Dive Brief:
- An Indianapolis construction project manager has been charged with mail fraud and making a false tax return after allegedly embezzling $2.7 million from his employer, the Indianapolis Star reported.
- Prosecutors claim that 52-year-old Troy Sissom created a sham company in 2003 and submitted fake material invoices to F.A. Wilhelm Construction for jobs he supervised. According to the Indianapolis Business Journal, Wilhelm is the second-largest contractor in Indianapolis, and Sissom was a project manager and worked with clients such as the University of Indianapolis and Eli Lilly.
- Prosecutors said Sissom plans to plead guilty and faces up to 20 years in prison. He must also make restitution to Wilhelm, as well to the Internal Revenue Service in the amount of $381,000.
Dive Insight:
The construction industry is plagued by fraud-related incidents, and it has the second-highest rate of fraud across all industries, according to risk analysis firm Kroll. Late last year, Kroll released its Global Fraud Report, which indicated that 75% of construction, engineering and infrastructure companies had a fraud-related event in 2015. The most common types of construction fraud were theft of physical assets or stock (36%) and vendor, supplier or procurement fraud (24%).
However, construction fraud is not limited to private enterprise. Earlier this month, authorities arrested a city engineer in Santa Clarita, CA, for allegedly diverting $500,000 in city contractor cash bond refunds into his own pocket. The engineer reportedly volunteered to take over the task of issuing refunds to contractors who were were entitled to receive their cash bond deposits back. However, prosecutors alleged that he deposited those refund checks into accounts he had opened in names similar to those who were owed money.
In another case involving a government entity, prosecutors alleged that some employees of architecture firm CannonDesign paid bribes to a U.S. Department of Veterans affairs medical center official in exchange for information that would give the company an edge when bidding on VA projects. Last month, the firm agreed to settle potential federal liability by paying a $12 million fine.