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GDOT announces $828.8 million in projects to transform Ga. 316

April 7, 2021 By Nancy Cleveland

Governor Brian P. Kemp and the Georgia Department of Transportation recently announced a series of reconstruction projects that will remove existing signalized intersections, address side road stopped intersections, and replace current at-grade separations with interchanges along 35 miles of Ga. 316 in Gwinnett, Barrow, and Oconee counties.

The proposed improvements are based on crash data and current and future traffic congestion predictions in the northeastern portion of the state.  Each project is designed to improve traffic flow and reduce the number of crashes on the newly upgraded freeway-style corridor.

 

Continue reading at:  AJC

 

Filed Under: Contracting News Tagged With: DBE, DOT, GDOT

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

December 19, 2016 By Nancy Cleveland

The 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

 

Filed Under: Contracting News Tagged With: abuse, bid document, corruption, DBE, DOJ, DOL, DOT, FAA, FBI, FHWA, fraud, FTA, IG, investigation, Justice Dept., money laundering, small disadvantaged business, tax fraud, U.S. Attorney, US DOT, USDOT

Colorado DOT employee stole DBE contractors’ personal information

May 11, 2016 By Nancy Cleveland

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

Filed Under: Contracting News Tagged With: data breach, data compromise, data security, DBE, DOT, ESB, small business

Governments struggle to root out fake minority contractors

April 6, 2016 By Nancy Cleveland

DBE Fraud HotlineMargie Sollinger knew something wasn’t right about the companies doing business with Portland, Oregon. As the city’s ombudsman, Sollinger had for some time been hearing from business owners about fraud in the city’s minority- and women-owned contracting program. But it wasn’t until she received a specific complaint in 2013 — about a certified minority-owned construction firm doing work for Portland’s housing authority — that she decided to take action. According to the complaint, the firm was merely acting as a pass-through, winning valuable city contracts and then subcontracting the work out to non-minority companies.

Like many cities and states, Portland has a program allowing it to give special consideration to women- and minority-owned companies when handing out government contracts. The goal, of course, is to help support traditionally disadvantaged companies by giving them a leg up. But as Sollinger began to discover, the city wasn’t necessarily helping the firms it thought it was.

When she first started looking into the housing contract complaint, she wasn’t sure where to turn. “As ombudsman, the most I can really do is make recommendations,” she says. “But even still, I reached a lot of dead ends.” According to state law, the city of Portland wasn’t allowed to take action against minority-owned firms it believed to be fraudulent; those complaints had to be referred to the state. But Sollinger says the state Office of Minority, Women and Emerging Small Businesses initially shrugged her off. So she referred the case to the Oregon Department of Justice, where the investigation continued for nearly two years. Ultimately, the contracting firm was forced to relinquish its minority certification and pay $15,000 to the state. State legislators took an interest in the issue, and last year passed legislation allowing all public agencies in the state to conduct their own investigations into future allegations of minority contract fraud.

Keep reading this article at: http://www.governing.com/topics/mgmt/gov-women-minority-contracting.html

Related: http://www.governing.com/columns/col-problem-with-preferential-bids.html

Filed Under: Contracting News Tagged With: abuse, compliance, DBE, discrimination, diversity, DOT, fraud, minority owned business, preference, small business, small disadvantaged business, wosb

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

February 26, 2016 By Nancy Cleveland

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:

  • CEO of fraudulent DBE firm sentenced to 51 months in prison
  • Two sentenced in largest DBE fraud in history
  • Business owner convicted of largest DBE fraud in U.S. history

Filed Under: Contracting News Tagged With: abuse, corruption, DBE, DOJ, DOL, DOT, FAA, FBI, FHWA, fraud, FTA, IG, investigation, Justice Dept., money laundering, small disadvantaged business, tax fraud, U.S. Attorney, US DOT, USDOT

GA-based construction firm to pay $1 million to settle alleged DBE-related False Claims violations

April 15, 2015 By ei2admin

C.W. Matthews Contracting Company (C.W. Matthews), a Marietta, GA-based construction firm, has agreed to pay $1 million dollars to settle allegations that it violated the False Claims Act almost eight years ago by submitting false and misleading certifications to the Government regarding: 1) work performed on several federally funded highway construction projects; as well as 2) the company’s compliance with the U.S. Department of Transportation’s Disadvantaged Business Enterprise Program (DBE Program).

DBE ownership and controlThe agreement was announced by the U.S. Attorney’s Office of the Northern District of Georgia on Monday, April 13, 2015.

Additionally, C.W. Matthews has reached a separate settlement with the U.S. Federal Highway Administration, pursuant to which the company has agreed to: 1) adopt an ethics code and a corporate compliance program; 2) appoint a compliance officer; and 3) retain an independent monitor to assess its performance.

“To receive the tangible and intangible benefits that it contracts for, the United States expects companies that actively seek and obtain federally funded contracts to be diligent and forthright in fulfilling their contractual obligations to the Government,” said Acting U.S. Attorney John Horn.

The settlement concerns false certifications that C.W. Matthews provided the Government regarding its compliance with requirements associated with the DBE Program.  Pursuant to the DBE Program, federally funded construction contracts contain DBE clauses, which require that a specified percentage of the work be sub-contracted to firms meeting the statutory definition of a Disadvantaged Business Enterprise (DBE).

As a precondition to bidding, a contractor must acknowledge the project’s DBE goals, and then identify the DBE that it proposes to subcontract with if awarded the contract.  Additionally, DBE regulations (49 C.F.R. § 26.55) require “real and substantial” work performed by a “viable” and “independent” DBE firm, and state that “there cannot be a contrived arrangement for the purpose of meeting DBE goals.”  The DBE Program is intended to ensure that DBEs are able to compete for federal construction contracts.

Between 2006 and 2007, C.W. Matthews was awarded several highway construction contracts that contained DBE clauses.  In bidding on the contracts, C.W. Matthews promised to subcontract with a DBE firm called Longoria Trucking (Longoria) to satisfy the contracts’ DBE goals.  As work progressed, C.W. Matthews submitted the requisite DBE Reports to the Government, which: 1) described work Longoria had purportedly performed; and 2) quantified the monetary amounts purportedly paid to Longoria.

The Government’s investigation revealed that the DBE reports submitted by C.W. Matthews were false and misleading as, in truth, it was a non-DBE trucking firm called G.E. Robinson – not Longoria – that performed most of the work, and received most of the payments, described in the reports.  Indeed, the investigation revealed that G.E. Robinson used Longoria as a “front” to obtain, and receive payment under, the applicable contracts.  As a non-DBE firm, G.E. Robinson was ineligible to even bid on these subcontracts.  To circumvent this restriction, G.E. Robinson assumed the identify of, and controlled, Longoria, which did little work and was paid a small fee by G.E. Robinson for its complicity.

The investigation revealed C.W. Matthews either knew, or should have known, of the scheme between Longoria and G.E. Robinson.  However, despite this knowledge, C.W. Matthews continued issuing false and misleading certifications to the Government regarding Longoria’s role in the applicable highway projects.

In certifying that Longoria was performing work under the contracts, despite clear signs that the work was actually being performed by G.E. Robinson, C.W. Matthews, at minimum, was either reckless or deliberately indifferent.

Source: http://www.justice.gov/usao/gan/press/2015/04-13-15.html

Filed Under: Contracting News Tagged With: DBE, DOJ, DOT, False Claims Act, FHWA, front, GDOT, sham, small disadvantaged business

Got DBE fraud skeletons?

November 3, 2014 By ei2admin

Every Halloween, the cute traditional images re-emerge from our closets and the attics.  Ghosts, gravestones, plastic pumpkins, and perhaps the most common of all – skeletons.  Given the recent heightened status of Disadvantaged Business Enterprises (DBE) fraud prosecutions, the massive civil penalties, the prevalence of hotlines, and increased incentives for whistle-blowers, any contractor who participates in DBE programs should use Halloween as an annual reminder to take a closer look to see if they have other skeletons in their corporate attics.

According to recent government reports and audits, DBE fraud investigations have been on the rise, in hopes of deterring widespread abuses in the programs.  According to a 2011 report from the DOT, between 2003 and 2008, the Office of Inspector General (OIG) investigations resulted in 49 indictments, 43 convictions, nearly $42 million in recovery and fines, and 419 months of jail sentences.  Moreover, from 2009 and 2010, the number of DOT investigations increased by almost 70 percent.  Based upon the headlines each month, the number of indictments keeps climbing, along with the civil and criminal penalties.

In view of these statistics and trends, one thing should be crystal clear. To the extent that DBE compliance may be a challenge, it is far better to discover the problems sooner, rather than later.

Keep reading this article at: http://www.jdsupra.com/legalnews/got-dbe-fraud-skeletons-32884/

DBE Fraud Hotline

Filed Under: Contracting News Tagged With: compliance, DBE, DOT, fraud, investigation, OIG, small disadvantaged business, whistleblower

Prime contractor pays $2.4 million to settle DBE fraud allegations

April 21, 2014 By ei2admin

U.S. attorneys, the FBI, labor and transportation officials announced on April 7, 2014 that  Connecticut-based construction company Manafort Brothers, Inc. will pay $2.4 million and implement internal reforms subject to independent monitoring to resolve a multi-agency joint criminal and civil investigation into alleged fraud committed by the company in connection with a public works project that commenced in 2007.

As part of the resolution, Manafort admitted that it made false statements to the United States and the State of Connecticut Department of Transportation that disadvantaged business enterprises (DBE) performed subcontracted work on the federally and state funded relocation of Route 72 when, in fact, non-DBE performed the work.

Manafort submitted a bid to ConnDOT to serve as the general contractor on a federally and state funded road project.  All qualifying bids were required to designate a percentage of work that would be performed by DBE, a requirement designed to provide socially and economically disadvantaged contractors, who have faced historical barriers to entry in the construction industry, with fair opportunities to compete for federally funded work.

The State of Connecticut Department of Transportation (ConnDOT) determined that Manafort was the apparent low bidder for the project with bid of approximately $39,663,000.  According to the pre-award bid documents, Manafort represented to ConnDOT that a particular DBE, identified as “Company #1,” would perform work under the contract totaling approximately $3,064,372, or 70 percent of the overall DBE goal.  In its pre-award submission package, Manafort stated that Company #1 would furnish all supervision, labor and materials in respect to the work covered by the subcontract agreement.  This work involved being responsible for the project’s reinforcing steel, materials for structural steel, furnishing a pedestrian bridge that would span the new roadway and the majority of work for a large retaining wall adjacent to the new highway.

The contract for the project was officially awarded to Manafort in August 2007 based, in part, on its representations that Company #1 would perform the work described in Manafort’s pre-award submission. However, during the course of the project, it was determined Company #1 was not performing most of the work that Manafort claimed it was performing.  In fact, the investigation revealed that Manafort was utilizing Company #1 essentially as a pass-through entity.  That is, Manafort would negotiate with and supervise subcontractors that it procured to perform work that Company #1 was supposed to perform or procure and supervise.  The Government maintains that Manafort arranged to pay those contractors through Company #1 to skirt DBE regulations.

Under the terms of a non-prosecution agreement and civil settlement agreement with the government, Manafort represented that it has undertaken various remedial measures to ensure compliance with the DBE programs for its current and future federally funded construction projects.  These measures include establishing a position for an Ethics and Compliance Officer at Manafort, forming a DBE compliance committee that meets regularly to review and address DBE-related issues, mandating DBE compliance training for Manafort employees, deploying software to insure that DBE are qualified to perform the work that they bid, removing the Manafort personnel directly involved in the misconduct, and continuing to assist law enforcement in its investigation.  Manafort has also agreed to pay a civil fine of $2,460,722.02.

Manafort sought an unfair and illegal advantage over its competitors and deprived disadvantaged businesses of an opportunity to perform work on this taxpayer funded construction project.  The non-prosecution agreement announced by the U.S. Attorney’s office in Connecticut addresses only the corporate criminal liability of Manafort, not potential criminal charges for any individual.

More details available at: http://www.justice.gov/usao/ct/Press2014/20140407-1.html.

Filed Under: Contracting News Tagged With: DBE, DOJ, DOT, false statement, FBI, fraud, pass-through, small business goals, small disadvantaged business

Two sentenced in largest DBE fraud in history

January 17, 2014 By ei2admin

The U.S. Attorney’s Office for the Middle District of Pennsylvania announced on January 13, 2014 that Dennis F. Campbell, of Orwigsburg, Pennsylvania, and Timothy G. Hubler, of Ashland, Pennsylvania, were sentenced by the Senior U.S. District Judge Sylvia H. Rambo in Harrisburg in connection with their roles in what the U.S. Department of Transportation (USDOT) has called the largest Disadvantaged Business Enterprise (DBE) fraud in the nation’s history.

Campbell, Schuylkill Product’a Inc.’s (SPI) former vice president in charge of Sales and Marketing, was sentenced to 24 months’ imprisonment, $119 million in restitution to the USDOT, and two years’ supervised release. Hubler, SPI’s former vice president in charge of Field Operations, was sentenced to 33 months’ imprisonment, $119 million in restitution to the USDOT, $82,370 in restitution to the Internal Revenue Service, and two years’ supervised release. Both men were ordered to surrender to the Bureau of Prisons by February 17, 2014, to commence service of their sentences.

Campbell pleaded guilty to DBE fraud in 2008, and Hubler pleaded guilty to DBE fraud and tax fraud in 2008. Romeo P. Cruz, of West Haven, Connecticut, the former owner of Marikina Construction Corporation, the DBE firm that operated as a front for SPI to gain lucrative DBE contracts, pleaded guilty to DBE fraud and tax fraud in 2008 and 2009, and is scheduled to be sentenced on Wednesday, January 15, 2014. All three men cooperated with the government’s investigation that led to the conviction of the two former owners of SPI, Ernest G. Fink, of Orwigsburg, Pennsylvania, SPI’s former vice president and chief operating officer; and Joseph W. Nagle, of Deerfield Beach, Florida, SPI’s former president and chief executive officer.

Fink pleaded guilty to DBE fraud in 2010. Nagle was convicted after a four-week jury trial in 2012 of 26 charges relating to the DBE fraud scheme. No sentencing date has been scheduled for Fink and Nagle.

“The sentences handed down today, in what is the largest reported DBE fraud case in USDOT history, serve as clear signals that severe penalties await those who would attempt to subvert USDOT laws and regulations,” said Doug Shoemaker, OIG Regional Special Agent in Charge. “Preventing and detecting DBE fraud are priorities for the Secretary of Transportation and the USDOT Office of Inspector General. Prime contractors and subcontractors are cautioned not to engage in fraudulent DBE activity and are encouraged to report any suspected DBE fraud to the USDOT-OIG. Our agents will continue to work with the Secretary of Transportation; the administrators of the Federal Highway, Transit, and Aviation Administrations; and our law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes throughout Pennsylvania and the United States.”

According to U.S. Attorney Peter J. Smith, the DBE fraud lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone. SPI, using Marikina as a front, operated in several other states in the Mid-Atlantic and New England regions. Although Marikina received the contracts on paper, all the work was really performed by SPI personnel, and SPI received all the profits. In exchange for letting SPI use its name and DBE status, Marikina was paid a small fixed-fee set by SPI.

The scheme lasted as long as it did because of the numerous fraudulent steps the co-conspirators took to conceal the scheme. SPI personnel routinely pretended to be Marikina personnel by using Marikina business cards, e-mail addresses, stationery, and signature stamps, as well as using magnetic placards and decals bearing the Marikina logo to cover up SPI’s logo on SPI vehicles.

SPI and its wholly owned subsidiary, CDS Engineers, was sold in 2009 and was based in Cressona, Pennsylvania. SPI manufactured concrete bridge beams, as well as other suppliers’ products. CDS was SPI’s erection division and installed SPI’s bridge beams, as well as other suppliers’ products. USDOT provides billions of dollars a year to states and municipalities for the construction and maintenance of highways and mass transit systems on the condition that small businesses owned and operated by disadvantaged individuals receive a fair share of these federal funds. The DBE fraud here involved SPI’s use of Marikina’s name and status to obtain DBE contracts that it was not entitled to receive.

The investigation was conducted by the FBI, the USDOT Inspector General’s Office, U.S. Department of Labor Inspector General’s Office, and the Criminal Investigation Division of the Internal Revenue Service. Senior Litigation Counsel Bruce Brandler handled the prosecution.

Source: http://www.fbi.gov/philadelphia/press-releases/2014/two-former-vice-presidents-of-schuylkill-products-inc.-sentenced-in-largest-disadvantaged-business-enterprise-fraud-in-nations-history

Filed Under: Contracting News Tagged With: DBE, DOJ, DOT, FAA, FHWA, fraud, FTA, investigation, tax fraud, U.S. Attorney, US DOT

Michigan subsidiaries of Georgia company to pay $3.8 million for falsely claiming DBE credits

January 10, 2014 By ei2admin

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.

Filed Under: Contracting News Tagged With: abuse, DBE, DOT, fraud, pass-through, set-aside, Small Business Act, waste

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