Former Baltimore City Department Of Finance Employee Pleads Guilty To Wire Fraud Conspiracy And Bribery Scheme

Press Release

City employee fraudulently obtained more than $138,000 in COVID-19 relief benefits and took more than $250,000 in bribes that caused losses to Baltimore City in excess of $1,250,000

Baltimore, Maryland - Joseph Gillespie, age 35, of Baltimore City, Maryland, pleaded guilty today to conspiracy to commit wire fraud involving a scheme to defraud a financial institution and the United States Small Business Administration in order to obtain fraudulent loans under the Paycheck Protection Program and Economic Injury Disaster Loan program for various purported businesses. The Defendant also admitted to engaging in a bribery scheme for over eight years, whereby, in exchange for bribes from various property owners in Baltimore City (the "City"), the Defendant would use his official position as an employee of the City to extinguish various financial obligations owed to the City, including for water bills and property taxes.

The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron and Special Agent in Charge William J. DelBagno of the Federal Bureau of Investigation, Baltimore Field Office.

Financial assistance offered through the CARES Act included forgivable loans to small businesses for job retention and certain other expenses, through the Paycheck Protection Program ("PPP"), administered through the Small Business Administration ("SBA"). According to the guilty plea, on March 4, 2021, the Defendant and co-defendant Ahmed ("Adam") Sary submitted a fraudulent PPP loan application to Cross River Bank to obtain a PPP loan for JAG Investments ("JAG"), a company the Defendant owned. The PPP loan application contained numerous material misrepresentations, including that JAG in 2019 had 19 employees and an average monthly payroll of more than $55,000. In support of the loan application, fabricated 2019 Internal Revenue Service ("IRS") forms were submitted, which falsely stated that JAG's total payments to employees in 2019 were more than $275,000.

Based on the false representations and fraudulent submissions made on behalf of the Defendant as the owner of JAG, the PPP loan was funded on March 6, 2021 and approximately $138,000 was distributed to a bank account controlled by the Defendant. The Defendant agreed to pay Sary kickbacks totaling $38,000 for his work in submitting the false application and obtaining the fraudulent PPP loan. After receipt of the PPP loan, the Defendant established payroll services for JAG to facilitate documentation that would later be used to substantiate a request for the PPP loan to be forgiven.

Further, according to the plea agreement, beginning in or about early 2016 and continuing until on or about September 20, 2023, the Defendant engaged in a bribery scheme in which he abused his position of trust as a public official for his own personal gain.

As an employee of the Baltimore City Department of Finance, Revenue Collections Department, the Defendant routinely accepted bribes from various property owners in the City whose property was subject to certain financial obligations and, if the obligations remained unpaid, to tax sale. The Defendant accepted these bribes -- typically 10% to 15% of the amount owed to the City -- in exchange for removing or extinguishing these financial obligations, including for citations, tax, and water obligations-thereby causing losses to the City. The Defendant also accepted bribes in exchange for delaying or postponing-without approval or permission from other City officials-due dates for the payment of outstanding financial obligations, thus forestalling the placement of a lien on the property by the City.

Once the Defendant received the bribe payment, he would extinguish the financial obligation owed to the City by marking the obligations as "paid" in the City's record-keeping system. After removing the obligation, the Defendant would, at times, send a photograph of supporting documentation to the property owner reflecting that a payment was made towards a financial obligation owed to the City when, in fact, no such payment was made by the property owner.

As part of an FBI investigation, the Defendant engaged in multiple recorded conversations in which he discussed the specifics of the bribery scheme outlined above. For example, in response to the question "[S]o you want 100 for each property?" talking about the size of the bribe payment, the Defendant replied, "yeah that's basically how I do." During another recording, the Defendant stated that he had the ability to "wipe a bill off" the City's record of outstanding obligations tied to a particular property or to "put paid next to 'em," even though the financial obligation had not in fact been paid. Defendant further stated that he removed additional financial obligations for this property owner, saying "There was a couple, extra miscellaneous bills that y'all had that I wiped off …. That shit gone now."

During another recorded interaction, the Defendant stated, "Going forward, I'm just your inside man ... That's what I do for a lot of different people around the City. You know what I mean - manage their shit for them a little bit …. I'm gonna go look at your shit."

The Defendant's bribery scheme continued for years thereafter, and he admitted that he enlisted the help of multiple co-conspirators in connection with his scheme. According to the plea agreement, the Defendant received more than $250,000 in connection with the bribery scheme and caused losses to the City in excess of $1,250,000.

Gillespie and the government have agreed that, if the Court accepts the plea agreement, Gillespie will be sentenced to between two years' and five years' imprisonment. United States District Judge Richard D. Bennett has scheduled sentencing for December 9, 2024 at 2:30 p.m.

The District of Maryland Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud, including fraud relating to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The CARES Act was designed to provide emergency financial assistance to Americans suffering the economic effects caused by the COVID-19 pandemic. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.

For more information on the Department's response to the pandemic, please visit https://www.justice.gov/coronavirus. Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

United States Attorney Erek L. Barron commended the FBI for their work in the investigation, and thanked the Small Business Administration's Office of Inspector General, Baltimore County Police Department, and the Baltimore City Inspector General for assistance as well. Mr. Barron thanked Assistant U.S. Attorneys Paul A. Riley and Evelyn L. Cusson, who are prosecuting the federal case.

For more information on the Maryland U.S. Attorney's Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

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Updated August 30, 2024