Kickbacks totaling $766,000 from a Pittsburgh-area construction contractor will likely mean a year and a half of jail time for an Indiana businessman who pleaded guilty to mail fraud charges.

Mark M. Palombaro, 55, of Carmel, Ind., was a senior vice president for a globe-spanning development firm, near the pinnacle of his industry. But in 2006, he began working with Robert E. Crawford, whose firm R.E. Crawford Construction is based in Springdale Borough. Both are now convicts.

"Mr. Crawford funneled kickbacks to Mr. Palombaro," said assistant U.S. attorney Shaun Sweeney at a guilty plea hearing at the U.S. Courthouse, Downtown. "Mr. Crawford was fraudulently overbilling the Simon Property Group," where Mr. Palombaro was an executive, to make up for the payments.

Mr. Sweeney told U.S. District Judge David S. Cercone this week that Mr. Palombaro used his influence to get Mr. Crawford's firm hired to build malls in Seattle and in Laguna Hills, Calif., at a total price of around $15 million.

Besides his role with Simon Property Group, Mr. Palombaro also was president of a firm called Abby Inc. That's where Mr. Crawford sent the kickbacks, according to Mr. Sweeney.

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

Simon Property Group eventually audited the contractor's bills and sued, resulting in a settlement and payment by Mr. Crawford and Mr. Palombaro to the mall developer of $3.3 million in restitution, interest and penalties. Mr. Sweeney said the agreement gives Mr. Palombaro some credit for that repayment, resulting in a recommended sentence of 18 months.

Judge Cercone can either accept or reject that recommendation at a sentencing hearing set for March 3.

Mr. Crawford, 54, pleaded guilty to mail fraud and filing a false income tax return in June. Prosecutors leveled the tax charge because Mr. Crawford told his accountant that the kickbacks were consulting payments, and deducted them from his earnings on tax returns. As a result, he owes the IRS $275,730, Mr. Sweeney said at Mr. Crawford's plea hearing.

Mr. Crawford is set to be sentenced Jan. 3.

First Published: November 9, 2013, 4:05 a.m.