Stoneham Police Officer Joseph Ponzo and his brother, Christopher, were arrested Friday by FBI agents on charges alleging they paid hundreds of thousands of dollars in bribes and kickbacks to obtain $36 million in lucrative MassSave contracts for insulation and electrical companies they own, federal authorities said.
Joseph Ponzo owned a company called AIR TIGHT that allegedly received MassSave contracts to insulate both residential and commercial properties. His company received $7.6 million between 2015 and 2019 from the company charged with managing the MassSave program, authorities said.
In one two-year period he collected $3.4 million in insulation contract payments — and spent just $766,179 on subcontractors who actually did the work for MassSave.
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At the same time, he was a full-time police officer, earning an average of $126,000 annually from the town between 2015 and 2019, according to federal authorities.
“The fact that a member of law enforcement who pledged an oath to protect the community allegedly abused this program as a get-rich scheme is particularly reprehensible,” said Joleen D. Simpson, special agent in charge of the Internal Revenue Service’s Criminal Investigations in Boston. The charges begin “the path to ensuring integrity in this program and should serve as a clear warning to those who are attempting to defraud it.”
Christopher Ponzo was the principal of CAP Electric, which collected $29 million in payments between 2013 and 2017, according to federal court records.
The MassSave program is financed by an energy efficiency surcharge on residential customers that is then used to pay for weatherization and other energy-saving projects in residential and commercial properties at no cost or reduced cost to the consumer, according to federal authorities.
“Defrauding the Mass Save program for millions of dollars means we are all left paying the bill,” Rachael Rollins, US attorney for Massachusetts, said in a statement. “As we allege, these defendants, motivated by greed, orchestrated a corrupt scheme to line their pockets with money fraudulently obtained from honest paying energy consumers.”
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The brothers allegedly bribed a business identified in court papers only as “Associate A,” to use its position inside the company managing the MassSave program to steer contracts to their companies, authorities allege.
The alleged conspiracy began in 2013. Christopher Ponzo allegedly paid Associate A $1,000 in cash weekly, bought A a $25,000 John Deere tractor, paid for A’s bathroom renovations — and sometimes provided cash payments of $5,000 or $10,000 at a time.
In 2014, Christopher Ponzo allegedly e-mailed his brother, reporting that he was “giv[ing] out thousands of dollars in gift cards all year round to keep us working and to keep the checks coming in ... so we all make$$$...,” according to authorities.
“I need some contracts!!!” Christopher Ponzo allegedly e-mailed Associate A in 2014.
In 2015, both companies were approved to continue getting work through MassSave, and Associate A e-mailed both men with the news.
“Congratulations your both [legitimate] contractors,” the associate wrote. “I use that term loosely.”
Joseph Ponzo, his brother, and the associate allegedly took steps to mask Joseph’s ownership of AIR TIGHT by having his spouse listed as the sole manager, registering the spouse as a state home improvement contractor, and getting needed professional certification for the spouse, according to prosecutors.
“These brothers allegedly raked in millions of dollars and are now accused of going to great lengths to conceal their bold and brazen scheme,” Joseph Bonavolonta, special agent in charge of the FBI Boston Bureau, said in a statement.
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Both brothers were scheduled to make an initial appearance in US District Court in Boston Friday. They both face one count of conspiracy to commit wire fraud and 12 counts of theft of honest services, according to federal records.
In a statement Friday afternoon, Stoneham Town Administrator Dennis Sheehan and Police Chief James McIntyre confirmed Joseph Ponzo had been placed on administrative leave by the department, and referred questions to the US Attorney’s office.
“The allegations in the indictment do not represent the values of the Stoneham Police Department or its members,” the statement said.
John R. Ellement can be reached at john.ellement@globe.com. Follow him on Twitter @JREbosglobe.