Nora R. Dannehy, Acting United States Attorney for the District of Connecticut, announced that JOSEPH E. MELLO, 41, of Pawtucket, Rhode Island, was sentenced today by Chief United States District Judge Robert N. Chatigny in Hartford to 18 months of imprisonment, followed by three years of supervised release, the first 12 months of which MELLO must spend in home confinement.  On October 9, 2007, MELLO pleaded guilty to federal charges related to a scheme to defraud the Federal Communications Commission (“FCC”) in connection with the E-Rate program, which provides funding to qualifying school districts nationwide to upgrade their Internet access capabilities.

To fund the E-Rate program, the FCC mandates that telecommunication companies throughout the country add surcharges to the bills of their customers, that, after collected, are forwarded to the FCC.  Applications by school districts are reviewed and awards to school districts are made by Universal Services Administrative Company (“USAC”), the FCC-designated administrator of the program.  In Connecticut, the Hartford, New London, New Haven and Bridgeport school districts received E-Rate funding.  Each school district selected SBC/Southern New England Telephone (“SNET”) as the prime contractor to perform its Internet upgrades.

In October 2003, MELLO left his position as Director of Project Management for SBC and became Vice President of Operations for Innovative Network Solutions (“INS”), a first-tier  subcontractor of SBC for performing E-Rate funded telecommunication upgrades.  In pleading guilty to one count of mail fraud, MELLO admitted that, from October 2003 through March 2004, he participated in a scheme to defraud the FCC with SBC account Managers Richard E. Brown and Keith J. Madeiros.  MELLO, in his position with INS, agreed to accept invoices submitted to INS by two fictitious companies, Responsive Communication Services, Inc. (“RCS”) and Chariho Associates (“Chariho”), created by Madeiros and Brown, respectively, for work purportedly performed on E-Rate funded school district projects.  INS made payments on those invoices – $161,933 to RCS and $446,572 to Chariho – and then passed the costs on to SBC.

It is not clear how the money paid to INS was divided.  However, of the $446,572 that was paid to Chariho by INS, Brown gave $175,199 to MELLO through BAJ Consulting, a company established by MELLO for the sole purpose of receiving money from Chariho.  Brown also disbursed $103,937 to Madeiros, and kept $167,432 for himself.

Today, Chief Judge Chatigny required MELLO to pay, jointly and severally with Brown, restitution in the amount of $608,565.

On October 9, 2007, MELLO also pleaded guilty to one count of income tax fraud for not reporting the money he received from the scheme on his 2004 tax return.  As a result, MELLO is required to pay back taxes, plus penalties and interest, on $175,199 that he failed to report to the Internal Revenue Service.

Brown and Madeiros each have pleaded guilty to charges related to their involvement in this scheme.  On August 29, 2007, Brown was sentenced to 27 months of imprisonment, and on December 7, 2007, Madeiros was sentenced to nine months of imprisonment.

This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation Division.  The case was prosecuted by Assistant United States Attorney Calvin B. Kurimai.