DBE Fraud

“The federal government announced its largest construction-related False Claims Act settlement of 2013 earlier this month involving alleged disadvantaged business enterprise fraud by a collection of Ohio-based engineering-related companies.

The U.S. Dept. of Justice says it has reached a settlement with Dayton-based TesTech Inc., TesTech owner Sherif Aziz, Dayton companies CESO Testing Technology Inc., CESO International LLC, and CESO Inc., and their owners, David and Shery Oakes. They have agreed to pay $2.88 million to resolve the fraud allegations.

The allegations were brought with the assistance of a whistleblower, former employee Ryan Parker, who will receive $562,370 of the settlement funds under provisions of the FCA.

The prosecution claimed in its allegations that the defendants created TesTech as a subsidiary to the Oakes’ other testing and engineering businesses, falsely filed paperwork that represented Aziz as owner of TesTech, and received minority-owned business and DBE status in Ohio and other states under false pretenses.”

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“The former chief executive of a Pennsylvania company that made concrete bridge beams has been convicted on multiple counts of fraud and money laundering in what the U.S. Dept. of Transportation says is the largest reported Disadvantaged Business Enterprise fraud in the department’s 45-year history.

U.S. officials said the alleged scheme extended from 1993 to 2008 and involved more than $136 million in federal-aid transportation contracts.

Since 1983, U.S. DOT has been required by law to make sure that at least 10% of its authorized highway and transit funds go to DBEs. The department has a single DBE goal that includes companies owned by women or members of minority groups.

Justice says the alleged conspirators used Marikina Construction Corp., a small Connecticut firm, as a front company to gain subcontracts designated to go to DBEs.”

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Ohio Engineering, Testing Firms Hit With Big DBE-Related Settlement

Ex-Head of Pa. Concrete-Beam Firm Convicted in DBE Fraud Case