The Justice Department announced on Jan. 9, 2014 that two related entities, Michigan-based Cadillac Asphalt LLC (Cadillac) and Michigan Paving and Materials Co. (MPM), have agreed to pay $3.8 million to resolve allegations that they falsely claimed Disadvantaged Business Enterprise (DBE) credits on a number of federally funded transportation projects. Both Cadillac and MPM are subsidiaries of Oldcastle Materials Inc., a construction material and services provider based in Atlanta.
“The Disadvantaged Business Enterprise program helps businesses owned by minorities and women to work on federally funded projects,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Those who falsely claim credits under the program to obtain federal funds victimize both the taxpayers and the businesses that the program is designed to assist.”
“The U.S. Attorney’s Office works with the Civil Division in Washington to use civil enforcement to recover funds for taxpayers,” said U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade. “In this case, civil attorneys were able to recover more than $3 million that was obtained through false claims.”
The settlement announced today resolves allegations that Cadillac and MPM knowingly and falsely claimed DBE credit for asphalt purportedly supplied by a DBE known as BN&M Trucking Inc. As a condition of federal funding, contractors, such as Cadillac and MPM, working on a federally funded project must make a good-faith attempt to meet DBE participation goals. For the contractors to meet their DBE participation goal, a DBE employed by the contractors must be independently responsible for performing a portion of the work with its own employees and equipment. Allegedly, BN&M Trucking was merely a pass-through company that did not supply any asphalt or perform any other commercially useful function.
“We remain steadfast in our commitment to maintaining the integrity of the U.S. Department of Transportation’s (USDOT) Disadvantaged Business Enterprise program,” said regional Special Agent-in-Charge of USDOT’s Office of Inspector General Michelle T. McVicker. “Working with the Secretary of Transportation, other DOT leaders and our law enforcement colleagues, we will continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse and violations of law.”
The allegations resolved by the settlement involved numerous federally funded transportation projects in Michigan between 2006 and 2010, including a project to construct a new runway at Detroit Metropolitan Wayne County Airport in 2008 and 2009. In November 2010, two other entities, John Carlo Inc. and Angelo Iafrate Construction Co. Inc., paid more than $1 million to resolve similar allegations related to the airport runway project.
This case was handled by the Justice Department’s Civil Division, Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Michigan and the Department of Transportation Office of Inspector General. The claims settled in this case are allegations only; there has been no determination of liability.