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Accusations of kickbacks at Haley

A subcontractor, who expects to be indicted, says a scheme was set up during a project at the Tampa hospital.

By PAUL DE LA GARZA
Published July 21, 2005

[Special to the Times]

According to Peter Castelli, this Bank of America cashier's check, dated Jan. 25, 2001, shows a payment of $63,000 to project manager Joel Velasco. Velasco denies the allegations, which are part of a criminal investigation.

	[Times photo: Mike Pease]
	The Spinal Cord Injury Center at James A. Haley VA Medical Center opened in February 2002 and cost $21.7-million to build.
	"I know I've done the right thing," says subcontractor Peter Castelli.

TAMPA - It started with an unusual request for a new pickup truck by a contractor in charge of a construction project at Tampa's VA hospital.

The request quickly escalated into a demand for two pickup trucks.

And finally cash.

Peter Castelli, a subcontractor who helped build the Spinal Cord Injury Center at James A. Haley VA Medical Center, has given the St. Petersburg Times a rare inside look at what he describes as a kickback scheme in the construction industry.

A year after the 70-bed, $21.7-million spinal cord center opened in February 2002, Castelli shared the story with the FBI and other federal agencies in Tampa, sparking a criminal investigation.

The ruse was elaborate, with bogus pay bonuses and altered documents, Castelli said.

Based on recent conversations with federal prosecutor Robert Mosakowski, Castelli said he expects to be indicted on charges of participating in the scheme. The 60-year-old Tampa man said the authorities have indicated that others will be indicted, too.

Castelli told the Times he decided to discuss the case publicly to defend himself against false allegations and to present himself as a whistleblower.

He said that without him, the scheme never would have been exposed.

Of the possibility he will be indicted, Castelli said: "I'm not worried at all. I know I've done the right thing."

Castelli says Joel Velasco, who was the manager for the Haley project, was the brains behind the kickback scheme. Velasco denies that and disputes Castelli's entire story. But Velasco confirms he, too, has met with the FBI.

The VA awarded Dawson Building Contractors Inc. of Alabama a contract to build the Spinal Cord Injury Center at Haley five years ago.

Dawson selected a Massachusetts company, Liko Inc., as a subcontractor. Liko installed the overhead lifts - or slings - used to move patients in the specialty unit, which has treated scores of soldiers wounded in Iraq and Afghanistan.

When the project was launched, Castelli was vice president of overhead lifts for Liko in the United States and Canada; Velasco was Dawson Building's project manager at Haley.

Soon after the project began, Castelli said, Velasco summoned him to his trailer and told him it was customary to provide the general contractor with a new pickup to tool around the job site.

Castelli said he was incredulous. "Nobody ever asked me anything like that," he told the Times.

But Castelli said he agreed to talk to Liko's president, Hans Sigvardsson. Sigvardsson did not want to jeopardize Liko's contract, Castelli said, and authorized buying the pickup after estimating it would cost between $18,000 and $20,000.

Within days, Castelli said Velasco upped the ante to two pickup trucks.

According to Castelli, Velasco explained that the home office had discovered Liko was getting him a pickup truck and that they were jealous. They wanted a truck, too.

At some point, Castelli said Velasco and Sigvardsson began to talk directly, and Sigvardsson instructed him to buy two pickups.

According to records of Castelli's personal Bank of America checking account, which the Times reviewed, Liko wired Castelli $38,182.59 on Jan. 24, 2001. The bank noted the deposit as "payroll."

But almost immediately, Castelli said he received a frantic call from Sigvardsson asking him not to touch the money. He said Velasco no longer wanted the pickup trucks. Now he wanted cash.

Castelli said Liko took back the money from his account the same day, and within hours wired him almost double the original amount: $71,570. That entry also was marked "payroll."

The following day, Castelli drew a cashier's check for $63,000 from his account and made it out to Velasco.

Castelli said he kept some of the money wired to his account to cover income taxes. If anybody asked about the transaction, Castelli said, Sigvardsson told him to say it was a work bonus. (Sigvardsson has declined to talk to the Times.)

At first, Castelli did not believe he was taking part in anything illegal, and figured Liko was taking the money out of its profit on the project.

But something happened that changed his mind. Castelli said Sigvardsson instructed him to revise Liko's initial proposal for the project and back date it to cover the money sent to Velasco.

The original lift proposal to Dawson Building, made in early 2000, was for about $320,000, Castelli said. The revised document was dated Nov. 27, 2000, and totaled $378,100.

After he was asked to change the proposal, Castelli said he concluded that the federal government was being defrauded and that the cost of the payment to Velasco was ultimately being passed to taxpayers.

On his way to hand Velasco the $63,000 check, Castelli said he felt a chill.

"As we were going (through) this process of the escalating requests and additional monies, I thought, at times, we might be dealing with a front company for organized crime," Castelli has written in a personal account of the events during the Haley project.

Castelli did not go to the FBI immediately. He insisted that he feared for his safety and that of his family.

In April 2003, Castelli said he left Liko, disillusioned by his experiences.

He said the breaking point came after Velasco and Sigvardsson approached him about working together on government projects in Pensacola and Puerto Rico.

Castelli decided to take his story to the FBI. He also told investigators about an accident at Haley that he says Liko covered up.

(The Times reported in January that Liko is the subject of a separate federal investigation into several patient lift accidents around the country, one of them fatal.)

Castelli, who now operates his own company, said he has been working with FBI Agent Scott Cheney and criminal investigator Tamara Marks of the VA inspector general.

The scope of the investigation is not known.

Dawson Building Contractors is a multimillion-dollar company, with several government projects around the country. Company officials did not return a message Wednesday seeking comment for this story.

Castelli said he became an informant for the government and wore a wire to tape conversations with Sigvardsson and others.

Investigators gave him a code to enter into his telephone whenever he planned to tape a conversation, and coached him on how to get information from reluctant sources by acting angry and getting loud.

In an industry conference in Las Vegas, Castelli said the FBI asked him to record conversations with some people. "I saw the agents wandering around all the venues to which I was a part," he later wrote, "but to the common person, they looked like schoolteachers."

Castelli said investigators told him that if he ever felt threatened, to call 911.

"One agent said, "This isn't like in the movies or television. If something happens, you can't call us and expect us to be there within a few minutes,' " he said.

The FBI and the VA declined to comment.

Joel Velasco told the Times that Castelli is "a liar" and accused him of trying to cut a deal with prosecutors to avoid jail.

Velasco categorically denied Castelli's allegations. He said, for example, that he never dealt with Sigvardsson.

He acknowledged meeting with Cheney, the FBI agent, and with a VA criminal investigator. During the meeting, he said, investigators asked about the cashier's check from Castelli.

Velasco said he told them Liko paid him $63,000 for work he did on the side during the Haley project when Castelli ran into problems installing the lifts and asked him for help.

Velasco said he helped design the overhead lift system at Haley and worked for Liko 12 to 20 hours a week for three months. For a total of $63,000, that would compute to an hourly rate between $262 and $437.

Velasco said he never mentioned the agreement to his employer, Dawson Building.

Investigators asked Velasco why the price for the lift system had ultimately gone from $378,000 to $680,000. Velasco said changes requested by the VA had driven up the cost.

"There was nothing to hide, and there was nothing that was done out of the ordinary," Velasco said. "There was no hanky-panky or corruption or fraud or anything else."

Castelli is not happy with federal prosecutors. He does not understand why he faces being charged.

In a 14-page essay about the case that he shared with the Times, Castelli described his feelings:

"I took the high road and possibly placed my family at risk by going to the government with information on a crime that would never, I repeat, "never' would have been discovered without my input.

"After I had done all this, they reward me by including me with these criminals."

Paul de la Garza can be reached at delagarza@sptimes.com or 813 226-3432.

[Last modified July 21, 2005, 00:57:10]