- A federal jury in Chicago this week convicted Michael Jarigese and his company Tower Contracting, based in Markham, Illinois, on nine counts of “honest services” wire fraud and one count of federal program bribery, the Chicago Tribune reported.
- Former Markham Mayor David Webb Jr., according to a 2017 Department of Justice indictment, demanded $100,000 from Jarigese in exchange for city construction contracts. Jarigese paid Webb the money via checks and cash, reportedly passing some of the latter to Webb in empty coffee cups. Tower Contracting also donated $150,000 to Webb's campaign and various city events.
- No sentencing date was set, but Jarigese faces up to 10 years in prison on the bribery charges and 20 years for wire fraud. Tower Contracting could end up paying a sizable monetary penalty. Webb pleaded guilty to fraud and filing a false tax return prior to testifying against Jarigese and other contractors from whom he took an estimated $300,000 in bribes and will likely spend no more than five years behind bars in return for his cooperation.
Even though the government tries to make high-profile examples out of contractors who engage in fraud, it seems that there are always individuals who are willing to bet their reputations and futures in order to take in some extra cash and win construction contracts.
Just this month, Michael Flynn, a Connecticut insulation contractor, pleaded guilty to participating in a bid-rigging and fraud scheme that saw him and other contractors get together and agree to inflate their prices for work they performed on both private and public contacts in violation of antitrust laws.
Kickbacks are another form of bribery and can come in many forms, including cash or small gifts.
In February, the DOJ filed suit against a contractor and subcontractor for engaging in a scheme to submit $65 million of fake subcontractor invoices to the National Nuclear Security Administration for work performed at the MOX fuel fabrication facility in Aiken, South Carolina. In return for forwarding fraudulent invoices, general contractor CB&I AREVA MOX Services LLC (MOX Services) allegedly received cash, mobile phones, sporting event tickets, firearms and hunting supplies as payoffs
But fraud doesn't always come in the form of bid-rigging and bribes. Some contractors try to shave costs by committing payroll fraud.
Earlier this year, the DOJ indicted a New Jersey contractor, Rakesh Kumar, president of Orba Construction Co., for fraud and conspiracy after he allegedly submitted false certified payrolls for work he performed on New York City School Construction Authority construction projects. Through the forms, Kumar affirmed that he was paying his employees at least the prevailing wage, but prosecutors claim that he actually paid workers at lower rates in cash or through another company he owned.