Philadelphia Traffic Court Judge, Two Others Named in Fraud Indictment

U.S. Attorney’s Office, Eastern District of Pennsylvania
September 13, 2012

PHILADELPHIA—An indictment was unsealed today charging Philadelphia Traffic Court Judge Robert Mulgrew, 54, and Lorraine Dispaldo, 58, both of Philadelphia, in a scheme to defraud the Pennsylvania Department of Community and Economic Development (“DCED”), announced United States Attorney Zane David Memeger and FBI Special Agent in Charge George C. Venizelos. The indictment also charges Dispaldo, Mulgrew, and Mulgrew’s wife, Elizabeth, 55, with filing false tax returns. The defendants were arrested this morning.

The primary counts of the indictment charge Robert Mulgrew and Dispaldo, who is an administrative aide to an unnamed Pennsylvania state representative, with numerous counts of mail fraud allegedly committed during their scheme to fraudulently receive and misuse Pennsylvania state grant funds awarded to non-profit groups. Between 1996 and 2008, the DCED awarded hundreds of thousands of dollars in grants to two community groups with which Mulgrew and Dispaldo were associated. DCED awarded more than $450,000 in grants to the Friends of Dickinson Square (“FDS”) with the understanding that the grants were to be used to purchase equipment and materials for the maintenance of Dickinson Square Park at 4th & Tasker Streets, Philadelphia, and surrounding neighborhood revitalization. Mulgrew, the vice-president of FDS, signed the FDS grant contracts with DCED. DCED also awarded approximately $397,000 in grants to the Community to Police Communications (“CPC”) with the understanding that the grants were to be used to purchase communications equipment for the police and to purchase materials to secure vacant lots and buildings for the protection of the police. Dispaldo signed the CPC grant contracts with DCED.

The indictment alleges that the defendants misrepresented their intentions to DCED, and that contrary to their agreement to spend grant funds solely to purchase equipment and materials for neighborhood revitalization and improved communications with the police, the defendants instead paid tens of thousands of dollars in grant funds to Mulgrew’s relatives and associates, including the teenage sons of his friends, and to the state representative’s life-long friends, for work purportedly done on behalf of FDS and CPC. The indictment also alleges that to create the impression that grant funds were being used in a concerted effort to maintain the park and surrounding neighborhoods and to secure property to protect the police, the defendants often created “make work” projects as a pretext for paying relatives and associates with grant funds. It is further alleged that Dispaldo often improperly used grant resources to address routine cleanup requests from the state representative’s local constituents. After distributing the funds, the defendants allegedly supplied false and misleading information to DCED to conceal the actual amount of grant funds which they paid to the relatives and associates contrary to the express purposes of the grant.

Mulgrew and Dispaldo are also alleged to have spent thousands of dollars of grant funds for their own personal uses. Mulgrew is alleged to have improperly reimbursed himself from FDS funds for thousands of dollars of expenditures which he claimed were incurred by FDS when they were not and for his expenditures for items not authorized under the terms of the FDS grants. The indictment alleges that Mulgrew and Dispaldo supplied DCED with false documents to conceal their own use of grant funds and other improper uses of the funds.

Robert Mulgrew and his wife, Elizabeth, are also charged with five counts of filing false joint personal income tax returns for tax years 2006 through 2010, one count of tax evasion for 2005, and obstructing the administration of the internal revenue laws. The tax counts allege that the Mulgrews did not report all of their income during 2005 through 2010 and claimed false business deductions which improperly reduced their tax liability.

Lorraine Dispaldo is charged with four counts of filing false personal income tax returns for tax years 2006 through 2009, and one count of bankruptcy fraud which alleges that she concealed her true income during 2008 and 2009 in her 2010 bankruptcy filing.

If convicted of all charges, Robert Mulgrew faces a maximum possible sentence of over 100 years in prison, five years’ supervised release, a $9.5 million fine, and a $3,800 assessment; Elizabeth Mulgrew faces a maximum possible sentence of 25 years in prison, three years’ supervised release, a $1.75 million fine, and a $700 assessment; and Lorraine Dispaldo faces a maximum possible sentence of over 100 years in prison, five years’ supervised release, a $9 million fine, and a $3,600 assessment.

The case was investigated by the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Paul L. Gray and John M. Gallagher.

An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.