Businessman pleads guilty to fraud charges involving Springdale construction firm

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An Indianapolis-area businessman pleaded guilty today to mail fraud involving a Springdale firm hired to build malls in Washington state and California.

Mark M. Palombaro faces a likely 18 month prison sentence under a plea agreement after admitting to his role in a scheme that also involved Springdale businessman Robert E. Crawford.

Mr. Palombaro, 55, of Carmel, Ind., was senior vice president of Simon Property Group in 2006 and 2007 when that company hired R.E. Crawford Construction to build malls in Seattle and in Laguna Hills, Calif. Mr. Palombaro used his influence to steer the contract to the Springdale firm, assistant U.S. attorney Shaun Sweeney said at the guilty plea hearing in the U.S. Courthouse in Downtown Pittsburgh.

Mr. Palombaro was also president of a firm called Abby Inc. As Simon Property Group paid R.E. Crawford Construction, the contracting firm steered kickbacks totaling $766,000 to Abby Inc., and ultimately to Mr. Palombaro, Mr. Sweeney said.

Investigators found that Mr. Crawford inflated his bills to Simon Property Group by around $1 million to cover the kickbacks, then created fake subcontractor bills to justify the charges.

Simon Property Group eventually audited the contractor’s bills and sued, resulting in payment by the contractor to the mall developer of restitution, interest and penalties totaling $3.3 million.

Defense attorney Thomas Farrell said that Mr. Palombaro did not have a role in Mr. Crawford’s decision to overbill Simon Properties Group.

U.S. District Judge David S. Cercone set sentencing for March 3.

Mr. Crawford, 54, pleaded guilty to mail fraud and filing a false income tax return in June. He is set to be sentenced Jan. 3.

Rich Lord: or 412-263-1542. Twitter: @richelord.

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