Road construction Fraud settlement nets $11.75 million to the government
There are a million ways to rip off the government. That is why the Qui Tam law’s (Federal False Claims Act) language is so broad. Yesterday I blogged about an HMO getting slapped with a huge verdict and penalty for ripping off Medicaid, last month I was upset by defense contractors posting ghosts instead of, and today I am blogging about a road contracting company which failed to follow the government regulations on hiring disadvantaged business entities.
What happened here is that two construction companies were awarded government contract to perform road work. As a part of the award the construction companies promised to hire disadvantaged business entities (DBEs) to do the work. What are DBEs? DBEs are businesses are owned by minorities, women, or socially or economically disadvantaged people. The purpose here is to get more people to enter the road construction industry.
The two companies were Ajax Paving Industries Inc. and Dan's Excavating Inc. These two companies were supposed to accurately report DBE construction to the Department of Transportation. Obviously they did not take this requirement seriously and failed to report accurately. What these companies did was report that a company called Borbolla Construction did major work on their projects, when in truth, Borbolla did not do more then simple administrative work. The companies now must pay $11.75 million back to the government and enter into a new agreement with the Department of Transportation to comply with the law.
The unfortunate thing in this construction fraud case was that there was no “known” whistleblower. The government stated it found the fraud on its own. This means no one is sharing in the fraud money. I find that hard to believe. What made the government suspicious? I wonder if someone gave the government a heads up on the fraud and did not have an attorney ready to protect their share of the award. Now that person is being locked out. Who knows? The government press release bragging about the award doesn’t say. We may never know. At least we know the government went after the fraud and the bad guys are paying back a large sum of money, making good on their contract and following the rules in the future.
Click here to read more from the Department of Justice on the Construction Fraud settlement.
