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).

The 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