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Ex-S&WB official and Ex-President of PSG will go to jail

Wednesday October 01, 2003

By Martha Carr
Staff writer

Former Sewerage & Water Board member Katherine Maraldo and Michael Stump, the man convicted of bribing her, are headed to the federal penitentiary.

The pair were sentenced Monday in Texas Southern District Court in Houston for scheming to rig the renewal of a private contract to run the city's two wastewater-treatment plants.

Maraldo's punishment includes five months in prison, five months of home confinement and a $5,000 fine. Stump was ordered to serve 21 months in prison and pay a fine of $25,000, said his attorney, David Gerger.

U.S. District Judge Kenneth Hoyt said he would allow Stump to begin serving his sentence at a later date, but he did not say when. Hoyt also made concessions for Maraldo, who asked that she be allowed to work until the end of the year in order to qualify for pension benefits. Hoyt ordered Maraldo to report to prison Jan. 5.

Both Stump and Maraldo will be on probation for three years after their release from prison. Though the crime occurred in New Orleans, the case was prosecuted in Houston, where Professional Services Group is based. PSG is the company that held the contract.

Before the sentencing, the judge refused to take up the defendants' motion for a new trial based on their contention that the federal court should have provided them with a complete transcript of their 16-day corruption trial by Sept. 8.

Hoyt said, however, that he will consider the motion if the parties file notices of appeal within 10 days, Gerger said. Stump is considering an appeal, Gerger said. Maraldo's attorney, Ron Woods of Houston, declined to comment.

The pair's sentencing was postponed eight times because of court reporter Jackie Smith's failure to produce a transcript, a key element in the appeals process. Smith spent a week in jail in March for failing to complete transcripts for other cases in her care, records show.

Smith resigned in September 2002, but she has a statutory duty to produce records for the trials she worked, court officials said. She last promised the court that she would complete the transcript by Sept. 8, records show.

"The transcript was ordered 14 months ago but has not yet been prepared," Gerger said. "Case law says if you don't have a transcript, you should receive a new trial."

Stump was convicted in June of using money from PSG to buy Maraldo's support in the mid-1990s for a five-year extension of the company's multimillion-dollar contract to run two wastewater-treatment plants. Stump was the company's president. Maraldo, who was appointed to the water board by New Orleans Mayor Sidney Barthelemy in 1988, was chair- woman of a committee that oversaw the contract. She left the board in 1997.

Prosecutors said PSG rewarded Maraldo for her support by funneling about $72,000 to her partner in a pricey real estate project in the Oak Harbor development near Slidell that they were having trouble selling. The company also tried to find a buyer for the Oak Harbor property at an inflated price, paid for attorney Sal Anzelmo to provide legal help in Maraldo's attempt to unload the property, and paid Maraldo's legal bills
in a personal lawsuit against the water board. In the suit, Maraldo received an injunction preventing Barthelemy from removing her from the board because she was working as a state employee at the time.

In exchange, Maraldo used her position as chairwoman of the board's sewer and water committee to push for a five-year extension, the prosecution said. The proposal had the support of the board's staff and passed Maraldo's committee, but it never won the backing of the full board.

The contract is now held by USFilter, which intends to bid on the far larger contract New Orleans is preparing to offer to a private manager to run the city's water and sewer systems.

USFilter, which was not accused of wrongdoing, was acquired by Vivendi, parent company of PSG and its holding company, Aqua Alliance, in 1999, and started running the New Orleans treatment plants as part of the contract. The company is now owned by Veolia Environnement.