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Division of Technology deputy fired for exploiting City’s Verizon contract

July 20, 2011

Philadelphia, July 20, 2011 – Managing Director Richard Negrin has accepted the findings of an Office of the Inspector General (OIG) investigation into City employees who exploited the City’s Verizon contract for personal gain, and has terminated one high-level Division of Technology employee and demoted another.

An OIG investigation found that Joseph James Sr., the Deputy Chief Information Officer for Communications and Operations, and Concetta D. Lilly-Pearson, an Information System Operations Manager, had accepted meals and gifts from vendors with City contracts, violating a mayoral executive order and provisions of the Philadelphia Home Rule Charter.

Today, James was terminated; Lilly-Pearson was demoted and given a 20-day suspension.

In addition, Francis G. Punzo, a former deputy commissioner of the Department of Public Property, was implicated in the actions conducted by James and others while he worked for the City of Philadelphia.

Verizon has taken “significant disciplinary measures” against those employees who provided meals and/or entertainment to City employees, according to Verizon’s corporate counsel. One employee was terminated and five received final written warnings, “which is the most serious form of discipline short of termination.”

James accepted 39 business-related meals — a personal benefit of $1,300 — from representatives of Verizon, Comcast, Shared Technologies, Motorola and RCC Consultants between January 2006 and December 2009.

Verizon representatives provided 18 of those meals — a $733 benefit to James — including a dinner at Morton’s steakhouse in December 2007 to thank James, Lilly-Pearson and Punzo for helping to renew the City’s Verizon contract for telephone and data services. Verizon representatives also provided a Philadelphia Flyers game ticket to James and sent him a $77 cheesesteak delivery.

Lilly-Pearson accepted two meals from Verizon for a personal benefit of $151. Punzo accepted 122 business-related meals from the five vendors — a personal benefit of $3,153 — for the years 2006 to 2009. Verizon representatives provided 80 of those meals — a personal benefit of $2,255 for Punzo — as well as four golf outings and tickets to six sporting events.

With few exceptions, Executive Order 002-04 prohibits employees in the executive branch of City government from soliciting or accepting, directly or indirectly, anything of value, including any gift, gratuity, favor, entertainment or loan, from vendors with City contracts. It also prohibits vendors from providing anything of value to City employees.

James and Punzo also used City resources to set up an unauthorized Verizon Business Link Rewards account, through which they improperly procured more than $48,000 worth of rewards — including iPods, gift cards, televisions and Tumi tote bags — from December 2005 to September 2009.

James and Punzo hid the rewards from the City’s property inventory and distributed items at their own discretion. James kept an iPod for his own personal use. Lilly-Pearson kept one iPod for her personal use and gave one to a family friend.

To date, most of the rewards items have not been located, including $2,300 worth of gift cards to Best Buy, Macy’s and Barnes & Noble. Kurland noted that this was not surprising given James and Punzo’s efforts to shield the rewards program from scrutiny.

“This case proves yet again that corruption spreads in the absence of oversight,” Kurland said. “We have to be vigilant. We have to hold our employees accountable at every level of government.”

Kurland said that the Managing Director’s Office (MDO) would redeem the remaining $107,600 worth of rewards points for Lowe’s and Best Buy gift cards, which the MDO’s PhillyRising program will use for community beautification projects throughout the fiscal year.

PhillyRising targets neighborhoods throughout Philadelphia that are plagued by chronic crime and quality of life concerns, and establishes partnerships with community members to address these issues. The PhillyRising Team coordinates the actions of City agencies to help neighbors realize their vision for their community through sustainable, responsive, and cost-effective solutions.

Before joining the City as Deputy Commissioner of the Department of Public Property’s Communications Division in February 1995, James was the Bell Atlantic account manager responsible for the City’s telephone and data services. In June 2000, Bell Atlantic merged with GTE to become Verizon.

Punzo was the Verizon account manager responsible for the City’s telephone and data services before he joined the Department of Public Property as a Communications Superintendent in January 2004. Punzo reported directly to James until February 2007, when James transferred to the Mayor’s Office of Information Services — now known as the Division of Technology — to become Deputy Chief Information Officer.

Punzo replaced James as Deputy Commissioner and held that position until he resigned in September 2009. Punzo then returned to Verizon, but did not work on the City’s account.

Public Property Commissioner Joan Schlotterbeck and Verizon’s legal compliance team have cooperated fully with the OIG’s investigation.

Verizon employees who received final warnings were taken off the City account and warned that any further misconduct would result in further discipline, including possible termination, according to Verizon’s corporate counsel. “All the employees who received a final written warning (except for one employee whose conduct was deemed less serious) were denied a 2011 salary increase and were personally counseled by Verizon Legal to reinforce their understanding of the rules.”

Representatives of Comcast, Shared Technologies, Motorola and RCC Consultants also cooperated with the OIG’s investigation.

The OIG has referred its ongoing investigation to the City Board of Ethics to determine if the parties involved have violated ethics rules. The OIG has also referred the matter to the U.S. Attorney’s Office to determine if there were any violations of federal law.

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