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2 men accused of defrauding taxpayers of more than $800,000

By John Craven, Reporter, JCraven@wfmz.com
Published On: Feb 06 2012 03:20:04 PM CST
Updated On: Feb 06 2012 04:27:22 PM CST

Two men stand accused of defrauding local taxpayers out of more than $800,000.

EASTON, Pa. -

Two men stand accused of defrauding local taxpayers out of more than $800,000.

Robert J. Kearns and Patrick J. McLaine were charged Monday with criminal conspiracy, a third degree felony, along with two related charges each. 

Both men operated Municipal Energy Managers Inc., a Scranton-area company that was hired by Bethlehem Twp., Northampton Co., to privatize its streetlights.

The township signed a contract with MEM in July 2007 to help the municipality buy its street lights from PPL, said District Attorney John Moganelli. The plan was supposed to reduce the township's overall electricity bill. 

Bethlehem Township paid MEM $832,460 up front, borrowing the money to do so, Morganelli said. 

According to a grand jury report unsealed Monday, two years later "MEM did little to perform the obligations under this agreement."  In fact, Morganelli said there is no evidence MEM even contacted PPL to start the process until August 2009.

The grand jury also learned that PPL's projected cost for the purchase was only $271,180, far below what MEM charged the township.

According to Moganelli, bank records indicated the defendants wrote several very large checks to themselves from an account where Bethlehem Township's money was deposited.   Prosecutors said the money was used for various personal expenses, including a trip to Walt Disney World.

At this point, Morganelli said there is no money left in the defendants' bank accounts to seize.

The township filed a civil lawsuit against MEM in 2010, alleging breach of contract. That case is still pending.

Morganelli said investigators from Cumberland County also contacted him recently concerning possible criminal activity there.

Kearns and McLaine are expected to be arraigned Tuesday before District Judge Joseph Barner.