- A jury in the Northern District of Illinois has found Chicago contractor Elizabeth Perino guilty of four counts of fraud for allowing two other major contractors to use her company as a "pass-through" in order to meet minority goals on city work, according to CBS Chicago.
- Prosecutors alleged that Perino's certified women's business enterprise (WBE) Perdel Contracting was supposed to receive 18% of labor costs and other fees — a total of $365,000 — to seemingly contract a portion of a $200 million public works project. She has not yet been sentenced.
- The prime witness against Perino — Anthony Capello, one of the contractors allegedly using her "sham" company to meet minority requirements — has another similar case pending against him for allegedly setting up a shell WBE in his wife's name.
Perino's attorneys maintain that Capello set her up in order to curry favor with prosecutors in advance of the case involving his wife. The second contractor charged with using Perino's company, prominent city contractor McHugh, paid $12 million to settle charges but did not admit guilt.
Companies often blame a shortage of minority contractors as the reason why they engage in various levels of fraud in attempting to meet the minority contractor participation requirements that exist on most publicly funded projects. However, minority hiring goals are instituted to ensure the inclusion of contractors who might not normally have access to large public projects, so undermining those initiatives carry serious consequences.
Of course, the threat of legal action doesn't always stop those intent on breaking the law. In February, three Pennsylvania steel executives were sentenced to probation and were ordered to pay fines totaling more than $1.3 million for setting up a fake minority business in order to secure almost $19 million worth of state and federal highway projects. The trio, Carl Weber, Dennis Weber and Judy Noll, pleaded guilty to wire fraud for creating the shell company but really using it as only an extension of the Webers' existing steel business.
However, minority fraud doesn't only involve women-owned businesses. In fact, just this month, a San Diego contractor, Harper Construction Company, paid $5.4 million to settle charges that it used fake disadvantaged business enterprises (DBEs) for work on two military bases. The U.S. Attorney's office said Harper used the companies to make it appear it had contracted with legitimate DBEs when it had actually used an affiliated business, Frazier Masonry Corp., to do the work.