TWO FORMER PennDOT managers and eight inspectors were arrested today in an overbilling scheme that defrauded taxpayers of more than $1.2 million, state Attorney General Kathleen Kane announced yesterday.

Alexander Morrone, 50, of Norristown, and William Rosetti, 36, of South Philadelphia, both former permits managers for the Pennsylvania Department of Transportation, allegedly took kickbacks from highway inspectors in exchange for ignoring phony time sheets and mileage reports, Kane said. Morrone also allegedly paid inspectors to do home improvements at his and his mother's homes while they billed taxpayers for the work. Rosetti further is charged with billing and getting paid for hours he didn't work.

The other eight men arrested were inspectors, including:

*  Frank DiMichele, 49, of Norristown: Unqualified for his position, DiMichele allegedly lied on his resume to get his post.

*  John J. Cavanaugh, 61, of South Philadelphia: He allegedly added two hours of overtime daily to his time sheet and gave Rosetti $140 to $150 each pay period as a "street tax" for Rosetti to look the other way.

*  Brandon Grosso, 33, of Boothwyn: Grosso, Rosetti's brother-in-law, had no construction experience, but he was hired after Rosetti allegedly instructed him how to lie on his resume. Grosso also allegedly padded his paycheck with three hours of overtime weekly and unearned mileage, paying Morrone $120 to $140 a week for "protection" to ignore the fraud.

*  Joseph DeSimone, 34 and John LaSpada, 40, both of South Philadelphia: Allegedly paid kickbacks to Morrone to overlook fraudulent overbilling and rarely visited job sites they claimed they'd inspected. DeSimone also allegedly billed eight hours for work he didn't perform at a construction site closed due to a state of emergency.

*  Christopher Lauch, 50, of Dover, Del.: He allegedly paid Rosetti $100 a week to ignore bogus time sheets and was laid off after falling behind in those kickbacks.

* David Betzner, 72, of Port St. Lucie, Fla.: Rosetti allegedly gave him presigned, blank time sheets, and Betzner improperly billed and was paid $53,000 for hours and mileage for inspection work at a single job site that workers said he never visited.

*  Generoso F. Palmieri, 60, of Glenside: He's accused of inflating mileage and padding his hours, paying Rosetti kickbacks to ignore the scam.

Their arrests were part of the same investigation that resulted in last July's arrests of PennDOT contractor Thanh Nguyen, who allegedly stole more than $3.6 million by submitting false invoices, and Robert Slamon, the CZOP Specter Inc. inspector Nguyen allegedly bribed to ignore his fraud.

Kane's office began to probe alleged abuses in the Highway Occupancy Permit program in District 6, which covers Philadelphia, Delaware, Montgomery, Chester and Bucks counties, in March 2013. The U.S. Department of Transportation Inspector General's Office also participated in the investigation.

PennDOT permits are required for construction or any encroachment on state or federal roads. Inspectors are supposed to ensure permit-holders adhere to law and permit conditions.

Palmieri and DiMichele worked for PennDOT; the other inspectors were contracted consultants. Cavanaugh, DeSimone and LaSpada worked for Construction Methods and Coordination (CMC) Inc. Betzner, Lauch and Grosso worked for CZOP Specter Inc. The inspectors were paid more than $500,000 they didn't earn, and CMC and CZOP raked in an additional $700,000 for employees' unearned overtime, Kane said.

Kane urged tipsters who know of suspected corruption in PennDOT's District 6 to call her office at 610-631-6208.

On Twitter: @DanaDiFilippo

Blog: phillyconfidential.com