A federal grand jury returned a twenty-two count indictment on April 3rd, charging three defendants with a 12-year fraud and money laundering scheme involving over $200 million in government-funded contracts intended to benefit small businesses.
The indictment names two individuals, Brian L. Ganos and Mark F. Spindler, both of Wisconsin, and the business Sonag Company, Inc. as defendants. In a related case, Nicholas Rivecca, Sr., also of Wisconsin, agreed to plead guilty to conspiring to defraud the United States.
The indicted defendants are charged with a conspiracy to commit mail fraud and wire fraud. The alleged conspiracy involves operating construction companies with straw owners who qualified as a disadvantaged individual or as a service-disabled veteran, but who did not actually control the companies. The conspirators then fraudulently obtained small business program certifications to win government-funded contracts to which they were not entitled.
Specifically, court documents allege the following:
- Nuvo Construction Company, Inc., was misrepresented in order to obtain certifications as a Small Disadvantaged Business from the U.S. Small Business Administration (SBA) and as a Disadvantaged Business Enterprise (DBE) from Milwaukee County. However, the disadvantaged owner worked full-time for a different entity in Minnesota and did not actually control Nuvo.
- C3T, Inc. was misrepresented to be majority owned and controlled by another individual to obtain verification as a Service-Disabled Veteran-Owned Small Business. In reality, for long stretches, the “owner” had virtually no involvement in C3T.
- Pagasa Construction Company, Inc. was misrepresented to be majority owned and controlled by a third disadvantaged individual in order to obtain certification as a Small Disadvantaged Business from the SBA. In reality, the owner relied on the assistance of conspirators to form Pagasa.
The federal indictment alleges that the defendants used their certifications to obtain over $200 million in federal, state, and local contract payments. These included federal construction contracts that were set aside for Small Disadvantaged Businesses or Service-Disabled Veteran-Owned Small Businesses. The indictment also alleges that the scheme included using Nuvo’s DBE certification to win ready-mix concrete contracts based on the false representation that Nuvo provided ready-mix concrete independently when, in truth, Nuvo’s concrete operations depended heavily on Sonag Ready Mix. As a part owner of Sonag Ready Mix, Nicholas Rivecca, Sr. agreed to plead guilty to that portion of the scheme.
The government alleges that the conspirators engaged in efforts to conceal the scheme and obstruct investigations into the matter; when interviewed, Ganos and Spindler each gave materially false statements to federal agents.
The indictment also alleges that Ganos conspired with Sonag Company, Inc. and others to launder proceeds of the fraud scheme in order to disguise and conceal the nature, source, and location of those fraud proceeds. As a part of that conspiracy, Ganos is alleged to have transferred fraud proceeds from accounts of Nuvo and C3T to accounts that Ganos controlled. The indictment further charged Ganos with three counts of concealment money laundering transactions, one of which involved the purchase of a Corvette with proceeds of the fraud scheme, and seven counts of spending money laundering transactions.
The maximum penalties for each of the wire and mail fraud-related charges are 20 years in prison, a $250,000 fine, and forfeiture of criminal proceeds. The maximum term of imprisonment for conspiring to defraud the United States is five years. The maximum term of imprisonment for the money laundering conspiracy and for each of the three concealment money laundering charges is 20 years in prison. The maximum term of imprisonment for each of the seven spending laundering charges is 10 years in prison. Each of the 11 money laundering charge also carries a fine of up to $250,000 or twice the amount laundered and subjects the defendant to forfeiture of all money and property involved in the laundering transaction.
Assets of the defendants — including real property, a 2014 Chevrolet Corvette Stingray Convertible, and more than $2.2 million seized from two bank accounts — are subject to civil forfeiture actions filed by the federal government.
The following agencies are participating in this investigation: the Federal Bureau of Investigation; U.S. General Services Administration, Office of Inspector General; Department of Veterans Affairs, Office of Inspector General; Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service; U.S. Department of Transportation, Office of Inspector General; U.S. Small Business Administration, Office of Inspector General, Investigations Division; Defense Contract Audit Agency; and the U.S. Army Criminal Investigations Command Major Procurement Fraud Unit.
An indictment is only a charge and not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
The owner of three fraudulent commercial supply companies has pled guilty to cheating approximately 40 subcontractors out of more than $1 million.
