Government Contracts Monitor

Short Take: Individual Pleads Guilty to Defrauding More than 1,000 Companies, Promising Contracting Preferences with FEMA

April 18, 2017

The Justice Department recently announced that an individual, Michael Pirolo, residing in Palm Harbor, Florida, has pleaded guilty to wire fraud in connection with a telemarketing scheme promising, for a $500 one-time fee. to “register” companies with the Federal Emergency Management Agency (FEMA} to enable them to receive FEMA contracting preferences. Approximately 1,200 victim-companies were misled by this scheme and paid Pirolo’s company, Government Contracting Registry, Inc. (GCR), doing business as FEMA Contract Registration, at least $604,500. Pirolo faces a maximum penalty of 20 years in federal prison.

According to the plea agreement, Pirolo, as President of GCR, employed telemarketers who, during communications with victim-companies, falsely and fraudulently claimed that, for a fee, GCR would “register” the companies with FEMA, enabling them to receive preferences in obtaining contracts from FEMA. The telemarketers stated, based on instructions and scripts provided by Pirolo, that the registration would place the customer company on a list of preferred vendors, and that, when a need arose, FEMA would bypass the normal contract acquisition process, contact the registered victim-company, and then offer a no-bid contract. At times, Pirolo instructed GCR telemarketers to go back to victim-companies that already had paid the one-time $500 fee, and seek renewal and payment of another fraudulent $500 fee.

To further the scheme, GCR’s telemarketers provided victim-companies with an on-line GCR form that requested the same information as a form on FEMA’s website. FEMA does not charge a fee to complete its form, which assists FEMA with market research. FEMA does not “register” companies, and completing this form is not a part of FEMA’s contracting process. Once victim-companies submitted the GCR form, GCR completed and submitted the online FEMA form that then enabled FEMA emails to the victim-companies acknowledging the completed FEMA form, giving the appearance that the companies had been “registered.”

Companies need to beware such scams, and must exercise due diligence as to all telemarketing overtures, particularly involving government contracting, which is governed by well-established rules and procedures.