3 more agree to plead guilty in $200M Wisconsin contractor fraud case
UPDATE, April 19 — Three more defendants in the case against contractor Sonag have agreed to plead guilty to charges, according to federal court documents filed Wednesday, the Milwaukee Journal Sentinel reported.
James Hubbell, Jorge Lopez and Telemachos Agoudemos were purported to own or operate the so-called straw companies Nuvo Construction Co. and C3T Inc. that Sonag allegedly used to defraud the government. Businesses owned or operated by Agoudemos and Lopez would have been certified as a small disadvantaged business by the U.S. Small Business Administration and as a Disadvantaged Business Enterprise by Milwaukee County, but neither had involvement in Nuvo or C3T, according to court documents. Instead, Hubbell worked for Sonag owner Brian Ganos and supervised construction projects.
Hubbell and Lopez agreed to plead guilty to conspiring to defrauding the government, and Agoudemos agreed to plead guilty to lying to federal agents. Nicholas Rivecca had previously agreed to plead guilty to conspiring with Ganos and others to use Nuvo’s disadvantaged business status to win government concrete orders. Ganos was silent when asked to enter a plea earlier this week, according to documents.
- A Wisconsin grand jury has indicted a Milwaukee construction company and its owner with a total of 22 counts of fraud for reportedly creating what were purported to be minority- and veteran-owned businesses in order to win more than $200 million in federal construction contracts set aside for those groups, according to the Milwaukee Journal Sentinel.
- Prosecutors allege contractor Sonag and its owner, Brian Ganos, set up at least three other businesses with minority and disabled veteran owners at the helm while he actually controlled their operations. The indictment also states that Ganos and others conspired to launder the proceeds from those contracts. Ganos' accountant and the president of one of Ganos' other companies were also charged in a related case, Global Construction Review reported. None of the "straw" company owners has been charged.
- Sonag was a certified minority contractor from 1994 to 2003 but graduated from the program, making it ineligible to win set-aside contracts. If convicted, Ganos and others face a maximum of 20 years in prison for each wire- and mail-fraud related charge, a $250,000 fine and forfeiture of criminal proceeds.
According to the Milwaukee Journal Sentinel, federal authorities have been investigating Sonag and Ganos for at least five years, with feds seizing $2.2 million in cash at the end of last year as part of its probe into the company. The money, as well as other property — a sports car and Colorado condominium — could be forfeited if a federal judge agrees to requests by the U.S. attorney's office.
In March 2017, Chicago subcontractor Elizabeth Perino was sentenced to a year in prison for her part in a similar scheme. Authorities claimed that two of Perino's companies received millions of dollars' worth of subcontracts for public works projects but did not actually perform the work. A company named Diamond Coring used Perino's firms to meet its minority hiring requirements, but its owner received two years of probation for cooperating with the authorities.
A Baltimore bridge painting firm this week was also charged with minority contractor-related fraud in relation to work performed in the Philadelphia area, according to the Courier-Post. Prosecutors allege that Alpha Painting & Construction Co. was part of a joint venture required to subcontract some of its work to minority contractors. Instead, authorities claim that the joint venture used a minority-owned firm as a front to secure big contracts.
- Global Construction Review US contractor prosecuted for $200m “straw man” fraud
- Milwaukee Journal Sentinel Indictment accuses Brian Ganos, Sonag of $200 million scheme to win federal contracts