Prison for lawmaker's ex-aide in fraud scheme

PHILADELPHIA A former aide to State Rep. William Keller (D., Phila.) was sentenced to a year and a half in federal prison Monday for using thousands of dollars in state grants earmarked for civic organizations to pay herself and friends and relatives of one of her boss' political allies.

Lorraine DiSpaldo, 58, pleaded guilty in April for her role in the scheme, which also led to the indictment of suspended Traffic Court Judge Robert Mulgrew. Mulgrew, a close Keller ally who led one of the South Philadelphia neighborhood organizations, pleaded guilty to fraud and tax evasion and awaits a sentencing hearing next month.

Between 1996 and 2008, nearly $900,000 in state grants tagged for economic development flowed into two civic groups associated with the pair - Community to Police Communications, a nonprofit run by DiSpaldo, and Friends of Dickinson Square, a Mulgrew-led organization ostensibly dedicated to maintenance of the park near Fourth and Tasker Streets.

They told state overseers the funds would be used to purchase better radio equipment for police in the area and beautification projects around the park.

While some of the money was spent as promised, nearly $110,000 was not, prosecutors said. In a sentencing memo filed last week, Assistant U.S. Attorney Paul Gray likened Friends of Dickinson Square to a slush fund that offered cushy jobs to "two permanently disabled" friends of Keller and Mulgrew's college-age nephew. All three of the employees told the FBI and the IRS they did relatively little work for their salaries.

Mulgrew also used grant money to lease pickup trucks and buy himself boots, an $827 camera, cigarettes, and a Christmas tree for his home, prosecutors said.

To cover their tracks, Mulgrew and DiSpaldo lied on mandatory reports they filed with the state, prosecutors say, either underreporting expenses or mislabeling them as vendor payments or for "constituent services" to the state representative.

Though Keller's name featured heavily in their original indictment, there was no suggestion that he participated in the crimes of his aide and ally. Through his lawyer, Fortunato N. Perri Jr., Keller has denied any wrongdoing.

In addition to the prison sentence Tuesday, U.S. District Judge C. Darnell Jones II ordered DiSpaldo to pay $121,000 in restitution.

Mulgrew faces another criminal case. He is among six current and former Traffic Court judges expected to stand trial on federal charges for fixing tickets.