The judge’s words to the defendants were harsh.
Their crimes were serious, said U.S. District Judge William S. Stickman IV.
They weren’t a momentary lapse in judgment but a decade-long criminal enterprise.
The defendants misappropriated the identity of a disabled American veteran to earn government contracts, something akin, the judge said, to “stolen valor.”
Despite his stern words — and the recommended sentencing guidelines that called for 12 to 18 months incarceration — Stickman ordered Edward Kessler and Edward DiGorio Jr., both formerly of South Park, to serve one year probation, including 100 hours of community service.
They must also each pay a $50,000 fine and restitution of more than $400,000 to the U.S. Department of Veterans Affairs.
Kessler, 69, and DiGorio, 66, both of Myrtle Beach, pleaded guilty in March to two counts of major fraud against the United States.
The men ran a “Rent-A-Vet” scheme that started in 2007.
Federal prosecutors said that Kessler and DiGorio owned ADDVETCO, a construction company incorporated in Pennsylvania in 2007 and Hi-Def Contracting Inc., founded in 2009.
Under the Veterans Entrepreneurship and Small Business Development Act of 1999, the federal government set a goal of awarding 3% of the total value of all contracts to small businesses owned by service-disabled veterans.
To be eligible, the disabled veteran had to own at least 51% of the company, be the highest paid employee, receive 51% of the annual profits and manage daily operations.
Although neither Kessler nor DiGorio ever served in the military, they paid a disabled veteran to pretend to be the majority owner of their companies.
As part of the 11-year fraud, investigators said the two defendants paid the disabled veteran, but then required them to kick back a portion of that pay to the defendants and their relatives in cash.
The government acknowledged that the contracts were completed in full, but said that the defendants profited hundreds of thousands of dollars.
During the two separate sentencing hearings for the defendants on Tuesday, their attorneys told the court that their clients had lived good lives with strong support from their family and friends.
Kessler submitted 30 letters to the court, describing him as a good citizen, kind and fun-loving , while DiGorio submitted 50, which called him kind, patient and generous.
The defense attorneys argued that their clients were entitled to a downward variance from the recommended prison sentence, based not only on the good works they’d performed in their communities but their age, medical history and because neither had any criminal record.
“I am ready to accept the consequences you deem necessary to atone for my actions,” Kessler said. “I have tried my best to live an honest life. Despite all the blessings, I veered off course.”
Kessler said he regrets what he did.
“The shame and grief I’ve experienced in this matter will be with me always.”
DiGorio told the court he was profoundly sorry.
“I worked my entire life to be a good example to my family,” he said. “I’d like to try to make things as right as I can. That’s why I’ve cooperated with the prosecution.”
But Assistant U.S. Attorney Carolyn Bloch said that neither man provided assistance to investigators in the case.
“Neither defendant ‘cooperated with the government,’” she said. “They both agreed to plead guilty because they found it to be in their best interest.”
Bloch told the court that she did not believe the men deserved a sentence reduction simply because they have good friends and are lucky enough to have a loving family.
“It was not a one-off. It was not a one-time mistake. It was not a bad decision once, twice, three times,” Bloch said. “It was a bad decision 35 times.”
Kessler and DiGorio, she said, entered into 35 contracts with the government and then sought to hide the fraud.
“It’s hard to call 11 years of conduct ‘a lapse in judgment,’” Bloch said.
Although the prosecutor acknowledged that both defendants will pay a fine and substantial restitution, she noted that they are in a position to do so because of the lucrative contracts they received from the fraud.
But Stickman was not moved by Bloch’s argument.
Instead, he said that prison would not serve the interests of justice in the case.
“You and your co-defendant lied to our government to take advantage of a program for disabled veterans,” Stickman said. “You did it by lying over and over and over again.”
The judge said he wasn’t giving the men a pass.
“Probation is a punishment. A fine is a punishment,” Stickman said. “I do believe it’s a deterrent.”
Paula Reed Ward is a TribLive reporter covering federal and Allegheny County courts. She joined the Trib in 2019 after spending nearly 17 years at the Pittsburgh Post-Gazette, where she was part of a Pulitzer Prize-winning team. She is the author of “Death by Cyanide.” She can be reached at pward@triblive.com.
