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Bid-rigging alleged by Falls figure to win work; U.S. attorney cites plumber John Gross

A Niagara Falls plumbing contractor with a checkered past rigged bids to win repair work at the former Summit mall in Wheatfield and a Goodyear plant in Niagara Falls, according to federal prosecutors.

John J. Gross Jr., a political power broker and convicted felon, allegedly used the letterheads of competing companies to submit false bids in their names that were higher than the bids submitted by his son's Niagara Falls plumbing company. He also allegedly paid for fishing trips and repair work at the homes of mall and plant employees.

Two years after FBI agents raided his son's company, more details have emerged about the federal government's case against John Gross.

In a criminal information filed by the U.S. Attorney's Office earlier this month in U.S. District Court in Buffalo, the government accused Gross of mail fraud and cheating on his taxes while working at David Gross Contracting from 2007 to July 2009.

No formal charges have been filed, though such paperwork usually precedes a court appearance by the accused, the filing of formal charges and an appearance for a plea.

No date has yet been set for Gross to appear in court.

"It's not a surprise," said Gross' attorney Robert L. Boreanaz. "We've had repeated contact with the government over the last several months."

In July 2009, FBI and Internal Revenue Service agents searched several locations, including the mall's roof, the offices of David Gross' plumbing company and Niagara Falls City Hall. Three employees of the city's Inspections Department were put on paid leave after the federal investigation alleged they received benefits for supporting Gross' company.

It wasn't the first time John Gross has come under scrutiny.

In 1997, he was sentenced to three years and five months in federal prison for racketeering, stealing, bribing officials and cheating on his taxes. He also served jail time in 1974 for grand larceny and conspiracy, and was the FBI's star informant in a bribery investigation in the 1980s.

The new allegations indicate the government believes Gross resumed his illegal activities while working at his son's company. The government alleges:

*David Gross' company did about $80,000 worth of emergency repair work on the roof of the Summit mall after a December 2008 storm. John Gross asked employees to create two false bids -- using a supply of letterheads from competitors -- to present to an insurance claims adjuster.

Gross' bid and two higher bids from competitors were submitted to a mall employee whose home Gross had completed repairs and improvements on. That employee, whose name was not released, submitted the bids to mall management. Gross' $79,000 bid was more than $8,000 less than the competing bids, according to the federal document.

*Gross developed a personal relationship with two Goodyear purchasing agents, paying for chartered fishing trips for them and arranging for work to be done on their homes.

David Gross Contracting, in December 2007, submitted a bid for duct work to be done at Goodyear after receiving information about competitors' bids from one of the purchasing agents, according to the document filed by the office of U.S. Attorney William J. Hochul Jr.

In another instance, David Gross Contracting allegedly completed about $19,000 worth of repairs at the Goodyear plant after submitting false competing bids to the other agent.

Representatives from the Goodyear plant were not available to comment late Monday, a plant security guard said.

*David Gross Contracting avoided paying property taxes on "gross receipts or sales" by asking customers to make checks out to "David Gross" and not "David Gross Contracting."

John Gross would then allegedly endorse the checks to himself and would direct employees to cash the checks and give him the cash. No receipts were entered into the company's accounting software or provided to its accountant.

The allegations parallel with information in the government's 2009 search warrant, though no mention of Gross' relationships with city officials was included in that document.

Barbara Burns, spokeswoman for the U.S. Attorney's Office, said the office had no comment because of the ongoing investigation.

Falls Mayor Paul A. Dyster said Monday evening, "My administration, as at the very beginning, stands ready to fully cooperate with federal law enforcement authorities."

In July 2009, the U.S. Attorney's Office sought employee records for Falls Building Commissioner Guy A. Bax and chief plumbing and electrical inspectors George Amendola and Peter Butry. Bax was quoted as calling Gross his "Godfather" in an e-mail intercepted by the FBI.

All three workers were put on paid leave after the FBI raid, and Bax retired in January. Amendola and Butry have returned to work with different job responsibilities, Dyster said.

"Their duties were circumscribed in order to avoid putting them in a position where they would have discretion over, for example, a permit or inspection where Gross plumbing would be involved," Dyster said.

Boreanaz said he did not believe the government was preparing to charge any other employees of the company. He added that it was premature to talk about a possible plea if Gross is formally charged.

"That's all it is at this point. It's allegations," Boreanaz said. "If we go to court, we'll address it the way we always do."

e-mail: cspecht@buffnews.com