Fumo aide charged with defrauding taxpayers

S. Michael Palermo, a longtime friend and aide of former State Sen. Vincent J. Fumo's, was charged yesterday by federal prosecutors with defrauding taxpayers through a no-work contract awarded to him by his former boss.

Palermo was charged in a criminal information, which means he waived the right to have a grand jury hear the case. A criminal information usually means the defendant will plead guilty. If convicted, Palermo would face a maximum of five years in prison and other penalties.

Assistant U.S. Attorney Robert A. Zauzmer, one of Palermo's prosecutors, declined to comment yesterday.

Palermo's attorney, Robert Scandone, did not immediately respond to a request for comment.

Fumo began serving a 55-month prison sentence last month after a jury convicted him in March of 137 counts of fraud, tax offenses, and obstruction of justice.

In part, the jury found Fumo guilty of fraud for awarding Palermo taxpayer money for little or no work.

Prosecutors alleged that Palermo, 69, received contracts from 1999 until 2004 worth a total of $287,000 from the Senate Democratic Appropriations Committee, which Fumo chaired.

"In order to reward defendant S. Michael Palermo for his friendship and personal assistance, Vincent J. Fumo arranged for Palermo to receive a contract from the [committee], in exchange for which Palermo did little or no actual Senate work," according to the criminal information.

Palermo, a former police officer, worked on and off for Fumo since the 1970s.

From the mid- to late-1990s until about 2004, Fumo stayed at Palermo's home near Harrisburg during Senate sessions. Palermo also helped Fumo acquire and develop a farm in the Harrisburg area beginning in early 2003.

Under his Senate contract, Palermo was supposed to provide "fiscal and operational analysis of intrastate transportation issues."

However, the criminal information states, "Palermo never provided any specification of what he purportedly did, and, in fact, he provided little or no services to the Senate at all. In particular, there is no written record of any work he ever did under the contract."

Palermo's contract expired and was not renewed in 2004 after Fumo became aware that he was under federal investigation, prosecutors say.