Robert E. Crawford, owner of a Springdale, Pa., construction company, is set to be sentenced on Dec. 13 in federal district court in Pittsburgh, after pleading guilty last summer to mail fraud in a kickback scheme with a developer financed though overbilling so-called "cost of work" charges on two building projects worth $15 million.

U.S. District Court Judge David Cercone has also set for next March 3 the sentencing for the developer, Mark M. Palombaro, former vice president of development for Indianapolis-based Simon Property Group.

Palombaro pleaded guilty on Nov. 3 to taking $766,000 in kickbacks from Crawford in 2006 and 2008 to steer mall construction projects in Seattle and Laguna Hills, Calif. to the contractor's firm, R.E. Crawford Construction Inc., according to Assistant U.S. Attorney Shaun Sweeney. Palombaro remains free on $10,000 bond.

Managers at Simon Property Group grew suspicious of submitted costs on the California project as it neared completion, and conducted an audit of the billings, referring that information to authorities, Sweeney said.

The contracts included construction-redevelopment of Seattle's Northgate Mall and the Laguna Hills Mall, for which Crawford’s company served as general contractor.

Under terms of both contracts, the “cost of work” was to be calculated based, in part, on the “actual costs paid” by R.E. Crawford Construction in connection with work done on those projects.

To get payments from Simon Property Group during the projects, the contractor was required to periodically submit “applications for payment” to the mall developer, according to a federal criminal complaint.

Although definition of "cost of work" varies by whatever contract it is in, the term generally means the actual costs incurred in performing activities for the project.

Those activities generally include, but are not necessarily limited to: subcontractor payments, transportation costs, engineer’s and architect’s fees, salaries for construction workers, installation and service charges, and taxes and losses incurred while performing the job.

Crawford paid Palombaro to use his influence and authority with Simon Property Group to get R.E. Crawford Construction chosen as general contractor for both projects.

The contractor then had his company make payments totaling $766,000 to Abby Inc., a Carmel, Ind.-based shell company of which Palombaro was listed as president.

Crawford also directed an employee to create false records that fraudulently overstated by $1 million the costs incurred by R.E. Crawford Construction in relation to the Seattle project.

In June, Crawford pleaded guilty to mail fraud and filing a false personal income tax return. At his plea hearing, he confessed to bribing Palombaro and padding invoices to Simon Property Group for work he did.

The overbilling enabled Crawford to raise the money to pay Palombaro, according to Sweeney.

Simon Property Group filed a civil lawsuit against both men; they settled by paying $3.3 million in restitution, penalties and interest, Sweeney said.

According to a published report in Orange County, Calif., Simon Property Group sold the Laguna Hills mall last May to Merlone Geier Partners, a real estate investment firm that is planning new renovations.