STATEN ISLAND — A Staten Island family that ran a school bus company contracted by the city allegedly tried to defraud the government of more than $10 million with bank and tax fraud schemes, according to the U.S. Department of Justice.
Laraine Castellano, 72, her son Dennis Scialpi, 44, both from Staten Island, and another son, Thomas Scialpi, 51, of Saddle River, New Jersey, were hit with a five-count indictment on Wednesday for bank fraud, conspiring to commit bank fraud and tax fraud for various schemes they had while owning yellow school bus companies from 2004 to 2011, the DOJ said.
"Companies owned and operated by Laraine Castellano, Thomas Scialpi and Dennis Scialpi received more than $300 million from city contracts to transport children to New York City public schools. But that was not enough for these defendants," Acting U.S. Attorney Kelly Currie said in a statement.
"As alleged, they used their companies to defraud the federal government and financial institutions of tens of millions of dollars, all to enrich themselves."
According to the DOJ, their various companies held under United Entities took out two bank loans in 2004 and 2007 for $14.5 million to establish an employee stock ownership plan for non-union employees.
While they filed paperwork to set up the plan, Castellano and her sons never funded the program and their workers didn't know it existed.
The company also submitted material to conceal the fact they were violating the terms of the loans and eventually defaulted on them, the DOJ said.
In 2008 and 2009, Castellano and Thomas Scialpi also created fake professional employer organizations to handle payroll taxes for their company, but intentionally underfunded them so they couldn't fully pay their taxes, the DOJ said.
When the IRS discovered the shortfall, the pair created another professional employer organization to continue the scheme and tried to defraud the IRS out of more than $10 million in payroll taxes, the DOJ said.
During this time, Thomas Scialpi applied for a loan of nearly $700,000 in 2007 to buy a yacht, and directed another person to create fake corporate tax returns for the company to secure the loan, the DOJ said. He eventually defaulted on it.
If convicted of all counts, Castellano faces a maximum of 65 years in jail, Thomas Scialpi a maximum of 125 years and Dennis Scialpi faces a maximum of 60 years.
