A Broadview Heights man was sentenced today to 30 months in prison for his role in the theft of more than $3.3 million from the Cuyahoga Heights School District, law enforcement officials said.
Dominick Palazzo, 42, pleaded guilty earlier this year to one count of conspiracy to commit mail fraud and one count of conspiracy to commit money laundering. His brother, Joseph M. Palazzo, was the Information Technology director of the Cuyahoga Heights School District. The Palazzos, along with David Donadeo and Dennis Boyles, conspired together to defraud the school district through dozens of fraudulent billings submitted to the Cuyahoga Heighs School District by sham companies that Dominick Palazzo, Donadeo and Boyles controlled, according to court documents.
The thefts occurred over a period of four years. The U.S. District Judge Benita Y. Pearson sentenced Dominick Palazzo to 30 months in prison, and ordered him to pay $3,333,448 in restitution to the Cuyahoga Heights School District. Judge Pearson also ordered the forfeiture of $43,409.53 that law enforcement previously seized from bank accounts that Dominick Palazzo controlled or that Palazzo otherwise paid over voluntarily to the government toward this debt.
“This defendant, along with his brother and friends, stole millions of dollars from the children and taxpayers in Cuyahoga Falls," said Carole S. Rendon, Acting U.S. Attorney for the Northern District of Ohio. “Their lengthy prison sentences appropriately reflect the severity of their offenses."
“This investigation uncovered a multi-million-dollar embezzlement scheme laced with a web of financial lies that left a local school district in financial peril," said Kathy A. Enstrom, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati Field Office.
“Dominick Palazzo violated the trust that the citizens and students of Cuyahoga Heights had placed in him by funding his personal account with their tax dollars," said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office. “The investigators are to be commended for uncovering this enormous fraud."
Joseph Palazzo was employed as the Information Technology director of the Cuyahoga Heights School District until February 2011. He was responsible for managing the district’s IT Department, which included purchasing hardware and software and making other IT expenditures to benefit the district and its students, according to court documents.
Joseph Palazzo devised a scheme to divert millions of dollars of district funds to his personal use and the personal use of others. This scheme involved Joseph Palazzo submitting to the district for payment false invoices that purported to be for IT-related goods and services purchased from legitimate companies by the district’s IT Department to benefit the district. He represented that the invoices he submitted were legitimate, and he approved the false invoices himself or forged the signature of another in the approval section, according to the information.
However, these invoices were for services never performed, fictitious software and hardware, and software and hardware never received or already purchased by the district from another source. The companies named on the invoices did not supply such goods to or perform such services for the district and were nothing more than “shells," according to court documents.
Joseph Palazzo’s actions caused the district to issue checks to these shell vendor corporations, which were established and owned by Dominick Palazzo, Boyles and Donadeo. The shell vendor corporation owners kept approximately half of the stolen money themselves and funneled the remainder of the money back to Joseph Palazzo for his personal use, according to court documents.
These shell companies included Laptops and More, Inc., and Impact Global, LLC, which were established by Dominick Palazzo.
The district sustained a total loss of at least $3,333,448, as a result of the fraudulent scheme according to the information.
Joseph Palazzo was previously found guilty and is currently serving a sentence of more than 11 years in prison. Boyles was sentenced to more than two years in prison and Donadeo’s case is pending.
This case was prosecuted by Assistant United States Attorney Rebecca Lutzko following an investigation by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation.
Source: U.S. Department of Justice, Office of the United States Attorneys
