Joseph Ponzo, 48, of Stoneham, and Christopher Ponzo, 47, of North Reading, were each indicted on one count of wire fraud conspiracy and 12 counts of wire fraud.
A Massachusetts police officer and his brother have been indicted in a $36 million fraud scheme, the U.S. Attorney's Office announced Friday.
Joseph Ponzo, 48, of Stoneham, and Christopher Ponzo, 47, of North Reading, were each indicted on one count of wire fraud conspiracy and 12 counts of wire fraud, federal prosecutors said. They were arrested Friday and were expected to appear in federal court in Boston at noon.
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According to the indictment, Joseph Ponzo, a full-time Stoneham police officer, and his brother Christopher, who owns an electrical contracting company, conspired to bribe an associated employed by a Mass Save vendor company in exchange for the associate's assistance procuring Mass Save contracts that netted the brothers millions of dollars.
"The indictment concerns allegations regarding the employee's outside business interests, and is not connected to his work as a Stoneham Police Officer," Town Administrator Dennis Sheehan and Stoneham Police Chief James McIntyre said in a statement. "The allegations in the indictment do not represent the values of the Stoneham Police Department."
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Mass Save's website says it is a collaborative of Massachusetts' natural gas, electric utilities and energy efficiency service providers, including Berkshire Gas, Cape Light Compact, Eversource, Liberty, National Grid and Unitil. It works to help residents, businesses and communities make energy-efficient upgrades through rebates, incentives, training and more.
The indictment alleges that the Ponzos paid a Mass Save vendor company employee tens of thousands of dollars in weekly cash bribes, kickbacks and other benefits, including a John Deere tractor, a computer, home bathroom fixtures and free electrical work.
According to the indictment, from 2013 to 2017, Christopher Ponzo paid the associate $1,000 in cash on a weekly basis. At times, Christopher allegedly paid the associate $5,000 to $10,000 in cash, telling the associate that the extra money was from Joseph for his part in the bribery scheme.
In return for the payments, it is alleged that the associate helped the Ponzos create companies, assisted in gaining approval for the companies to serve as Mass Save contractors, assisted in obtaining Mass Save projects for the Ponzo’s companies and helped the Ponzo’s receive payments for completed projects.
As a result of the scheme, Christopher and Joseph Ponzo allegedly collected approximately $29 million and $7 million in fraudulently obtained Mass Save funds, respectively.
In one instance, the indictment alleges the associate helped Joseph Ponzo set up a company, Air Tight, to do insulation work and get approved as a contractor under the Mass Save program. Joseph put his spouse’s name on Air Tight incorporation documents and contracting licenses in order to conceal his involvement in his corrupt side business. It is alleged that Joseph collected millions of funds under the Mass Save program through this contract, despite having no professional experience in residential insulation work.
“Virtually every Massachusetts resident who uses energy is surcharged and pays for Mass Save. These payments are mandatory and amount to hundreds of millions of dollars. Defrauding the Mass Save program for millions of dollars means we are all left paying the bill," U.S. Attorney Rachael Rollins said in a statement. "As we allege, these defendants, motivated by greed, orchestrated a corrupt scheme to line their pockets with money fraudulently obtained from honest paying energy consumers. These bad actors allegedly took advantage of funds set aside for energy-efficiency projects for their own personal financial gain and, moreover, did so through illegal, preferential treatment. It is corruption at its core and will not be tolerated.”
Massachusetts law requires utility companies to collect an energy efficiency surcharge on all Massachusetts energy consumers. These funds, which amount to hundreds of millions of dollars each year, are to be disbursed by the utility companies to fund energy efficiency programs and initiatives in Massachusetts.
Under the Mass Save program, utility companies select lead vendors to approve and select contractors to perform energy improvement work for residential customers. This contracting work – performed at no-cost or reduced cost to the customer – is then paid for by the lead vendors with Mass Save funds.
