Former aide to Pa. state rep. sentenced to 18 months for fraud conviction

A federal judge has sentenced a state lawmaker’s former aide to a year-and-a-half behind bars for her role in a scheme to defraud state government.

U.S. District Judge C. Darnell Jones, II, sitting in the Eastern District of Pennsylvania, on Nov. 25 sentenced Lorraine Dispaldo, 58, of Philadelphia, to 18 months in prison for her involvement in defrauding the Pennsylvania Department of Community and Economic Development, according to the U.S. Attorney’s Office in Philadelphia.

Records show that Dispaldo was originally scheduled to be sentenced back in September, but the sentencing was pushed back to last week.

Prosecutors had said that Dispaldo helped to orchestrate a scheme to fraudulently receive and misuse state grant money awarded to nonprofit organizations between 1996 and 2008.

During that time frame, the DCED had awarded hundreds of thousands of dollars in grants to two groups with which Dispaldo and her co-defendant, former Philadelphia Traffic Judge Robert Mulgrew, were affiliated – the Community to Police Communications and the Friends of Dickinson Square.

The DCED had awarded approximately $397,000 in grants to the Community to Police Communications to be used to buy communications equipment for police and to purchase materials to be used to secure vacant lots and buildings for the protection of emergency responders, the record shows.

The DCED gave out about $460,000 in grants to the Friends of Dickinson Square to be used toward maintenance of the outdoor communal space, located at 4^th and Tasker Streets in South Philadelphia.

This spring, Dispaldo pleaded guilty to 36 counts of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, filing false personal income tax returns and bankruptcy fraud, according to prosecutors.

In addition to the 18 months in federal prison, Jones also ordered Dispaldo to pay restitution in the amount of $120,865 and a $3,600 special assessment.

Dispaldo was also given three years of supervised release.

Mulgrew, her co-conspirator, abruptly pleaded guilty to the charges against him during the first day of his trial in federal court back in September.

The former jurist pleaded guilty to mail fraud and conspiracy to commit mail fraud and filing a false tax return.

During the time of his crimes, Mulgrew was sitting on the since-shuttered Philadelphia Traffic Court, which was plagued by a ticket-fixing scandal.

In the current case, Mulgrew was accused of using the DCED money for personal expenditures.

In Dispaldo’s case, the woman was accused of falsifying five of her “close-out” reports that were sent to the DCED by concealing most of the $104,000 in payments she made to people in the two nonprofit organizations from 2005 to 2010.

Dispaldo had admitted to paying tens of thousands of dollars in CPC and FDS grants to Mulgrew’s relatives and associates instead of using the money for materials and equipment for the two community groups.

Dispaldo admitted that she submitted to the Internal Revenue Service false 1099 forms.

The U.S. Attorney’s Office stated that to conceal the improper payments Dispaldo made to certain individuals, she also submitted to the DCED “staggering numbers” of duplicative phone invoices.

For example, Dispaldo sent to the DCED $91,500 worth of receipts in the close-out report for the third grant in the amount of $90,000, while $41,640 of those receipts had already been sent in with either the first or second grant close-out reports, according to the government.

Dispaldo also filed false income tax returns for 2006 through 2009, and she concealed her true income for 2008 and 2009 in a 2010 bankruptcy filing, the prosecutor’s office stated.

Mulgrew, meanwhile, still awaits sentencing.

Dispaldo worked as a legislative aide to State Rep. William Keller, D-Phila.