- The U.S. Attorney’s Office for the District of Connecticut announced last week that a state insulation contractor has pleaded guilty to participating in a $45 million bid-rigging and fraud scheme with other contractors.
- Prosecutors said Michael Flynn of Ridgefield, Connecticut, and other insulation contractors, in a coordinated effort, inflated their prices by 10% for insulation work they performed at both public and private commercial projects in Connecticut, New York and Massachusetts between October 2011 and March 2018 in violation of antitrust laws. The contractors attempted to conceal their illicit activities by using burner phones and an encrypted disappearing message app.
- Flynn, who is the second individual convicted in this case, faces a maximum of 10 years in prison and a $1 million fine for the bid-rigging (antitrust) charge, as well as another 20 years and $250,000 for the fraud charge. Flynn will also pay $327,500 in restitution through a settled forfeiture action on his home and has surrendered cash in seized bank accounts.
Since the start of this year, there have already been several contractors charged or convicted in fraudulent schemes.
In March, federal officials in New York charged Rakesh Kumar, president of Orba Construction Co., with mail and wire fraud in connection with work the company did for the New York City School Construction Authority. Prosecutors allege that Kumar submitted false certified payroll forms on which he falsely claimed that he was paying employees a higher wage than he actually was. The employees in question were also not working the same number of hours that Kumar indicated on the forms, and some were being paid in cash or through another company he owned.
And in February, the U.S. Department of Justice sued a contractor and subcontractor for submitting almost $6.5 million of fake invoices and for violating the federal False Claims and Anti-Kickback acts in relation to work they performed at the MOX fuel fabrication facility in Aiken, South Carolina. Authorities allege that subcontractor Wise Services Inc. of Dayton, Ohio, turned in fake invoices to Aiken, South Carolina, general contractor CB&I AREVA MOX Services LLC (MOX Services) for nonexistent construction materials. MOX Services allegedly passed those on to the owner, the National Nuclear Security Administration, in exchange for kickbacks, which included cash, mobile phones, sporting event tickets, firearms and hunting supplies.
Also in February, Lancaster, New York, contractor Nichter Construction pleaded guilty to falsely representing that it used the required 13% minority contracting firms on a $350,000 state renovation project. Nichter enlisted a legitimate minority firm to falsely state that it had provided services on the job, and that company pleaded guilty to its involvement as well.