ALBUQUERQUE - Two men from Gallup, N.M., pleaded guilty today to federal charges arising out of a scheme to defraud the United States and the U.S. Department of Housing and Urban Development (HUD) of more than $100,000. The guilty pleas were announced by U.S. Attorney Damon P. Martinez, Phyllis Robinson, Special Agent in Charge of Region 6, HUD Office of Inspector General, and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.
The defendants, Danny Garcia, 38, and Michael Virruso, 61, were indicted in Aug. 2013, on one count of conspiracy and eight counts of making false claims against the United States. Garcia also was charged with three counts of theft from programs receiving federal funds.
According to the indictment, between June 2010 and Oct. 2012, Garcia and Virruso engaged in a scheme to steal federal funds provided by HUD to the Gallup Housing Authority (GHA). HUD is a federal agency whose core mission is to make quality, affordable housing accessible to all Americans. HUD oversees and funds programs designed to provide affordable housing for low-income Americans. One such program, the Capital Fund Program (CFP), provides grants to public housing agencies for the purpose of making improvements to public housing developments. GHA is a public housing agency that receives approximately $400,000 in CFP grants each year and Garcia was the Executive Director of GHA at the time of the offenses charged in the indictment.
As Executive Director of GHA, Garcia was responsible for selecting contractors to carry out GHA projects, reviewing and approving invoices payable by GHA, and requesting HUD funds to pay for GHA projects. According to the indictment, in summer 2010, Garcia awarded a contract to remove and replace sidewalks in a GHA housing development to a construction company that employed Virruso and appointed Virruso to act as safety inspector. While working on the project, Virruso submitted invoices to GHA for work performed by the company and for which the company received payment. Garcia used GHA funds to pay Virruso’s invoices and then obtained reimbursement from HUD’s CFP. Virruso and Garcia then formed a company together, MCL Construction. Virruso submitted a fraudulent invoice from MCL to Garcia, who approved the invoice for payment from HUD funds, and both men collected a share of the proceeds. Virruso fraudulently received more than $75,000 through this scheme. In addition, Garcia embezzled more than $15,000 of HUD funds by misusing a GHA debit card.
During today’s proceedings, both men entered guilty pleas to Counts 1 and 9 of the indictment charging them with conspiracy to commit false claims against the United States and false claims against the United States. Garcia also pleaded guilty to Count 10 of the indictment charging him with theft from a program receiving federal funds. In their respective plea agreements, Garcia and Virruso each admitted participating in the unlawful scheme described in the indictment. Garcia also admitted embezzling GHA funds by making personal purchases exceeding $5,000 per year using a debit card linked to a GHA bank account.
Under the terms of the plea agreements, Garcia and Virruso each will be sentenced to a prison term within the range of 18 to 24 months followed by a term of supervised release to be determined by the court. Garcia also was ordered to pay $105,000 with interest in restitution to the United States, including $75,000 that is to be paid jointly with Virruso. Both men remain on conditions of release pending their sentencing hearings, which have yet to be scheduled.
The case was investigated by the Region 6, HUD Office of Inspector General and the Albuquerque Division of the FBI, and is being prosecuted by Assistant U.S. Attorney Jeremy Peña.
Source: U.S. Department of Justice, Office of the United States Attorneys
