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Painting Firm Enters FHWA Deal Over Fraud Charges

Tuesday, April 10, 2018

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In late March, three officials from Pennsylvania-based Hercules Painting Company entered into an agreement with the Federal Highway Administration, voluntarily excluding themselves from participating in government contracting for three years.

George Savakis, Michael Savakis and Brian Balzli,—president, vice president and treasurer/secretary, respectively, of Hercules Painting Company, have not admitted to wrongdoing.

The Scheme

In 2017, Maria Savakis, of Merritt Island, Florida, pleaded guilty to theft from a health care program, and was sentenced in July to two years of probation and $2,600 in fines. Savakis was owner of New Castle, Pennsylvania-based Hercules Painting. The charges relate to the 2011 rehabilitation of the George C. Platt Memorial Bridge, in Philadelphia, a $42.7 million job carried out by a joint venture of Hercules and the Vimas Painting Company, of Lowellville, Ohio.

Michael Murphy, CC BY-SA 2.0, via Wikimedia Commons

The charges relate to the 2011 rehabilitation of the George C. Platt Memorial Bridge, in Philadelphia, a $42.7 million job carried out by a joint venture of Hercules and the Vimas Painting Company, of Lowellville, Ohio.

According to the U.S. Department of Transportation’s Office of the Inspector General, Savakis allegedly devised a scheme in which employees on the Platt Bridge job were paid via two separate payrolls, only one of which was reported on certified payrolls at the prevailing wage required in the contract. Employees were paid their remaining hours at a lower rate on the second, unreported payroll.

The DOT said the result of the scheme was that the joint venture kept funds that should by law have been deposited in the Welfare Fund of the International Union of Painters and Allied Trades’ District Council No. 21.

According to investigators, the joint venture kept a total of $61,689 that should have gone to the union fund. The DOT suspended Hercules Painting from federal contracts and proposed the company’s debarment in May.

Moving forward, the FHWA has agreed not to pursue any additional suspension or debarment unless the terms of the agreement are violated.

DOT-OIG is spearheading the investigation, working in collaboration with the FBI, DOL-OIG, the Environmental Protection Agency Criminal Investigations Division, Homeland Security Investigations and Internal Revenue Service Criminal Investigations. FHWA and PennDOT also provided assistance.

   

Tagged categories: Bridges; Criminal acts; Department of Transportation (DOT); Federal Highway Administration (FHWA); Fraud; Labor; NA; North America; Program/Project Management

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