A former supervisor with the city's Office of Fleet Management pleaded guilty Thursday to theft and conspiracy related to a scam that bilked the city of more than $400,000.
Robert Otterson, 50, of the 1900 block of South 30th Street, in South Philadelphia, also pleaded guilty to theft in a separate case in which he stole items from city inventory — including car parts, police strobe lights and Porta-Potties. He sold some items on Craigslist.
In 2010, Otterson helped reputed mob associate Ronald Galati Sr. and Galati's son, Ronald Jr., who both ran a South Philly auto-body shop, fraudulently obtain a contract to repair city vehicles even though the shop did not have a required piece of equipment — a certain type of welder. At the time, Otterson, who began working for the city in June 1989, was a Fleet Management team leader at the city's auto-body shop at 11th and Reed Streets in South Philly.
The Office of Fleet Management, created in 1993, manages all police, fire, maintenance and other city vehicles. Otterson was responsible for deciding whether a car should be repaired at the city shop at 11th and Reed or at a contract shop.
Galati Sr., who ran the American Collision & Auto Center shop at 1930 S. 20th St. in South Philly, fraudulently inflated repair and labor costs on city vehicles and Otterson approved the inflated costs, according to a grand jury presentment. Galati Sr. would then share proceeds with Otterson.
Galati Sr., 65 — who was sentenced to 22 years in federal prison for trying to have his daughter's then-boyfriend killed in Atlantic City in November 2013 — pleaded no contest last week to corrupt organizations, theft, and related charges in a widespread insurance-fraud case he spearheaded. His fraudulent contract with the city was just one part of the fraud case.
His son, Ronald Jr., 38, pleaded guilty to corrupt organizations and related charges. They are to be sentenced Dec. 9.
In this case, Otterson approved 178 American Collision invoices for city vehicle repairs that contained 13,442 hours of unperformed labor, which resulted in an unwarranted payment of $403,081 from the city to American Collision, according to the grand-jury investigation by the Philadelphia District Attorney's Office's Insurance Fraud Unit and the Pennsylvania State Police.
"The city's in such dire straits right now," Assistant District Attorney Dawn Holtz said after Thursday's plea hearing. "These people ripped the city off. Greed on top of greed. They got the contract illegally, now they have to overcharge the city. Obviously, Mr. Otterson thought he would get something off of it."
While searching Otterson's residential property in April 2014, investigators found receipts for large purchases made by Otterson, including for a $2,000 watch, new carpets worth $700, new windows worth about $8,000, a $9,000 Harley-Davidson motorcycle and receipts for firearms bought with cash.
Otterson was fired from his city job in 2014 — around the time he was charged with bid-rigging and related offenses.
His defense attorney, Perry de Marco Sr., said after Thursday's hearing: "In spite of these charges, he's otherwise a great guy. He's been hardworking all his life. At heart, he's a good fellow."
He contended Otterson, who is not in custody, is a good candidate for probation at his Dec. 16 sentencing before Common Pleas Judge Jeffrey Minehart.
Among the charges Otterson pleaded guilty to were conspiracy, bid-rigging, theft and perjury.
In a statement Thursday, city spokesman Mike Dunn said that after learning of the investigation, the Office of Fleet Management had "fully cooperated with officials during the entire investigation and in fact helped uncover information that led to the arrests."
Otterson on Thursday also pleaded guilty to theft in another matter in which he stole items from the city's inventory.
According to an affidavit of probable cause, Otterson, while working as a Fleet Management team leader, stole city property from the city building at 11th and Reed and from a fenced-in city lot across the street. He then sold the items for his own profit.
Investigators found that Otterson and another Fleet Management employee, Daniel Rosa, had posted for sale about $40,000 worth of items they stole from the city's inventory on Craigslist, including police strobe light kits, Ford and Chevy car parts, Meyer snow plow parts, welders, a Honda generator and Porta-Potties.
Holtz said it's not clear how much of the items were actually sold on Craigslist. Earlier this year, Rosa, 35, entered a probationary program for first-time offenders. He resigned from his city job last year, about the time he was charged.