3 NY Painting Companies Charged with Fraud
The United States federal government has recently filed a civil fraud lawsuit against three New York-area painting contractors.
Spectrum Painting (Scarsdale, New York) is being charged with allegedly defrauding government contracts for the painting of the Brooklyn Bridge and Queens Plaza transit facility, by exploiting the Disadvantaged Business Enterprise program.
Ahern Painting Contractors Inc. (Woodside, New York) and Tower Maintenance Corp. (Roslyn, New York) have also been sued under the False Claims Act.
The Painting Contract
In 2010, Ahern won a $150 million coating contract for the rehabilitation of the Brooklyn Bridge and Queens Plaza projects. In the contract, Ahern was required to set aside 14 percent of the work to DBE subcontractors. Tower was hired for a portion of this work.
When one of the DBE contractors had to back out of the project, Ahern had to find another DBE-qualified contractor. However, according to the complaint, Tower was not experienced enough to take on more of the work.
The government reports that Tower and Spectrum officials knew one another from working on previous projects together. Allegedly, Ahern agreed to have Spectrum use Tower’s status as a DBE to take credit for millions of dollars of work. But, since Tower did not perform a “commercially useful function” on the projects, Spectrum completed more of the directing, managing and supervising the DBE work.
Complaints state that by May 2010, Tower’s part of the deal had expanded more than 10 times than what was in the original deal. Spectrum workers were allegedly pretending to be Tower employees by wearing its company vests, using its security information and were even telling other laborers that they were Tower employees. A foreman allegedly informed a government investigator that Spectrum officials “ran the show.”
In addition to this, Ahern and Tower allegedly repeatedly sent out false statements and records to the main contractor, Skanska Kock Inc. (Brooklyn), NYC-DOT and the Metropolitan Transit Authority, misrepresenting that Tower had completed all the work alone and didn’t hire a subcontractor.
The government is claiming that Spectrum was paying kickbacks to Ahern superintendent in the form of a $10,000 “commission payment” for commissioning the projects and arranged a free trip to Atlantic City in 2010 and 2012 for the vice president.
As a result of all of this, the defendants allegedly obtained millions of dollars in federal money to which they were not entitled.
What Happens Now
Because of the investigative work completed by Douglas Shoemaker, regional Special Agent-in-Charge of the United States Deptartment of Transportation Office of the Inspector General; Margeret Garnett, the Commissioner of the NYC Deptartment of Investigation; Barry L. Kluger, Inspector General of the MTA-OIG; and all those involved with the investigation, a case has been made.
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, has officially filed a charge against the three contractors.
DOI Commissioner Garnett said: “These defendants used trickery, false documents, and a kickback scheme to game the Disadvantaged Business Enterprise program—stealing millions of dollars in federal funds. [The] DOI was proud to assist in this investigation with our federal and state partners to ensure guidelines that empower legitimate Disadvantaged Business Enterprises are obeyed and businesses who attempt to take advantage of these programs are made to pay for their actions.”
“Disadvantaged Business Enterprise regulations serve the important purpose of increasing legitimate participation by businesses owned by women and minorities that have been historically disadvantaged in federal contracting,” added U.S. Attorney Berman.
“We will not tolerate fraudulent schemes that exploit the DBE program and undermine its purpose. Contractors who lie about who is actually doing the work will be held to account.”
Assistant U.S. attorneys Monica Folch and Li Yu are in charge of the case. The contractors have not commented on the case.