January 22, 2010 - Michael Palermo, 69, of Philadelphia, was sentenced today to five years' probation, the first year of which will be served in home confinement. He was also ordered to pay restitution of $50,000 to the Senate of Pennsylvania, pay a $25,000 fine, and a $100 special assessment. Palermo was sentenced in connection with his conviction for conspiring with former State Senator Vincent Fumo to defraud the Senate Democratic Appropriations Committee (“SDAC”), announced United States Attorney Michael L. Levy. Palermo received a contract from the SDAC for consulting services which paid his firm, M.P. Consulting, Inc., a total of $287,000 in state funds between 1999 and 2004. The contract provided payments of $150 per hour for consulting services to the SDAC regarding the fiscal and operational analysis of intrastate transportation issues. But Palermo provided little or no actual work to the SDAC. Palermo was a friend of Fumo's who worked as an aide to the former senator in the early 1970s, when Fumo was director of a Pennsylvania agency, and, again, as chief of staff in Fumo's legislative district office in Philadelphia.
Palermo admitted that, beginning in or about July 1999, he submitted an invoice each month to the SDAC which fraudulently represented that he was entitled to payments under the contract in exchange for legitimate consulting services provided to the SDAC when, in fact, he provided little or no services to the Senate at all.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys John Pease and Robert Zauzmer.
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