23 Mar , 2012
By Michael Whiteley, Eastern Bureau Chief
An auditing supervisor for the State Workers’ Insurance Fund (SWIF) was on the payroll of three Pennsylvania staffing companies for at least a decade before he was arrested on bribery charges Monday by a special investigations unit of the Pennsylvania Attorney General’s Office, according to the criminal complaint filed against him.
An affidavit filed Monday in connection with James McDonnell’s arrest alleges McDonnell became a private consultant for American Personnel Services, Wallieo Enterprises and Certified Flagger Co., three staffing companies based in Hazelton, Pa. All three companies are owned by Paul D’Andrea.
To keep the relationship a secret, D’Andrea paid the bulk of the money — $73,254.58 â€“ to the SWIF supervisor’s wife, Michelle McDonnell, in the form of weekly consulting fees and commissions, the complaint alleges.
D’Andrea paid James McDonnell 1% commissions on every new client employer he brought to the staffing companies, according to the affidavit, written by Senior Special Agent Joseph A. Farkus.
In return, James McDonnell secured premiums refunds totaling $91,662 for D’Andrea’s staffing companies between Oct. 11, 2007, and October 8, 2010, according to the complaint. Investigators said no supporting documents were available at SWIF for the refunds.
McDonnell, 53, and 44-year-old wife were arrested on a variety of charges alleging they engaged in a conspiracy to solicit and accept bribes from at least 15 SWIF policyholders in exchange for securing policy refunds.
The McDonnells are scheduled to appear at a preliminary hearing in Pennsylvania Commonwealth Court in Scranton, Pa. on Monday.
They could not be reached for comment this week, and D’Andrea declined to discuss the case.
“I can’t discuss anything until the preliminary hearing on Monday,” he told WorkCompCentral.
SWIF, Pennsylvania’s largest workers’ compensation carrier, operates as a division of the Pennsylvania Department of Labor and Industry. The insurer, Pennsylvania’s carrier of last resort, referred all questions to the Department of Labor and Industry.
Labor and Industry spokesman Christopher Manlove said Thursday that James McDonnell has worked at SWIF for the past 20 years and 36 weeks and is paid $51,228 a year. He was suspended without pay or benefits Monday pending conclusion of the case.
Manlove referred further questions to Attorney General Linda Kelly. Lauren Bozart, Kelly’s assistant press secretary, released copies of the affidavits filed in connection with the McDonnell’s arrests, but declined to comment further on the case.
“It’s part of an ongoing investigation,” she said. “I couldn’t comment beyond that.”
The bribery case is the latest in a series of public relations problems for SWIF.
Last month, State Auditor Jack Wagner accused SWIF of lax management of a contract that paid Pennsylvania-based medical bill review firm MedRisk $4.9 million during 2009 and 2010. Wagner said $2.5 million of that went to pay MedRisk for services duplicated by SWIF workers.
Wagner said SWIF paid another $73.7 million to an unrelated vendor, StoneRiver, to provide a computer system for which costs had been projected at $10.6 million.
Wagner referred the audits to Kelly’s office for further investigation last month. His office did not return a phone call Tuesday to discuss the status of that case.
The Scranton Times-Tribune reported last September that McDonnell and SWIF were named as co-defendants in a sexual harassment suit filed by one of McDonnell’s former employees. The newspaper said the woman, identified only as Jane Doe, accused McDonnell of making sexual advances and said SWIF managers ignored her complaints. The case is still pending, according to news reports.
Manlove said Tuesday he could not provide details on the sexual harassment case.
“That’s about all I’m going to be able to say about James McDonnell at this time,” Manlove said Tuesday.
Cynthia L. Pollick, a Philadelphia attorney representing the woman, did not return a telephone call.
Another former SWIF employee, Peter David Brigido, 53, was accused in November 2010 of operating a football and basketball betting pool out of SWIF’s headquarters in Scranton. Brigido was charged with pool-selling and bookmaking, according to a news report at the time.
Monday’s charges identify three Pennsylvania employers who engaged in bribery discussions with James McDonnell.
The affidavits allege that Michelle McDonnell existed as an employee of Wallieo Enterprises only on paper. Investigators said D’Andrea spoke to her on two of three occasions during the relationship.
“For all practical purposes, Michelle McDonnell is a ghost employee,” Farkus, the state investigator, said in one of the affidavits.
Through the arrangement, D’Andrea paid the McDonnells a 1% commission for each new employer McDonnell brought to the staffing company. The payments were based on the size of each customer’s payroll.
Investigators allege that James McDonnell also struck a deal with R.N. DeMeck Roofing and Siding Co., based in Madison Township, Pa. McDonnell allegedly approved premiums reductions totaling $79,636 between March 13, 2008, and Jan. 20, 2011. Investigators said DeMeck was a client of D’Andrea’s staffing companies and obtained the refunds without proper documentation.
Robert DeMeck, the roofing company owner, told investigators that, in return for the premium reductions, he put Michelle McDonnell on his payroll from January through April 2011 to do housecleaning for him and paid her $200 a week.
DeMeck told investigators James McDonnell reversed a $54,000 premium increase for the contractor and secured a premium refund of an additional $10,000.
DeMeck said he became convinced after further discussions with McDonnell that he would have to use payroll services provided by Wallieo, one of D’Andrea’s companies, to “avoid any future hassles with SWIF.”
DeMeck told investigators James McDonnell also asked the roofing contractor for loans. He said he may have loaned McDonnell between $10,000 and $15,000 beginning in 2010. He said the loans were never repaid, according to the affidavit.
Thomas Stone, the owner of Scranton-based furniture company Stone Office, told investigators he met with James McDonnell in October 2010, after a SWIF audit boosted the company’s premiums by $50,000, according to the affidavit.
Stone said McDonnell offered to get Stone’s premiums reduced, “but you will have to pay me for the help,” investigators reported. Stone said he turned down the auditor’s offer and, instead, successfully appealed the case and got the premiums reduced by $18,000, the affidavit states.
Neither Stone nor DeMeck returned telephone calls Tuesday.