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Contractor Settles DBE Fraud for $2.6M

Monday, November 16, 2015

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A New York contracting company has agreed to pay the federal government $2.6 million for violating the Disadvantaged Business Enterprise (DBE) program on a highway bridge project.

U.S. Attorney Preet Bharara announced Nov. 6 that her office was dismissing a previous criminal complaint against Yonkers Contracting Company Inc. as a result of the settlement. In exchange, the company admitted it had violated DBE regulations and agreedment to pay for civil charges and penalties.

The settlement was approved Nov. 6 by U.S. District Judge Nelson S. Roman in White Plains federal court.

“The DBE regulations at issue serve the important purpose of increasing legitimate participation by minority-owned and disadvantaged businesses,” said Bharara in the statement. “Instead of complying with the DBE regulations, Yonkers Contracting found fraudulent ways to get around them.”

Alleged Violations

According to the complaint, Yonkers—which prosecutors said is one of the largest contractors in the state of New York—was part of a joint-venture that obtained a contract from the New York State Department of Transportation for the federally funded Cross-Westchester Expressway (also known as the I-287 Project). Yonkers was the main contractor on the project from 2006 through 2010.

© / J-Elgaard

Yonkers Contracting Company Inc. has agreed to repay the U.S. government $2.6 million for violating the Disadvantaged Enterprise Business program on a federal bridge project.

As part of the contract, NYSDOT agreed to an 8.03 percent DBE participation commitment, 31 percent of which was supposed to be completed by Global Marine Supply Co. Global Marine, a DBE company, was expected to supply steel for the bridge project.

Instead, the U.S. Attorney said, Yonkers used a third-party steel supplier that was not a DBE company. Global Marine copied the invoices from the actual supplier, added a 1 percent markup, and submitted the invoices to the joint venture for repayment.

Under DBE regulations, a contractor can obtain federal funds for the program only if the DBE performed a “commercially useful function” to the work outlined in a contract, the statement said. A certified DBE—such as Global Marine—must be responsible for the work outlined in a contract; perform, manage or supervise the work involved; and furnish its own supervision, labor and equipment to do the job.

Yonkers knew that Global Marine had not participated in any commercially useful way to the project, the U.S. Attorney said. Yet, Yonkers entered the payments into NYSDOT’s electronic-tracking system stating that the steel had come from Global Marine. As a result, Yonkers received federal funds for which it was not entitled, the U.S. Attorney said.

“This investigation has demonstrated how individuals in the construction industry have manipulated and circumvented the intent of the DBE Program by utilizing firms as fronts to satisfy Program goals,” said Michael Nestor, the General Inspector for the Port Authority of New York and New Jersey, which helped in the investigation. “This conduct deprived legitimate DBE’s from receiving their fair share of government contracts.”

© / asterix0597

Yonkers had a contract with NYSDOT for bridge and highway work on I-287 (not shown) from 2006 to 2010, but used a DBE business as a "pass through" to receive DBE funding.

In addition to its acknowledgment of wrongdoing and penalties, Yonkers also must maintain internal corporation remediation measures for two years regarding its involvement with Disadvantaged, Minority-Owned and Women-Owned Businesses, the settlement stipulates.

Company Profile

According to its website, Yonkers—which is based in Yonkers, NY—provides general contracting, construction management and design/build services in the private and public sectors. Its markets include highways; bridges; intermodal transportation; energy and environment; and commercial and development.

Among other projects, its online portfolio includes work on Grand Central Station and the Brooklyn Bridge.

An operator who answered the company’s phone Friday (Nov. 13) said no one was immediately available to comment.


Tagged categories: Bridges; Contractors; Department of Transportation (DOT); DOT; Ethics; Federal Highway Administration (FHWA); Government; Government contracts; Laws and litigation; Lawsuits; Roads/Highways

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