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Bridge Contractors Charged in Fraud

Tuesday, June 23, 2015

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PHILADELPHIA--Two Pennsylvania firms and their principals raked in millions of dollars from hundreds of federal highway and bridge projects through a 16-year-long Disadvantaged Business Enterprise scam, officials say.

Carl M. Weber Steel Service Inc.; president Dennis Weber, 66; and vice president Dale Weber, 51, all of Kutztown, PA, have been charged with conspiracy to commit wire fraud, U.S. Attorney Zane David Memeger announced June 16.

Also charged was Judy Noll, 52, of Mertztown, PA, who ran the Webers' bogus DBE for nine years, according to the U.S. Department of Transportation's Office of Inspector General (DOT OIG).

'Sham DBE'

Over more than 16 years, the Webers and their company "set up and utilized a sham DBE called Karen Construction Co. Inc." to obtain DBE bridge and highway subcontracts across Pennsylvania, the FBI said.

©iStock.com / IPGGutenbergUKLtd.

DOT's Disadvantaged Business Program, established in 1983, requires that at least 10 percent of the funds authorized for highway and transit financial assistance programs be spent with DBEs.

Noll was president of Karen Construction from January 2002 to October 2011, during which time the company landed $11.9 million in subcontracts.

In reality, Weber Steel and Karen Construction operated as one business run by the Weber brothers.

The two companies shared an office and employees. Noll's role was ginning up false reports, certifications, invoices and correspondence that represented Karen to state and federal transportation officials as a legitimate DBE firm, authorities said.

Shell Game

Manta, the online business directory, categorizes Karen Construction under "Bridge Builders."

"Our records show it was established in 1983 and incorporated in Pennsylvania," according to Manta. "Current estimates show this company has an annual revenue of $1 [million] to 2.5 million and employs a staff of approximately 5 to 9."

Federal officials say Karen Construction was never more than an arm of Weber Steel, created as a pass-through to satisfy the DBE program.

There has been, since 1983, a statutory provision requiring DOT to ensure that at least 10% of the funds authorized for the highway and transit financial assistance programs be expended with DBEs. DOT has established a single DBE goal, encompassing both firms owned by women and minority group members. - See more at: http://www.transportation.gov/osdbu/disadvantaged-business-enterprise#sthash.islCfSoo.dpuf

From April 1995 through November 2011, authorities said, the Webers took in about $18.7 million through DBE subcontracts on some 224 federally funded projects.

BridgeConstruction
©iStock.com / TommL

The Webers took in about $18.7 million through DBE subcontracts on some 224 federally funded projects across Pennsylvania, authorities said.

Dennis and Dale Weber directed that Karen's profits be shared with them in year-end bonuses that were disguised through phony invoicing. Noll received no bonus from Weber Steel and did not share in its profits, the OIG said.

About the Program

DOT's DBE program, established in 1983, requires that at least 10 percent of the funds authorized for highway and transit financial assistance programs be expended with DBEs. Weber Steel, founded in 1960 by the Webers' father, was not a DBE.

To be certified as a DBE, a firm must be a small business owned and controlled by "socially and economically disadvantaged individuals." Since 1987, the program has had a single DBE goal that encompasses both women and nonwhites.

If convicted, Dennis and Dale Weber each face up to five years in prison and a fine of up to $250,000. Weber Steel faces up to five years of probation and a fine of up to $500,000. The OIG did not release potential penalties for Noll.

The case was investigated by DOT's OIG, the FBI, and the Labor Department's Office of Inspector General/Office of Labor Racketeering and Fraud Investigations.

 

   

Tagged categories: Bridges; Department of Transportation (DOT); Government contracts; Laws and litigation; North America; Program/Project Management; Roads/Highways

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