- Three Pennsylvania steel executives, who pleaded guilty in October to wire fraud in connection with almost $19 million worth of state and federal highway projects they secured through a shell minority business, have been sentenced to probation and must pay fines totaling more than $1.3 million, according to the Morning Call.
- Prosecutors allege that brothers Dennis and Dale Weber installed Judy Noll as owner of Karen Construction, which was then able to qualify as a woman-owned business, so that they could take advantage of government bridge and highway contracts set aside for disadvantaged business enterprises (DBEs).
- Noll allegedly concealed the significant control the Weber brothers exerted over Karen’s operations and made representations that the company was independent. Not only did the Webers control Karen, but the shell company also shared office space, employees and equipment with the Webers' steel company, according to the Morning Call.
DBE programs are meant to create a level playing field by providing opportunities for government contracts to go to businesses owned by women and minorities. The USDOT spends billions of dollars each year on transportation projects, most of them highway-related, and sets 10% of its contracts for certified DBEs.
This Pennsylvania case, however, is not the only recent instance of DBE fraud.
Last week, an upstate New York bridge contractor admitted guilt to defrauding the federal disadvantaged business enterprise program as part of a plea agreement. ING Civil CEO Corey Ingerson and employees of a local material supplier paid $1 million to settle claims that they submitted false documentation and invoices to make it appear as if Ingerson was purchasing material from a minority supplier for a public Mohawk River bridge project.
In a similar case, Colorado contractor MCC Construction Company pleaded guilty and agreed to pay $1.8 million for conspiring to commit minority contract fraud. Officials alleged that MCC used two minority companies to gain 27 government contracts worth more than $70 million.
And late last year, the CEO of a North Carolina paving company was sentenced to 30 months in federal prison for fraud and money laundering for obtaining more than 36 state and federal highway contracts worth $90 million by using a small minority contractor as a shell to win contracts and divert the money back to him.