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DBE couple charged with bribery

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A federal indictment has been unsealed in Philadelphia, charging Nazik Modawi and her husband Abboud Wali with conspiracy and bribery.

According to allegations contained in the indictment, the defendants made two bribe payments in November through December 2016 to Southeastern Pennsylvania Transportation Authority (SEPTA) employees for the purpose of expediting their application for a certification from SEPTA’s disadvantaged business enterprise (DBE) program. SEPTA employees immediately reported the cash payments to authorities.

The charge of conspiracy carry a maximum sentence of 5 years in prison and a $250,000 fine; charges of bribery concerning agencies receiving federal funds carry a maximum sentence of 10 years in prison and a $250,000 fine.

An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

The case was investigated by the Federal Bureau of Investigation and the United States Department of Transportation, Office of Inspector General, with assistance from the SEPTA Inspector General. It is being prosecuted by Assistant United States Attorney Denise S. Wolf of the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

Source: https://www.justice.gov/usao-edpa/pr/husband-and-wife-charged-bribery

Woman in DBE front scheme gets 12 months in federal prison

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The former owner of a suburban Chicago construction business convicted of acting as an illegal front so another company could secure a lucrative city airport contract was sentenced Thursday (Mar. 16, 2017) to 12 months in federal prison.

Lawyers for Elizabeth Perino had sought probation and home confinement, but U.S. District Judge Gary Feinerman said he opted for prison to send a message to “an industry that needs to clean up its act.”

Perino’s conviction is the latest turn in an eight-year saga sparked in 2008 when Perino’s former project manager filed a whistleblower lawsuit alleging misconduct in massive projects run by industry giant McHugh Construction, a century-old company that reported more than a half-billion dollars in revenue in 2015.

That sparked a joint investigation by federal prosecutors and Illinois Attorney General Lisa Madigan resulting in the criminal charges.

Perino’s company posed as a legitimate woman-owned business, allowing Chicago-based Diamond Coring Co. to meet its requirements for hiring disadvantaged businesses in order to win a multimillion-dollar runway repair contract at O’Hare International Airport. Perino did no work for the bills submitted by her company.

Keep reading this article at: http://www.chicagotribune.com/news/local/breaking/ct-phony-woman-business-owner-sentencing-met-20170316-story.html

DBE contracting opportunities under the Trump Administration

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good-time-for-dbes-01-2017With President-elect Trump’s promise to turn America’s crumbling infrastructure into an opportunity for accelerated economic growth, there are likely to be significant investments in the next four years in transportation, construction, and other similar projects.

The new administration’s plans are likely to have a particularly big impact on the highway construction industry, which stands to ultimately receive billions in federally-financed dollars. State and local governments will be first in line to receive the funds so they can be trickled down to create thousands of new jobs. Those dollars will be filtered through prime contractors and their disadvantaged business enterprise (DBE) partners, which will be performing many of these federally-funded projects. With billions of dollars likely to hit the streets, this is a good time for firms to look into the DBE program.

While not as well-known as the Small Business Administration’s 8(a) and other small business programs, the Department of Transportation’s (DOT) DBE program has been around for some time. It was established by Congress in 1983 with legislation that required that at least 10 percent of the funds authorized for highway and transit federal financial assistance programs be expended with DBEs. The three agencies with those programs are the Federal Highway Administration, Federal Aviation Administration, and Federal Transit Administration.

Keep reading this article at: http://www.jdsupra.com/legalnews/dbe-contracting-opportunities-under-the-95974/

Court of Appeals affirms lengthy prison sentences for men engaging in DBE fraud 

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USDOTThe U.S. Attorney’s Office for the Middle District of Pennsylvania has announced that Joseph W. Nagle of Deerfield Beach, Florida and Ernest G. Fink, Jr. of Orwigsburg, Pennsylvania, the former owners of Schuylkill Products Inc., (SPI) had their sentences affirmed by the Third Circuit Court of Appeals.

Nagle was sentenced to 84 months’ imprisonment on November 30, 2015, and Fink was sentenced to 41 months’ imprisonment on February 24, 2016, for their roles in a massive conspiracy to defraud the U.S. Department of Transportation’s Disadvantage Enterprise (DBE) program.

According to USDOT, their scheme, which lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone, is the largest reported DBE fraud in the nation’s history.

In April 2012, after a four-week jury trial, a jury convicted Nagle on 26 charges relating to the scheme, including conspiracy to defraud USDOT, mail fraud, wire fraud, and money laundering.  Fink previously pleaded guilty to conspiracy to defraud the USDOT in August 2010.

In 2014, three other former executives associated with SPI were sentenced for their roles in the scheme.

  • Romeo P. Cruz, of Westhaven, Connecticut, the former owner of Marikina Construction Corp., which operated as a front for SPI, was sentenced to 33 months’ imprisonment.
  • Timothy G. Hubler, of Ashland, Pennsylvania, SPI’s former Vice-President in charge of field operations, was sentenced to 33 months’ imprisonment.
  • Dennis F. Campbell, of Orwigsburg, Pennsylvania, SPI’s former Vice-President in charge of sales and marketing, was sentenced to 24 months’ imprisonment.

The investigation was conducted by the FBI, USDOT’s Inspector General’s Office, the U.S. Department of Labor Inspector General’s Office, and the Criminal Investigation Division of the IRS.

Source: https://www.justice.gov/usao-mdpa/pr/third-circuit-court-appeals-affirms-lengthy-prison-sentences-two-men-who-executed

 

DBE program ruled burdensome but constitutional

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idotThe federal program that offers advantages for minority and women-owned businesses on highway construction contracts may disproportionately burden subcontractors, but it is still constitutional, the Seventh Circuit ruled.

Midwest Fence, a specialty contractor focused on guardrails and fencing, challenged the federal government’s program that offers help for disadvantaged business enterprises (DBEs), small businesses owned and managed by racial minorities and women.

The DBE program, in effect since 1983, establishes a goal of spending at least 10 percent of federal highway funds on contracts with disadvantaged businesses.  DBE business owners must certify their disadvantaged status, and qualify only if their net worth does not exceed $1.32 million.

Participation in the federal program is a requirement for states that want to use federal highway funds.

However, the program offers the states significant flexibility.  Contractors bidding on highway construction work in Illinois cannot be automatically rejected for failure to meet diversity goals, and quotas are flat-out prohibited. Instead, the state must determine if the bidder has made good faith efforts to find DBE subcontractors that could perform 10 percent of the work.

Keep reading this article at: http://www.courthousenews.com/2016/11/07/perks-for-minority-owned-businesses-upheld.htm

Tennessee construction company settles DBE fraud allegations for $2.25 million

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Mountain States Contractors, LLC, a subsidiary of Jones Brothers, has agreed to pay the United States more than $2,250,000 to settle False Claims Act (FCA) allegations, announced Jack Smith, Acting United States Attorney for the Middle District of Tennessee for the administration of this settlement.  The settlement resolves a civil investigation of Mountain States and affiliated companies for submitting false claims for payment to the government in connection with the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) Program.

Jones BrothersUSDOT’s DBE Program provides a vehicle for increasing the participation by Minority Business Enterprises in state and local transportation projects and ensures that DBEs can compete fairly for federally funded transportation-related work.

The Justice Department alleged that Mountain States and its affiliated company, HMA, as the prime contractors on a federally-funded construction projects, agreed that they would use DBEs to perform subcontracted work on the projects.  For a number of these projects, Mountain States and HMA subcontracted with G&M Associates.  Although G&M Associates is a certified DBE, evidence obtained during the investigation indicated that Mountain States had improperly “loaned” its employees to G&M to perform the DBE work on the projects.  The entities claimed these employees as DBE employees for purposes of obtaining payment for their work despite the fact that the prime contractors continued to provide their health insurance.  The prime contractors also improperly leased equipment to G&M, which the entities then counted against the projects’ DBE goals.

“Fraud schemes like that committed by Mountain States harms the integrity of law abiding, small business contractors trying to compete for contracts on a level playing field,” said Marlies Gonzalez, regional Special Agent-in-Charge of the U.S. Department of Transportation Office of Inspector General.

The allegations resolved by today’s settlement were originally raised in a lawsuit filed against Mountain States by a former Mountain States employee who brought his claims under the qui tam, or whistleblower, provisions of the FCA, which allow private citizens with knowledge of false claims to bring civil suits on behalf of the government and to share in any recovery.  The whistleblower will receive over $405,000 as his share of the settlement.

In addition to the settlement, Mountain States will enter into a monitoring agreement with the Federal Highway Administration.  This agreement will help to prevent similar conduct in the future.

This matter was investigated by the DOT-Office of Inspector General and the United States Attorney’s Office for the Middle District of Tennessee.  The United States was represented by Assistant U.S. Attorney Christopher C. Sabis.

This case is docketed as United States ex rel. Meadows v. Mountain States Construction, LLC, No. 3:12-cv-0523 (M.D. Tenn.).

Source: https://www.justice.gov/usao-mdtn/pr/local-construction-company-settles-allegations-fraud-involving-disadvantaged-business-0

Colorado DOT employee stole DBE contractors’ personal information

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DBE certifiedPersonal information from hundreds of Colorado Department of Transportation (CDOT) contractors may have been compromised after a data breach involving a CDOT employee.

The employee, who is no longer working for CDOT, had access to a database for several hundred disadvantaged and emerging small businesses. The database for Emerging Small Business (ESB) and Disadvantaged Business Enterprise (DBE) firms contained confidential information — including tax returns.

“We believe that there is a data breach on the database itself where an employee accessed information and may be using that and selling that information externally,” CDOT spokeswoman Amy Ford said.

The businesses potentially affected by the data breach submitted information to CDOT in order to qualify for ESB and DBE programs, Ford said. The programs are designed to give small, disadvantaged businesses an opportunity to contract with CDOT on construction, professional service, research and more.

Keep reading this article at: http://www.9news.com/mb/news/cdot-employee-stole-contractors-personal-information/175000302\

See letter send by CDOT to affected contractors at: https://www.scribd.com/doc/311660836/Letter-about-CDOT-data-breach

Contractor files lawsuit over DBE-related lost $77 million bridge contract

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Arkansas_State_Highway_and_Transportation_DepartmentA Texas-based contractor has filed a lawsuit against the Arkansas State Highway and Transportation Department over the department’s cancellation of a $77.6-million bridge contract for alleged failure to document disadvantaged business enterprise (DBE) involvement efforts. The department has made a claim against the contractor’s bid bond.

The contractor, Roanoke, Texas-based Johnson Bros. Corp., had in January submitted a very low bid to replace a bridge carrying highway I-40 over the White River between Little Rock and North Little Rock. The second-low bid came in about $40 million higher.

Filed in the Pulaski County circuit court of Arkansas in Little Rock on March 9, Johnson Bros. names as defendants the state’s highway commission, the commission members individually and the department’s chief engineer. The petition requests judicial review of February administrative decisions that found the contractor’s efforts to involve DBEs in the project insufficient, reject the bid, make a claim under the bid bond and ban the contractor from rebidding on the project.

The petition also claims that the highway commission took no action on a petition to review the department’s decision and request for injunctive relief.

State officials had conditionally awarded the contract to Johnson Bros. Corp. based on the company’s low bid.

Keep reading this article at: http://www.enr.com/articles/39253-arkansas-cites-dbe-rule-and-halts-bridge-contract

Sentence reduced for company president who engaged in fraudulent DBE contracts worth $136 million

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DBE Fraud HotlineThe former chief operating officer and co-owner of now-defunct Schuylkill Products Inc. will spend 10 fewer months in prison, but pay the same fine, after being resentenced Wednesday in federal court in Harrisburg, Pennsylvania for his role in the largest fraud of its kind in U.S. history.

Ernest G. Fink Jr., 70, of Orwigsburg, Pennsylvania, must serve 41 months in federal prison and pay $25,100 in fines, Senior U.S. District Judge Sylvia H. Rambo ruled.

Rambo originally sentenced Fink on July 14, 2014, to 51 months in prison and $25,100 in fines after he pleaded guilty to participating in Schuylkill Products’ scheme to defraud the federal Disadvantaged Business Enterprise (DBE) program.

Federal prosecutors charged Fink and several other Schuylkill Products executives with using Marikina Engineers and Construction Corp., West Haven, Connecticut, as a front under the DBE program from 1993 until 2008 to funnel work to the Cressona company and its wholly owned subsidiary, CDS Engineers Inc.

Keep reading this article at: http://republicanherald.com/news/schuylkill-products-co-owner-resentenced-to-10-fewer-months-in-prison-1.2011402

See our earlier articles on this case:

Yet another DBE fraud case: Steel company execs get $1 million fine, 5 years’ probation

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Phony owner of DBE gets 3 years of probation and is ordered to pay $336,219 in restitution.

Two Pennsylvania men who funneled business to their family’s steel construction firm by using a shell company to qualify as a disadvantaged business enterprise (DBE) must repay the government $1 million.

USDOTU.S. District Judge Lawrence Stengel last week sentenced brothers Dennis Weber, 66, and Dale Weber, 52, to five years of probation and ordered them to pay restitution to the government for the scheme, which netted Carl M. Weber Steel Service hundreds of government construction contacts between 1995 and 2011.

Stengel also sentenced Judy Noll, of Mertztown, the owner of Karen Construction, to three years of probation and ordered her to pay $336,219 in restitution, according to a court filing Wednesday.

Each pleaded guilty in October to conspiracy to commit wire fraud. Their attorneys could not be reached.

Prosecutors said Karen Construction was a sham that the three used to obtain bridge and highway construction contracts through a U.S. Department of Transportation program for disadvantaged businesses.

Keep reading this article at: http://www.mcall.com/news/breaking/mc-berks-steel-fraud-sentences-20160207-story.html

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