CHRISTIANSTED — Two Virgin Islands Department of Education officials have been charged in a $4 million tax fraud scheme, authorities said.
Department of Education Director of Maintenance, Davidson Charlemagne, 50, and his wife Sasha Charlemagne, 44, both of St. Croix, were each arrested after a federal grand jury returned an indictment charging the pair with government program fraud, wire fraud and money laundering conspiracy, U.S. Attorney Delia L. Smith said.
The indictment also charges former Virgin Islands Housing Finance Authority (VIHFA) Chief Operating Officer Darin Richardson, 56, of St. Thomas, with criminal conflict of interest and making materially false statements.
According to court documents, the charges stem from a two-year investigation involving a VIHFA
contract for storage and management of wood that was shipped to the territory to be used for the
reconstruction of commercial and residential buildings following Hurricanes Irma and Maria in 2017.
After both hurricanes, Federal Emergency Management Agency (“FEMA”) mobilized resources, including a large consignment of wood, to rebuild public and private infrastructure in the Virgin Islands. As part of those efforts, VIHFA received funding through the Department of Housing and Urban Development (HUD) Community Development Block Grant Disaster Recovery program to pay for the storage and management of the wood.
Initially, VIHFA stored the St. Croix consignment of wood at Sunshine Mall in Frederiksted, St. Croix.
However, in 2020, the owner of Sunshine Mall requested that the Government of the Virgin Islands remove the St. Croix woodpile from his commercial property.
On May 12, 2020, VIHFA issued a public request for proposals seeking bids for a contract to store and manage the woodpiles on both islands.
On June 2, 2020, VIHFA received a proposed bid from ISG and D&S Trucking, a company owned and operated by Davidson Charlemagne, at a cost of $2,993,500.00, over a three-year period.
The proposal included cost estimates for four employees, including a warehouse manager at
$120,000.00 per year, a forklift driver at $100,000.00 per year, a shipping and receiving clerk at $80,000.00 per year, and an administrative staffer.
These estimates for labor were vastly inflated and above the labor costs estimated by VIHFA. By comparison, according to the United States Bureau of Labor Statistics, salaries for
forklift drivers, shipping and receiving clerks, and administrative support personnel average approximately $41,000.00 per year, and a manager of warehouse employees earns on average $64,000.00 per year.
“As alleged, these defendants exploited hurricane recovery efforts in order to develop and carry out a $4 million scheme to defraud taxpayers,” U.S. Attorney Smith said. “The indictment levied against these individuals sends a clear message that the Department of Justice and our law enforcement partners followed the money and will continue to hold public officials seeking to profit from natural disasters accountable for their crimes. I commend the diligent work done by Housing and Urban Development Office of Inspector General, Federal Bureau of Investigation and the Small Business Administration Office of Inspector General who worked tirelessly to uncover this conspiracy to defraud the citizens of our territory.”