Fumo Friend Admits To Contract Fraud

PHILADELPHIA - <p>A friend of imprisoned former state Sen. Vincent Fumo admitted Tuesday that the powerful lawmaker steered him nearly $290,000 in state funds through phony senate contracts.</p> <p>In a conditional plea, S. Michael Palermo said he conspired with Fumo to commit mail fraud.</p> <p>Palermo, 69, of Philadelphia was a close friend and top Senate aide who helped run Fumo's farm near Harrisburg and did myriad other personal favors for the Philadelphia Democrat.</p> <p>Fumo is serving a 55-month sentence for defrauding the Senate and two nonprofits of several million dollars. Jurors in March found he used their staff and resources to perpetuate a lavish lifestyle that featured four homes, three drivers, round-the-clock assistants and other luxuries.</p> <p>Palermo would get five years' probation under the negotiated plea agreement, which U.S. District Judge Stewart Dalzell must approve before the Jan. 22 sentencing.</p> <p>Prosecutors say there's no evidence Palermo did any work for the $150-an-hour transportation consulting contracts. Instead, Fumo had several other people in Harrisburg working as transportation analysts.</p> <p>"In essence, they did the job that this contract said Mr. Palermo was going to do," Assistant U.S. Attorney Robert Zauzmer said.</p> <p>Palermo maintains he did some work but nothing close to the 2,000 hours over five years for which he was paid.</p> <p>Defense lawyer Robert Scandone declined to comment after the hearing.</p> <p>Palermo once served as chief of staff at Fumo's district office in Philadelphia. Fumo awarded him Senate Democratic Appropriations Committee contracts from 1999 to 2004 that netted Palermo $45,000 to $66,000 a year.</p> <p>Fumo was convicted of fraud for the Palermo contracts and will pay most of the $287,000 in related restitution. Palermo, charged six months after Fumo's conviction, would pay the remaining $50,000.</p> <p>Palermo is only the latest Fumo associate charged in the case. Longtime aide Ruth Arnao was convicted at trial with Fumo and is serving a one-year prison term, while two computer technicians pleaded guilty before trial to destroying e-mail evidence.</p> <p>Arnao's husband, a former state turnpike commissioner, remains under FBI investigation for $150,000 in alleged no-work contracts awarded by Fumo.</p>