Morristown & Erie helps derail fraud scheme
Representatives of the Morristown & Erie Railway helped to catch a state engineer trying to inflate the cost of a state-funded roadway repair by more than $700,000, according to the New Jersey Office of the Attorney General.
Acting Attorney General John J. Hoffman announced Monday that Gaudner B. Metellus, a suspended senior engineer for the state Department of Transportation, pleaded guilty to official misconduct in Morris County.
Appearing before state Superior Court Judge Robert J. Gilson, Metellus admitted that he and an alleged accomplice solicited representatives of the Morristown & Erie to fraudulently inflate the cost of a project to rehabilitate Eagle Rock Bridge in Roseland from about $693,000 to $1,421,510
Morristown & Erie operates a short-line freight railroad in New Jersey. The funds for the bridge work would come the State Rail Freight Assistance Grant Program. In return, Metellus proposed that the railway officials pay him $325,000.
The alleged accomplice, Ernest J. Dubose, 34, of Boston was indicted with Metellus on June 29, 2011. He continues to face charges of conspiracy, official misconduct, bribery, attempted theft by deception and false contract payment claims. He is scheduled for trial in March.
According to Hoffman, Metellus solicited representatives of the Morristown & Erie to engage in a scheme to fraudulently inflate the cost of the bridge work. Railroad officials alerted the state Division of Criminal Justice about the plot and cooperated in the investigation, Hoffman said.
Metellus proposed that the company submit false invoices for rehabilitation work that would never be performed and demanded that it split the state grant funds with them. Metellus was responsible for confirming the need for repair work and inspecting completed work in connection with the grant program.
“Metellus treated his authority over public grants like a license to steal, soliciting huge bribes from a railway company and falsely inflating the cost of a publicly financed project by nearly three-quarters of a million dollars,” Hoffman said. “Fortunately, the company reported him, and Metellus will be spending multiple years in prison, instead of spending his corrupt windfall.”
Morristown & Erie officials secretly taped an Aug. 12, 2010 meeting that the CEO and another employee held with Metellus at the company’s offices in Morristown, in which Metellus described the fraudulent scheme. The company contacted the Division of Criminal Justice the following day.
The company cooperated in the state’s investigation, recording additional conversations in which Metellus and allegedly Dubose, discussed the scheme, according to Hoffman.
On Aug. 23, 2010, Metellus and Dubose again met with Morristown & Erie representatives in their Morristown offices and allegedly received two company checks made payable to Dubose in the amounts of $10,000 and $315,000.
The defendants allegedly instructed company representatives to make the checks payable to Dubose as a consultant on the project. In reality, Hoffman said, Dubose had no knowledge or skills that enabled him to act in that capacity, but rather was acting as the middle man to accept the bribes from the railway, disburse them between himself and Metellus and insulate Metellus from detection.
The $10,000 check was subsequently deposited into a bank account in Dubose’s name, according to Hoffman. The $315,000 check was postdated to Nov. 5, 2010, at the direction of Metellus, who indicated that the company would receive state grant funds by that time.
Metellus, 35, of Philadelphia, was suspended without pay after his arrest in September 2010.
Under a plea agreement, the state will recommend that Metellus be sentenced to three years in state prison, including a two-year period of parole ineligibility. He must forfeit his job and permanently will be barred from public employment. He also will forfeit his state pension and retirement benefits.
Sentencing for Metellus is scheduled for March 20.
Staff Writer William Westhoven: 973-428-6627; wwesthoven@dailyrecord.com.