USFilter employee flushed out

By Patrick J. Cronin / pcronin@cnc.com
Friday, September 5, 2003

Additional indictment handed down in Rockland Massachusetts sewer scam

A former USFilter employee is being charged with conspiring with former Rockland Sewer Superintendent Gregory Thomson in allegedly embezzling more than $370,000 from the town.

Michael R. Sause, a former regional district manager in charge of USFilter in Rockland, is being charged with three counts of larceny in a single scheme. A Plymouth Superior court grand jury returned an indictment against Sause, 47, of 155 Commercial Street, Provincetown, on Aug. 29.

Two weeks ago, The Mariner reported another person, not a town employee, was believed to be a part of the scheme to embezzle from town, beginning in 1997.

Rockland police recently questioned Sause but didn't get many answers. According to Police Chief Kevin Donovan, there is substantial evidence that links the two individuals together.

According to USFilter spokesperson Christie Kaluza, Sause worked for the company for several years. He was given three choices in April - cooperate with the investigation, resign or be fired. He chose to resign and the left the company.

Donovan said the new allegations stem from the results of a fraud audit done on the sewer department this year.

"We were the lead investigators in the case," said Donovan. "We worked alongside the auditor hired by the town."

Selectmen decided to conduct the audit on the department in October after Town Accountant Jack Franey discovered several discrepancies with the town's current contract with USFilter, the company hired by the town to run the sewer treatment plant. One of the discrepancies discovered had to do with certain fees paid each year by the town to USFilter.

According to the contract, any money that was not used was supposed to be returned to the sewer department. While the findings of the audit are being kept under wraps, sources close to the investigation said the money allegedly embezzled from the town was the money that was supposed to come back to the sewer department.

Rockland officials said USFilter has been operating the town's sewer plant since 1994. Vivendi, the parent-company of USFilter, initiated the first two contracts on the project between itself and the town under different names, not USFilter.

The first contract was signed by the town with Metcalf & Eddy Services, Inc., which was subsequently bought by the Professional Services Group (PSG). The contract was for three years. The second contact was signed in 1998 between the town and PSG. The contract was to last 10 years with an option for an additional 10 years.

Under the first contract, the town gave USFilter $50,000 for preventive maintenance and repair and $100,000 each year for equipment replacement and facility maintenance.

Under the second contract, the town gave the company $75,000 for maintenance and repair, $100,000 for equipment/capital replacement and $15,000 for electricity. The town also gave the company $400,000 for wages and salaries.

According to both contracts, "At the end of each fiscal year, all unexpended funds from the allowances shall be returned to the town."

Officials said a fraud auditor was needed because they say there appeared to be missing sewer department documents which supposedly state how much money was actually spent and the amount that should've been returned to the town.

Thomson was indicted in 2002 at Brockton Superior Court for allegedly embezzling more than $168,000 from the town.

Rockland police said their criminal investigation began at the end of May, 2002 after Thomson's bank, Abington Cooperative, discovered a $5,700 check made out to him, the sewer commissioners and the Town of Rockland that was deposited into his personal account. One of the attorneys from the bank notified Abington police who in turn notified Rockland police.

When the investigation began, Thomson quit his job and admitted to Sewer Commission Chairman Robert Corvi Sr. he had embezzled $70,000 to $80,000, police said.

At the time, investigators said Thomson was asking for money from USFilter for project-related expenses. Officials said instead of using money for sewer-related projects, Thomson allegedly deposited the money into his own personal bank account.

Investigators found no paperwork that matched Thomson's requests.

Police uncovered 19 checks totaling $138,000, from USFilter that were deposited into his account since January of 2001.Thomson opened the account in 1999.

At the time, police would not comment on a motive. However investigators noted some of the money was used to pay off a $6,000 credit card bill in Thomson's name. Officials also now believe Thomson used some of the money to build a new house. In 2001, Thomson built a two-story colonial home on 4.8 acres on Liberty Street. According to the assessors, the house is now valued at more than $334,900.

Thomson was only getting $47,000 for his position.

Rumors also began circulating that Thomson had a drug problem. While Thomson was released on $100 bail after his indictment, a judge ordered him to stay off any drugs and told him he would be subjected to random urine tests.

Last month, Thomson was indicted on additional charges of embezzlement. According to John J. Sullivan, the forensic accountant hired to conduct the fraud audit, the new charges stem from the sewer probe and involves civil and criminal charges.

According to other sources close to the investigation, the auditors found out Thomson had four different bank accounts, including ones in Wakefield and Weymouth.

Officials say Thomson and Sause had a joint bank account at the Wainwright Bank and Trust Co. in Boston. Bank statements were sent to a loft at 33 Sleeper Street in Boston.

According to police, at least $166,000 in checks from USFilter were deposited into the account between 1997 and 1999. One of the checks uncovered showed Sause as an endorsee for a $140,951 check.

Police said Sause opened the account with Thomson in 1997. Police believe the most of the money was supposed to come back to the town as part of its contract with USFilter.

Donovan said investigators examined all of Thomson and Sause's bank statements and records.

"This was a very tedious and difficult investigation," said Donovan. "Detective Sargent Jack Wentworh should be commended for all of his hard work."

Donovan said the investigation is winding down but is not completely over.

"The investigation is winding down but we are still looking at other things," said Donovan.

One of the things town officials are looking into is whether the banks that cashed the checks should be held liable. All the checks that were deposited by the duo were made out to Gregory Thomson, sewer commissioners and the Town of Rockland.

Police are also turning over evidence to the state inspector general. According to police, Thomson could face additional charges for political corruption.

Court documents indicate the company that owns USFilter, France's Veolia, formerly Vivendi Environment, had some legal problems concerning fraud and financial mismanagement in the past. Most of the cases have to do with bribery and extortion.

Before purchasing USFilter, Vivendi bought the North American company, PSG.

According to the Connecticut Post, between 1996 and 1999, PSG allegedly gave $700,000 to two close associates of former Bridgeport, Connecticut Mayor Joseph P. Ganim to obtain a contract to operate the city's wastewater treatment plant. Federal prosecutors allege Ganim shared in hundreds of thousands of kickbacks when the contract was awarded. Court documents state the mayor is currently facing racketeering, extortion, bribery and mail fraud charges. Nine people, including close associates of Ganim's, have already pled guilty to charges in connection with the case.

The U.S. District Court in Houston, Texas charged former PSG President Michael Stump, former vice-president William Gottenstrater, executive H. Grant Simmons and company attorney Salvador Anzelmo with one count of conspiracy, four counts of interstate travel in aid of bribery, four counts of mail fraud, and one count of wire fraud.

The U.S. District Court in Houston also charged Katherine Maraldo, a former member of the New Orleans Sewerage and Water Board, with accepting $70,000 to pay for her mortgage and getting free legal advice from a PSG attorney in her attempts to sell the property.

According to the indictment, the four PSG defendants conspired to provide legal services and cash payments to then-board member Maraldo in order to influence and reward Maraldo for supporting PSG's business interests with the New Orleans Sewerage & Water Board.