
$250,000 fine, restitution, and a $100 special assessment.
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