Ponzo Scheme: Stoneham Officer Charged In $36 Million Mass Save Fraud

STONEHAM, MA — A Stoneham police officer and his brother have been indicted by a federal grand jury for paying a Mass Save vendor thousands of dollars in cash bribes, kickbacks, and more in exchange for over $36 million in Mass Save contracts with the vendor company, U.S. Attorney Racheal Rollins said Friday.

Joseph Ponzo, 48, of Stoneham, and Christopher Ponzo, 47, of North Reading, were indicted on one count of wire fraud conspiracy and 12 counts of wire fraud. Both men were arrested early Friday morning and will appear in federal court in Boston Friday afternoon.

A full-time Stoneham police officer, Joseph Ponzo, and his brother, Christopher Ponzo, the owner of an electrical contracting company conspired to bribe an associate employed by a Mass Save vendor company in exchange for the associate's assistance in obtaining Mass Save contracts that made the Ponzos millions of dollars, Rollins said.

From 2013 to 2017, the prosecutors claim the Ponzos paid the associate tens of thousands of dollars in cash bribes, kickbacks, a John Deere tractor, computer, electrical work and other benefits. According to the indictment, from 2013 to 2017, Christopher Ponzo paid the associate $1,000 in cash on a weekly basis. At times, Christopher Ponzo allegedly paid the associate $5,000 to $10,000 in cash, telling the associate that the extra money was from Joseph Ponzo for his part in the bribery scheme, the U.S. Attorney's Office said.

Rollins says in return for these payments, the associate helped the Ponzos create companies, assisted in gaining approval for companies to serve as Mass Save contractors, and assisted in obtaining Mass Save projects for the Ponzo's companies. As a result of the scheme, both Ponzo brothers were said to have collected approximately $36 million in fraudulently obtained Mass Save Funds. According to prosecutors, Christopher Ponzo collected $29 million, and Joseph Ponzo collected $7 million.

According to the indictment, one instance shows the associate helped Joseph Ponzo set up a company called 'Air Tight' to do insulation work. The company was approved as a contractor under the Mass Save program. Prosecutors say Joseph put his spouse's name on Air Tight documents and contracting licenses so his involvement wouldn't show up as a police officer.

"Virtually every Massachusetts resident who uses energy is surcharged and pays for Mass Save," Rollins said. "These payments are mandatory and amount to hundreds of millions of dollars. Defrauding the Mass Save program for millions of dollars means we are all left paying the bill."

Massachusetts law requires utility companies to collect an energy efficiency surcharge on all Massachusetts energy consumers. These funds, which amount to hundreds of millions of dollars each year, are to be disbursed by the utility companies to fund energy efficiency programs and initiatives in Massachusetts.

Mass Save is a Massachusetts public-private partnership sponsored by various gas and electric utility companies that disburses these energy efficiency funds by funding energy conservation projects for consumers. Under the Mass Save program, utility companies select lead vendors to approve and select contractors to perform energy improvement work for residential customers. This contracting work – performed at no cost or reduced cost to the customer – is then paid for by the lead vendors with Mass Save funds.

Prosecutors claim Joseph collected millions of funds under the Mass Save program through this contract, even though he had no experience in residential insulation work.

The charges of wire fraud conspiracy and wire fraud each provide for a sentence of up to 20 years in prison, up to three years of supervised release and a fine of up to $250,000.