Shore Road man indicted in $36M fraud scheme

NORTH READING – A 47-year-old Shore Road man and his brother, a Stoneham police officer, were indicted by a federal grand jury last week.

Christopher Ponzo, 15C Shore Rd., and his 48-year-old brother, Joseph Ponzo of Stoneham, were both indicted on one count of wire fraud conspiracy and 12 counts of wire fraud. The brothers are accused of allegedly paying a Mass Save vendor company employee tens of thousands of dollars in weekly cash bribes, kickbacks and other in-kind benefits, including a John Deere tractor, a computer, home bathroom fixtures, and free electrical work, among other things in exchange for the procurement of over $36 million in Mass Save contracts with the vendor company.

The defendants were arrested on April 29 and arraigned in federal court.

According to the indictment, Joseph Ponzo, a full-time Stoneham police officer, and his brother, Christopher Ponzo, an owner of an electrical contracting company, conspired to bribe an associate employed by a Mass Save lead vendor company (Company A) in exchange for the associate’s assistance in procuring Mass Save contracts that netted the Ponzos millions of dollars in Mass Save contracts.

Specifically, from 2013 to 2017, the Ponzos allegedly paid the associate tens of thousands of dollars in cash bribes, kickbacks and other in-kind benefits. According to the indictment, from 2013 to 2017, Christopher Ponzo paid the associate $1,000 in cash on a weekly basis. At times, Christopher Ponzo allegedly paid the associate $5,000 to $10,000 in cash, telling the associate that the extra money was from Joseph Ponzo for his part in the bribery scheme.

In return for these payments, it is alleged that the associate, among other things, helped the Ponzos create companies; assisted in gaining approval for the companies to serve as Mass Save contractors for Company A; assisted in obtaining Mass Save projects for the Ponzo’s companies; and helped the Ponzos receive payments from Company A for completed projects. As a result of the scheme, Christopher Ponzo and Joseph Ponzo allegedly collected approximately $29 million and $7 million in fraudulently obtained Mass Save funds, respectively.

In one such instance, according to the indictment, the associate helped Joseph Ponzo set up a company, Air Tight, to do insulation work and get approved as a Company A contractor under the Mass Save program. Joseph Ponzo 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 Joseph Ponzo 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,” stated U.S. Attorney Rachael S. Rollins.

“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,” added Rollins.

“Every year, Massachusetts homeowners shell out hundreds of millions of dollars to fund energy conservation projects for consumers—and today we arrested Joseph and Christopher Ponzo for allegedly cheating them by paying a steady stream of bribes and kickbacks to an insider who steered contracts their way,” said Joseph Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation in Boston.

“These brothers allegedly raked in millions of dollars and are now accused of going to great lengths to conceal their bold and brazen scheme. We have said this before, and it merits repeating. If you are a victim of, or witness to a public corruption scheme, it’s never too late to do the right thing. The FBI is here, we are doing our job, and we want to hear from you,” Bonavolonta added.

Joleen D. Simpson, the special agent in charge of Criminal Investigations in Boston for the Internal Revenue Service, concurred.

“Mass Save is all about providing consumers who qualify in the Commonwealth of Massachusetts with low or no-cost energy-efficiency projects for their homes,” said Simpson. “The fact that a member of law enforcement who pledged an oath to protect the community allegedly abused this program as a get-rich scheme is particularly reprehensible. Today’s indictment begins the path to ensuring integrity in this program and should serve as a clear warning to those who are attempting to defraud it.”

Massachusetts law requires utility companies to collect an energy efficiency surcharge on all energy consumers in the state. 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. Mass Save is a Massachusetts public-private partnership sponsored by various gas and electric utility companies that disburses the funds collected to energy conservation projects that benefit consumers.

Under the Mass Save program, utility companies select lead vendors to approve and select contractors to perform energy improvement work for residential customers. The contracting work, which is performed at no-cost or reduced cost to the customer, is then paid for by the lead vendors with Mass Save funds.

The charges of wire fraud conspiracy and wire fraud each provide for a sentence of up to 20 years in prison, up to three years of supervised release, and a fine of up to $250,000. Sentences are imposed by a federal district court judge based upon the U.S. sentencing guidelines and statutes which govern the determination of a sentence in a criminal case.

The details contained in the indictment are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. Assistant U.S. Attorneys Elysa Wan and Dustin Chao of Rollins’ Criminal Division are prosecuting the case.