- The CEO of a North Carolina paving company has been sentenced to 30 months in federal prison for fraud and money laundering for his part in a minority contractor racket resulting in $90 million in highway work for his company, the Charlotte Observer reported.
- Drew Boggs, of Charlotte-based Boggs Paving, which was fined $500,000, pleaded guilty last year to conspiracy to defraud the federal highway department and money laundering conspiracy.
- Prosecutors said that Boggs landed more than 36 state and federal highway contracts over the last 10 years by misrepresenting the role minority-owned firm Styx Trucking played in the projects. Boggs reportedly paid Styx millions, then Styx would secretly return the money to Boggs.
Boggs apologized for his company’s actions but has denied any direct role in the fraud, the Observer reported. But he did say he should have noticed the fraud going on within his company and stopped it. Prosecutors maintain that Boggs led the illegal conduct and asked the judge for the maximum prison penalty, plus $3.7 million — the amount of actual contracts that should have gone to disadvantaged business enterprises.
Boggs’ attorney, Ken Bell, said Boggs Paving is no longer allowed to bid on state or federal contract, and, after it wraps up its current projects, the company will close its doors. Three other executives from Boggs Paving were also charged for their roles in the scheme.
At Boggs’ sentencing, the judge acknowledged Boggs’ actions did not cost taxpayers but also said he had an obligation to protect the disadvantaged business enterprise program.
Boggs told the judge, "Contractors all over the country are watching our case with raised eyebrows. Some have changed the way they’re doing business. We’ve helped others learn what not to do."
Boggs is not the first to break the rules of DBEs. In October, three Pennsylvania steel executives pleaded guilty to a 20-year, $19-million fraud for setting up a shell company with a woman as owner, specifically to get state and federal highway contracts.
Some industry experts have said that in markets where qualified DBEs are hard to find, it’s easy to justify playing fast and loose with the rules; but most chalk it up to greed. Penalties for this type of crime are on the rise, and New York City has even established a construction fraud task force to root out these and other construction-related crimes.