A federal jury on Friday (June 17, 2016) convicted a suburban Chicago construction subcontracting firm on fraud charges for scheming to help a general contractor falsely satisfy the woman’s business enterprise (WBE) requirement on city of Chicago construction projects.
As the owner of the WBE, Elizabeth Perino agreed to allow her company to be claimed as a subcontractor on city projects so that the prime contractor could satisfy its requirement to assign a portion of the work to female-owned businesses. Perino falsified paperwork to conceal the fact that her business, Perdel Contracting Co., would perform no actual work on the projects. As a result of Perino’s fraud, Perdel expected to receive payment equivalent to a percentage of the work that Perdel Contracting fraudulently claimed to have performed.
Perino, 62, was convicted on three counts of wire fraud and one count of mail fraud. The conviction is punishable by a maximum sentence of 80 years in prison. U.S. District Judge Gary Feinerman indicated he will schedule a sentencing hearing at a later date.
A city of Chicago ordinance establishes an overall goal of awarding at least 5% of total annual funding of all city contracts to WBEs. The city’s program mirrors the federal government’s WOSB, or women-owned small-business, contracting program. For contracts with values exceeding $10,000, each contractor has to commit a certain percentage of labor to WBEs, either as a joint venture or subcontractor, or by purchasing goods or services from a WBE. In addition to being a WBE, the Perdel firm, which specializes in concrete and carpentry work, also qualified to participate in city projects as a certified Disadvantaged Business Enterprise (DBE). The DBE program is a requirement by the U.S. Dept. of Transportation, applicable to federally-assisted transportation projects like airports, highways, and public transit systems.
Evidence at the four-day trial revealed:
- Perino and a co-worker agreed to act as a “pass-through” WBE/DBE on two city projects, meaning that Perdel’s employees would perform no work and Perdel’s equipment would not be used.
- For one of the projects – at O’Hare International Airport – Perino agreed to place the general contractor’s employees on Perdel’s payroll to perform the work that would be credited to Perdel.
- Perino also entered into a sham contract to “purchase” street sweepers from the general contractor and title them in Perdel’s name while the general contractor’s workers performed the street sweeping as purported employees of Perdel. Perino and the general contractor further agreed that, at the conclusion of the O’Hare project, the street sweepers would be returned to the general contractor for $1 per machine, and Perdel would receive 18% on top of the labor costs and $20 per hour for the street sweepers.
The conviction was announced by the U.S. Attorney for the Northern District of Illinois, along with representatives of the Federal Bureau of Investigation, and the Inspector General’s offices of the U.S. Dept. of Transportation, the U.S. Dept. of Labor, and the City of Chicago.
See the FBI’s 2012 announcement of the charges filed against Perino at: https://www.fbi.gov/chicago/press-releases/2012/two-area-contractors-charged-with-fraud-involving-minority-and-women-set-asides-for-government-construction-contracts