Stephen Pirrone, 54, of Paramus (formerly of Old Tappan and Norwood, N.J.), pleaded guilty today to second-degree charges of conspiracy and theft by deception before Superior Court Judge James J. Guida in Bergen County. Under the plea agreement, the state will recommend that Pirrone be sentenced to seven years in state prison. He must pay restitution of $54,623 to the Department of Labor.
On Dec. 9, co-defendant Wilfredo Sanchez, 38, of Newark, pleaded guilty to second-degree conspiracy and third-degree theft by deception before Judge Guida. The state will recommend that Sanchez be sentenced to five years in prison, and he must pay $43,908 in restitution. On Dec. 3, Jose Flores, 39, of Newark, and Andre Brown, 37, of Woodland Park, each pleaded guilty to third-degree theft by deception before Judge Guida. The state will recommend that Flores be sentenced to three years in state prison, and he must pay $25,502 in restitution. The state will recommend that Brown be sentenced to 364 days in the county jail as a condition of a term of probation. Brown must pay $59,400 in restitution.
The defendants were charged in a June 26, 2014 indictment obtained by the Division of Criminal Justice Specialized Crimes Bureau. Deputy Attorney General Debra A. Conrad prosecuted the case and took the guilty pleas. Judge Guida scheduled sentencing for Pirrone for April 17. The other three defendants are scheduled to be sentenced on Feb. 27.
The state’s investigation revealed that Pirrone originated the fraudulent scheme and enlisted the other defendants. From November 2006 through March 2013, the defendants collected $183,433 in unemployment benefits on seven fraudulent unemployment insurance claims, including two filed by Sanchez and Flores using false identities. All of the false claims were based on fraudulent employer quarterly wage statements submitted to the state in the names of two businesses that were defunct: a trucking company formerly operated by Pirrone called Culver Transportation, Inc., and a bankrupt trucking company from which Pirrone formerly rented office and terminal space. Sanchez and Flores attempted to file additional claims using eight other false identities, but those claims were determined to be invalid by the Department of Labor and no benefits were distributed.
“As the Department of Labor has upgraded its security tools and techniques to detect unemployment fraud, they have helped us build strong criminal cases such as this one targeting multiple defendants and major fraud schemes,” said Acting Attorney General Hoffman. “We will continue to work diligently as partners to protect the state’s unemployment trust fund and the workers it serves.”
“Unemployment insurance fraud hurts honest New Jersey workers who strive to earn a living and count on these benefits to keep them afloat financially if they lose their jobs,” said Director Elie Honig of the Division of Criminal Justice. “By sending these men to prison, we are putting offenders on notice that we will aggressively prosecute this type of fraud.”
“The Attorney General continues to be a strong partner in my department’s efforts to pursue more and more of these fraud cases as criminal acts. We have developed strong procedures to prevent fraud and stop money from leaving state coffers, but we are not going to forgive those who think they have found ways to defeat our system and dupe the taxpaying public,” said Commissioner Harold J. Wirths of the New Jersey Department of Labor and Workforce Development.
Since 2011, the Department of Labor has been cracking down on unemployment insurance fraud, saving the New Jersey Unemployment Trust Fund more than $535 million to date. Among the many anti-fraud practices and procedures adopted are software and program changes that enable the department to detect false claims by cross-checking data internally and with other databases to flag invalid information or suspicious patterns involving common elements among multiple claims, such as identical residences or Internet protocol (IP) addresses. The investigation into Pirrone and his co-defendants began when their claims were flagged based on their use of the same defunct employers and other common elements.
Pirrone owed a debt to Brown and used the scheme to pay off that debt. Pirrone also taught the scheme to Sanchez, who worked with Flores in filing false claims. Sanchez and Flores paid part of the proceeds of their false claims to Pirrone by wiring money to his commissary account in federal prison. Pirrone was sentenced to federal prison in March 2012 for fraudulently collecting federal tax refunds by filing false returns.
Deputy Attorney General Conrad presented the case to the state grand jury for the Division of Criminal Justice Specialized Crimes Bureau. The investigation was conducted for the Division of Criminal Justice by Detectives Lynn Patrick Fitzgerald and Glenn Stanton. The investigation was conducted for the Department of Labor and Workforce Development by Supervising Investigator Michael Kulyk and Supervisor of Investigations Michael B. Marich of the Bureau of Benefit Payment Control, under the direction of Charles J. Walkowiak, Director of Fraud Prevention and Risk Management.
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