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MWBE Contract Scam Ends in Jail Term

Wednesday, April 2, 2014

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A 77-year-old Chicago contractor who agreed to use his company as a minority-owned front for companies seeking city contracts will serve 17 months in jail and pay more than a half-million dollars in restitution for the scam.

Jesse Brunt, 77, owner of Brunt Brothers Transfer Inc., was sentenced in mid-March, more than three years after his federal indictment for mail fraud and nearly two years after he pleaded guilty in the case, Chicago's Office of Inspector General (OIG) announced.

Chicago
Wikimedia Commons / DazMSmith

In 2012, the City of Chicago obtained an $11 million settlement from Allied Waste Transportation in connection with related to "substantial shortfalls in minority contract services."

Brunt's trucking company raked in more than $3 million from the City of Chicago between 1999 and 2006 through contracts for services that included cleaning and videotaping sewers.

Brunt's case was part of a long-running fraud case that triggered a citywide Minority- and Women-owned Business Enterprise (MWBE) reform initiative in Chicago in 2012.

Other Settlements

Authorities said Brunt, a former Mississippi sharecropper, used his company as a pass-through for others, including now-defunct companies owned by Anthony Duffy, a non-minority contractor.

Duffy, 49, of Barlett, IL, pleaded guilty in 2012 to lying to the FBI about failing to report investors in one of those companies, Municipal Sewer Service, which performed the work for the deal Brunt had signed.

Duffy was sentenced last year to 17 months in jail. He also agreed to pay $428,438.74 to the city and was permanently banned as a city contractor.

In 2012, the City of Chicago obtained an $11 million civil settlement with Allied Waste Transportation in connection with "substantial shortfalls in minority contract services under waste hauling contracts with the City," the Office of Inspector General reported.

$38M Municipal Fraud

OIG found that "nearly all" of Allied's mandated MBWE participation on city contracts was achieved through Allied's "knowing use" of pass-through contractors. Allied paid off both the certified firms and the contractors that actually completed the work, taking a cut in the process.

MWBE
publicpolicylab.org

Chicago's Office of Inspector General criticized oversight of the city's Minority- and Women-Owned Business Enterprise program and recommended several changes.

In all, OIG said the shortfall from bogus MWBE contracts totaled $38 million over nine contracts.

OIG said it had debarred more than 65 companies and individuals and recommended stripping certification from more than 20 companies since 2005. Five federal criminal prosecutions were also mounted.

In Brunt's case, Allied claimed that Brunt Brothers provided more than $9 million worth of MBE participation that involved 20 to 25 trucks a day. In fact, OIG said, Brunt owned "at most five trucks."

The OIG made a number of recommendations for changing the MWBE system. It noted, for example, that the online monitoring system "relies on the hostesy of Allied's MWBE subcontractors, all of which were participating in the fraud."

   

Tagged categories: Contractors; Enforcement; Government contracts; Laws and litigation

Comment from Michael Deaton, (4/2/2014, 5:22 AM)

Here we go again....Yet MORE corruption coming out of Illinois!


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