News

Paint contractor admits bilking schools
Friday, January 30, 2004
BY ANA M. ALAYA
Star-Ledger Staff
The owners of an Essex County painting company that has been doing business in New Jersey for 30 years admitted yesterday to defrauding three North Jersey school districts as part of a $1.5 million contract scheme.

Paint Smart of Nutley and its owners, Jose LoGrecco of Park Ridge and Charles Paraboschi of West Paterson, admitted in Superior Court in Hackensack that they failed to pay workers the prevailing wages set in contracts with the districts, then pocketed the profits.

In some cases, workers who were supposed to be paid about $30 an hour were getting as little as $15, Attorney General Peter C. Harvey said during a news conference after the men pleaded guilty to fraud.

"Thieves who take money out of the schools are taking money from the children," said Harvey, whose office is in the midst of an investigation of school districts and vendors. "If you are stealing from school districts, we will find you, and you will go to jail."

Paint Smart, a preapproved state contractor that has done work for various school districts and public agencies, including the Port Authority of New York and New Jersey, is accused of skimming $1.5 million off contracts with the Paterson, Ridgewood and South Brunswick school districts.

LoGrecco, 53, and Paraboschi, 65, each pleaded guilty to one count of second-degree false payment claims in return for a five-year prison sentence. Both also will have to pay $250,000 in restitution to the districts. The company will also pay $250,000.

Both are free on bail and will be sentenced May 7.

Paraboschi, the vice president of Paint Smart, nodded and said "yes" when Judge William C. Meehan asked if he understood his rights. Prosecutors said Paraboschi, a former Newark policeman, lived lavishly and owns a Rolls- Royce.

LoGrecco, the company president, was more timid in court and told the judge he couldn't read "100 percent" and only had a fifth- grade education.

Both men refused to comment after the hearing.

Harvey said his office offered the minimum prison sentence -- the fraud charge carries up to 10 years -- because both men agreed to pay restitution.

Authorities said the yearlong investigation of Paint Smart revealed the company had been defrauding districts since 1999 and had been hired despite being barred from working in New York City two years ago after similar wage violations were uncovered.
The company would be paid a predetermined prevailing wage by a school district, but then pay subcontractors just 40 percent of that wage, authorities said.

To mask their scheme, Paraboschi and LoGrecco had Paint Smart checks made out to subcontractors. They then cashed the checks by forging signatures, and retained the proceeds, authorities said.

"Many of these workers were working especially hard, and they were frightened to come forward and talk to us," Harvey said, explaining that some of the workers were immigrants who did not know the prevailing wage and were just happy to have work.
Deputy Attorney General Harry Moskowitz said most of the subcontractors were either very small or one-man crews.

Moskowitz also said the state- run Paterson school district failed to check whether Paint Smart was paying the correct wages and that the poor bookkeeping could have multiple consequences.

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