Linden Lumber Company Cheated Its Customers, Feds Say

Linden, NJ - A part owner of a major Linden lumber supply company admitted in federal court Thursday that he knowingly defrauded customers out of $708,386, U.S. Attorney Paul Fishman announced.

Robert Dattilo, 61, is a co-owner of Bayway Lumber, a Linden-based company that sold commercial and industrial products to numerous public and private entities. Its clients included Amtrak, Con Edison, the University of Medicine and Dentistry of New Jersey (UMDNJ), Rutgers University; the City of Elizabeth; and the New York Transit Authority, among others.

From 2007 to November 2015, Dattilo conspired with others to defraud those customers by overbilling, charging for more expensive items, and providing free items to employees of customers, then recouping the cost of the items by overbilling.

Inflated prices on lumber, prosecutors say

At Dattilo’s direction, Bayway Lumber inflated the prices on items sold or intentionally failed to provide the prices called for in contractual agreements between Bayway Lumber and customers.

Bayway Lumber sometimes manually altered vendor invoices, in order to enable the company to bill UMDNJ higher mark-ups. Bayway also consistently billed the New York City Transit Authority for the most expensive items, such as doors, frames and door hardware, permitted by the contract, when in reality Bayway was providing far less-expensive items.

Dattilo also conspired to provide certain customers, such as the Philadelphia Housing Authority, Con Edison, the New York Department of Corrections and the City of Newark, with lower-quality lumber than the customers ordered and paid for. To hide this, Dattilo directed his employees to spray paint or rearrange the lower-quality lumber to conceal markings on it that would indicate it was cheaper.

Gave away “freebies,” then charged customers for them

Bayway gave other customers, such as Amtrak and the Plainfield Board of Education, a variety of “freebies,” such as electronics, tickets to sporting events, merchandise and gift cards. Bayway Lumber then overbilled and fraudulently billed those customers to recoup the cost of the gifts, plus additional profits. Dattilo kept a running tally of how much Bayway Lumber overbilled and fraudulently billed those customers, which Dattilo referred to as the “Bank,” to ensure that Bayway Lumber recovered the full cost of the free items, prosecutors said.

By pleading guilty, Dattilo faces a maximum 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss associated with the offense, whichever is greatest. Sentencing is scheduled for May 23.

Photo: Bayway Lumber at 418 Ashton Avenue in Linden, N.J.