Fraud

Fraud case involves $31M intended for disadvantaged small businesses

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“Executives at two Arlington companies have pleaded guilty after being accused of fraudulently obtaining more than $31 million in federal contract payments meant for disadvantaged small businesses, the Justice Department said Monday.

Justice alleged that Hedman and an unnamed African American woman established an Arlington-based security service consulting company around 2001. The woman was named president and chief executive, allowing the contractor to win work set aside for certain minority-owned small businesses, Justice alleged.

After the woman left in 2003, the company was no longer eligible for the set-aside work, and Hedman created a shell company to win small-business work, even though it was not qualified, according to Justice.”

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CFO in Kenwood Towne Place case faces fraud charge

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“The chief financial officer of the developer that led construction on long-stalled Kenwood Towne Place is facing a charge of conspiracy to commit bank fraud.

A federal grand jury in Cincinnati indicted Bear Creek Capital’s Tina Schmidt on Thursday, charging her with diverting money from the high-profile Sycamore Township development to pay outstanding debts and enrich others.

This is the first criminal charge out of the most complex foreclosure case in Hamilton County history. Parties have claimed throughout the case that fraudulent activities led to the shocking demise of the most promising new retail and office development in the region.

Contractors walked off the construction site late in 2008 after they hadn’t been paid for their work. Bank of America filed foreclosure in May 2009, claiming an $81 million default on the construction loan. Developers, contractors and investors have spent more than three years in court passing blame for the project’s cost over-runs and attempting to collect the money owed and invested.

Also in August, a group of subcontractors dropped similar fraud claims against Bank of America. Still remaining are charges of fraud by contractors and Kenwood Towne Place investors against Bear Creek Capital partner Matt Daniels and construction manager Audie Tarpley.”

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$12M bid-rigging federal trial includes testimony on contractor’s bond

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“Xcel was hired as construction manager for the Garden View project. Xcel hired Ferguson Enterprises Inc. as a subcontractor.

Prosecutors allege Ferguson was involved in both companies and that his involvement was a conflict of interest and violated federal contract laws.

Ferguson is accused of falsifying bids, laundering money and dumping debris on the grounds of the old Herman Gardens public housing site on the west side.

Prosecutors contend Ferguson orchestrated false bids as part of a scheme to make it look like a bid by one of his companies was the lowest.”

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Las Cruces contractor sentenced for fraud, embezzlement case

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“A local construction contractor will serve eight years in state prison for defrauding customers and embezzling money over a five-year period, prosecutors said.

Gary Winsor and his late father, Raymond L. Winsor, were indicted in 2007 after prosecutors said their construction companies defrauded at least 16 customers who had hired them for roof work, home additions and remodeling projects, from 2002 to 2007.

About 50 lawsuits against the Winsors and their companies, which used the names Winsor Construction, RayWin Construction, WCS Inc. and Western Truss – resulted in civil judgments against the Winsors, according to court records.

Between 1997 and 2005, about $1 million in debt accumulated by the Winsors was by bankruptcy court, according to court records.”

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Feds: Prime Contractor Supplied Staff To WBEs on Chicago Bridge Project

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“The prime contractor on a Chicago bridge project shuttled its employees to woman-owned steel and concrete subcontractors hired to comply with government hiring goal programs, and later rehired the same workers in 2006 and 2007, federal prosecutors charge.

As part of the charges made last month against Elizabeth Perino, 57, the owner of two companies accused of serving as an illegal “pass-through” to help prime contractors fulfill subcontracting requirements for woman-owned businesses (WBEs) and disadvantaged businesses (DBEs) on the North Avenue Bridge project, the U.S. attorney in Chicago amassed different types of evidence of fraud. An essential part of the alleged fraud is that Perino’s companies performed no useful commercial function.

Chicago Mayor Rahm Emanuel pledged $11 million to be used to develop M/WBE programs with greater oversight. The city plans to begin enforcing strict compliance initiatives including unannounced visits to city job sites, strengthening M/WBE certification requirements and training courses for general contractors and their subs on M/WBE fraud.”

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Exec pleads guilty in $28 million contracting fraud scheme against Army Corps of Engineers

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“Babb admitted to soliciting and accepting more than $1 million in kickbacks from Alex N. Cho, the chief technology officer for Nova Datacom, in exchange for giving the subcontractor preferential treatment. The gifts included cash and checks, airline tickets and the promise of a future job for Babb at the company, prosecutors said. Babb also admitted to paying, offering and promising more than $7 million in bribes in return for approval on Army Corps of Engineers contracts and subcontracts, authorities said.

Since the initial arrests, prosecutors also have revealed charges against a handful of other men associated with subcontractors, including Cho, who pleaded guilty last September to money laundering, conspiracy and other charges. Prosecutors on Tuesday announced charges against an additional defendant associated with a subcontractor.”

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