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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

 

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:

FHwA expected to release $2 billion in old earmarked funds to state highway departments

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AASHTO Statement - Jan. 2016State transportation officials and construction contractors are eagerly awaiting word from the Federal Highway Administration (FHwA) about how the agency will parcel out to states an estimated $2.1 billion in earmarked but long-unused highway-project funds. FHwA should make its announcement this month, an agency official says.

The fiscal 2016 omnibus appropriations measure, signed into law on Dec. 18, directs FHwA to redistribute to states unobligated funds earmarked for highway projects in transportation legislation dating back at least a decade. For example, some of the earmarks were contained in the Transportation Equity Act for the 21st Century, which was enacted in 1998.

The appropriations law specifies that states must redeploy the funds on a project within 50 miles of the old earmarked one.

Keep reading this article at: http://www.enr.com/articles/38738-fhwa-expected-to-release-2b-in-old-earmarked-funds

$1.1 trillion spending bill to trigger a ‘substantial lift’ in construction

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The construction industry should get a substantial lift in coming months, thanks to a newly enacted $1.14-trillion government-wide fiscal year 2016 spending measure that boosts most major federal construction accounts, with General Services Administration (GSA) and Dept. of Veterans Affairs (VA) programs scoring exceptional increases. But there were some funding cuts, such as in Environmental Protection Agency (EPA) water infrastructure, which was pared slightly.

The $1.14 trillion FY16 Omnibus Appropriations bill increases spending for many federal construction programs and gives extensions to renewable energy tax credits for wind, solar and geothermal projects and other business tax incentives,.
The $1.14 trillion FY16 Omnibus Appropriations bill increases spending for many federal construction programs and gives extensions to renewable energy tax credits for wind, solar and geothermal projects and other business tax incentives.  (Click on image above to see text of the Bill.)

The giant appropriations bill was part of a package that also included extensions for a long list of tax incentives for individuals and businesses, including construction firms, with some items extended permanently. The “extenders” bill would cost the Treasury $622 billion over 10 years, the congressional Joint Committee on Taxation estimates.

Keep reading this article at: http://www.enr.com/articles/38435-house-passes-spending-bill-with-big-gains-for-construction

FAA plans small business matchmaker Jan. 13 in College Park

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FAAThe Federal Aviation Administration’s Eastern Service Area Small Business Development Program Group is hosting a Small Business Development Program Outreach/Matchmaking Event in College Park, Georgia on Wednesday, January 13, 2016.

Attendance is limited to the first 50 small businesses who register.

Registration and other details follow.

What: FAA Small Business Development Program Outreach/Matchmaking Event

Purpose: Learn how to do business with the FAA and identify qualified small businesses capabilities to support the FAA Mission. Also, participate in matchmaking sessions.

Who May Attend: Small businesses, registered in the System for Award Management (SAM).

Location: FAA Southern Region, 1701 Columbia Avenue, College Park, Georgia 30337

When: Wednesday, January 13, 2016

Time: 9:00 AM to 12:00 PM

Limited Attendance: Limited to the first small businesses (First Come-First Served) that respond by email, received by Friday, December 18, 2015, 4:00 PM.

Registration/Attendance Request: Email Tony Ortiz at Tony.C.Ortiz@faa.gov There is no cost to attend this event, but pre-registration is required. Once maximum attendance capacity (50 small businesses) is reached, registration will be closed. See Required Information below.

Required Information: Name(s) (Limit 2 representatives per small business), Name of Business, and U.S. Citzenship by indicating Yes or No. Foreign National Visitors will be required to provide additional information immediately without delay in order to attend by contacting Tony Ortiz at Tony.C.Ortiz@faa.gov or telephone number: (404) 305-5780.

Point of Contact: Tony Ortiz, FAA Small Business Development Program Group Liaison/Representative, email: Tony.C.Ortiz@faa.gov – Telephone Number: (404) 305-5780

Why are DBEs MIA? Overcoming the disadvantaged business enterprise shortage

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Since the early 1960s, even before the passage of the Civil Rights Act of 1964, the U.S. government has been trying to find ways to give disadvantaged business enterprises (DBEs) a piece of the gigantic federal contract pie — almost $450 billion in 2014. Also commonly called WBEs (women-owned) and MBEs (minority-owned), they all refer to businesses, which, by virtue of ownership, historically have been shut out of federal contracting opportunities.

DBE ownership and controlState and federal agencies typically set required DBE participation goals at 5%-10% and up, meaning that there are tens of billions of federal dollars up for grabs. In 2015, federal construction spending, according to the Associated General Contractors of America, will total almost $106 billion, resulting in a potential $10 billion payoff for firms certified as disadvantaged.

Of course there is, for some, the temptation to commit fraud in order to gain access to these lucrative contracts. Three Pennsylvania steel company executives pleaded guilty in October to setting up a sham DBE in order to win nearly $19 million in U.S. Department of Transportation and Pennsylvania Department of Transportation contracts set aside for disadvantaged businesses.

With all that money at stake, one would think minority and women-owned businesses are filling federal offices, demanding to be certified and eager to participate. So why aren’t they? Construction industry experts say there is a shortage of certified DBEs, and that means it’s getting harder to meet federal agency DBE participation goals.

Keep reading this article at: http://www.constructiondive.com/news/why-are-dbes-mia-overcoming-the-disadvantaged-business-enterprise-shortage/408432/

NC toll road moves ahead with contractor guilty of fraud

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North Carolina transportation officials are pushing ahead with an embattled toll road outside Charlotte, even after a politically connected paving contractor involved in the $840-million project pleaded guilty last year to defrauding taxpayers.

NCDOTThe state Department of Transportation announced Thursday construction had begun on the Monroe Expressway, a 20-mile highway in Union County. The project, which had been stalled for years by a lawsuit over its environmental impact, is being built by a joint venture of three companies.

One of those firms, Boggs Paving Inc. of Monroe, pleaded guilty to conspiracy in September in what federal prosecutors described as a bid-rigging and kickback scheme involving nearly $88 million in government highway construction contracts between 2003 and 2014. Company president Carl A. “Drew” Boggs III is awaiting sentencing after pleading guilty to conspiracy and money laundering. He faces up to 25 years in prison and $500,000 in fines.

Despite that, the three-company consortium, Monroe Bypass Constructors LLC, has been paid $6.8 million by the state during the eight months since the guilty pleas were entered, according to N.C. Department of Transportation spokesman Mike Charbonneau. In addition, Boggs Paving has been paid $108,290 since September for two other road projects.

Keep reading this article at: http://www.wncn.com/story/29185407/nc-toll-road-moves-ahead-with-contractor-guilty-of-fraud

FBI investigates TN road building giant for DBE fraud

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The FBI raided the offices of a Williamson County, Tennessee construction company as part of an ongoing investigation into nine Tennessee Department of Transportation and two Metro Nashville Airport Authority contracts.

The agents seized payroll records, contract files, work orders and computer hard drives from the College Grove offices of G&M Associates. Jones Brothers, one of the largest road contractors in the Southeast, and two of its affiliate companies are implicated in the investigation, according to a search warrant.

Jones Brothers and the two affiliated companies, Mountain States Contractors and Hot Mix Asphalt, were allegedly involved in a scheme to fraudulently land government contracts intended for companies that promise to subcontract a certain percentage of the work to women- or minority-owned small businesses, the search warrant documents state.

Keep reading this article at: http://www.tennessean.com/story/news/investigations/2015/03/14/fbi-investigates-tennessee-road-building-giant-fraud/70282674/

Augusta regional airport hosts small business open house Feb. 26th

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The Augusta (GA) Regional Airport invites Subcontractors, Suppliers, and Small Businesses to attend a Small Business Workshop and Open House Event on Wednesday, February 26, 2014.

The event is being held at the Augusta Regional Airport Commission Chambers, 1501 Aviation Way, Augusta, GA 30906 from 3:00pm to 6:00pm.

Information will be made available on upcoming bid opportunities in the areas of all trades related to construction, hauling, demolition, furniture suppliers, surveyors, manufactures, automotive suppliers, and engineering.

The airport’s upcoming projects for 2014-2015 include:

  • Taxiway Alpha Extension
  • Apron Rehabilitation
  • Consolidated Rental Car Facility
  • Gen Perry Smith Parkway Utility Corridor
  • Southeast Quadrant Drainage

This is the perfect opportunity for small business owners to come out and meet airport staff. The Disadvantaged Business Enterprise  (DBE) Program staff will be on hand to give out valuable information related to becoming a certified DBE.

For additional information please contact Mrs. Risa Bingham at 706-798-3236.

Two sentenced in largest DBE fraud in history

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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

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