Coatings Industry News

Main News Page

Design Firm to Pay $12M in Kickback Case

Monday, August 29, 2016

Comment | More

A Buffalo, NY-based international architecture firm has agreed to pay $12 million to resolve allegations of criminal conduct by its employees, including paying bribes and kickbacks in order to obtain confidential information related to Veterans Affairs construction projects, authorities have announced.

Cannon Design has also agreed to implement a series of corporate reforms and pull out of the VA West Los Angeles project in California to resolve the company’s criminal liability in the case, the U.S. Attorney’s Office for the Northern District of Ohio announced Wednesday (Aug. 24).

Veterans Affairs

A former executive at Cannon Design was found guilty of bribing a Veterans Affairs official with money and gifts to obtain inside information on bids for VA construction projects.

William D. Montague, the former director of the Cleveland Veterans Affairs Medical Center, was sentenced earlier this year to nearly five years in prison after being found guilty of 64 counts related to his involvement in the scheme.

A former executive with Cannon Design, Mark S. Farmer, was also sentenced to nearly three years in prison after a federal jury convicted him on 14 counts related to providing things of value to Montague in exchange for confidential information about VA construction projects.

Scandal Details

Montague had served as director of the Cleveland VA Medical Center from 1995 until Feb. 3, 2010, according to officials. On March 11, 2011, he began working as director of the Dayton VA Medical Center, a position he held through Dec. 17, 2011.

Prosecutors indicate that Farmer held a variety of positions with Cannon Design, including associate principal. Prosecutors alleged that Farmer, Cannon Design and Montague had conspired since January 2010.

Farmer and the firm received VA records and things of value, including non-public information about the VA and streamlined access to public information concerning projects, by bribing Montague with cash and gifts.

Montague had embezzled and stolen those documents, authorities said.

Email Trail

The case detailed interactions between Montague, Farmer and Cannon Design employees.

After Cannon Design issued a $20,000 check to Montague in March 2011, Farmer wrote an email to some employees with Montague’s consulting agreement, explaining: “His job is to help us bring in more work from the VA, in part by helping us access key decision makers.”

In another email that month, Farmer noted one $15 million contract that would include $12 million in sales, leaving a $3 million fee for the firm "on the table... ."

© / BrianAJackson

Emails between the parties detailed the scheme.

"[O]ne of MONTAGUE’s jobs will be to fill up the bucket by directing task orders toward our contract, Going forward, we have two $15M buckets to fill (Central and Eastern regions). That’s a lot of shoveling to get to $30M…BILL has the relationships to help us maximize the contracts…"

The same email noted that five additional VA hospital projects totaling more than $1.2 billion were in the pipeline: "Montague told us about these before they were advertised, which has allowed us to get an early start in developing the team. If we bring him on board, he can help us pull in one or two of these large projects."

Montague created a financial-services firm, House of Montague, to facilitate the scheme, according to authorities.

The scheme was used to give Farmer and Cannon Design an advantage over other companies in the awarding and administration of VA business, according to court documents and trial testimony. Farmer admitted that he knew about $3.9 million in illicit deals gained by using inside information from Montague.

Rooting Out Corruption

“Companies must never benefit by using public officials to obtain a competitive business advantage,” said Stephen D. Anthony, Special Agent in Charge of the FBI’s Cleveland Office.

“The FBI will continue to root out corruption at all levels.”

Michael J. Missal, Inspector General, U.S. Department of Veterans Affairs, added “The agreement holds the corporation accountable for the conduct of its leadership. A $12 million penalty along with 90 months of prison time for related case subjects is a strong deterrent against defrauding VA.  We will continue to diligently and aggressively pursue fraud, waste, and abuse for the benefit of our nation’s heroes.”

Under the terms of the settlement, Cannon Design said it made company-wide revisions and enhancements to its compliance program, internal controls, policies and procedures to detect and deter fraud.

The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Paul Flannery following an investigation by the FBI and United States Department of Veterans Affairs-Office of Inspector General.


Tagged categories: Architecture; Business matters; Color + Design; Criminal acts; Ethics; Fraud; Government contracts; Health Care/Hospitals; Laws and litigation; North America

Comment Join the Conversation:

Sign in to our community to add your comments.

Axxiom Manufacturing

KTA-Tator, Inc. - Corporate Office

Western Technology Inc.

Sauereisen, Inc.


Technology Publishing Co., 1501 Reedsdale Street, Suite 2008, Pittsburgh, PA 15233

TEL 1-412-431-8300  • FAX  1-412-431-5428  •  EMAIL

The Technology Publishing Network

PaintSquare the Journal of Protective Coatings & Linings Paint BidTracker

EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
MORE:      About   |   Privacy Policy   |   Terms & Conditions   |   Support   |   Site Map   |   Search   |   Contact Us