Owners of Ohio Company Plead Guilty In Ohio Bridge-Painting Fraud Case
May 31, 2007
On May 31, Michael Lignos, co-owner of LM Lignos Enterprises, a Cleveland, Ohio, painting company, pleaded guilty in U.S. District Court in Cleveland to charges of bribing state inspectors to overlook the improper painting of 11 bridges in Lake and Cuyahoga counties. Lignos gave two Ohio Department of Transportation (ODOT) inspectors a trip to Las Vegas in 2001 in exchange for their allowing the company to paint the bridges in inclement weather and without prior scraping, sanding and priming of the bridge surfaces. He subsequently gave one of the inspectors, Ralph F. Smith III, an additional $4,000. Smith pleaded guilty in April 2006 to charges of making false statements regarding highway projects and is awaiting sentencing. The other inspector was not charged, but resigned from ODOT. Smith previously pleaded guilty in 2003 to charges of making false statements regarding inspections he performed on three other highway bridge painting projects and served 24 months probation. Lignos also pleaded guilty to charges involving a 2004 contract to repair a bridge in Portage County, Ohio. He admitted to stealing $23,959 from the company's employee benefit plan by failing to report 1,811 hours worked by union carpenters to the benefit plan, resulting in an underpayment of $23,959 in fringe benefits. Lignos also admitted to failing to withhold Federal Insurance Contributions Act (FICA) taxes on 23 employees, resulting in the underreporting of $66,000 in income to the IRS on his corporate tax returns. His wife, Maria Lignos, who was co-owner of the defunct company, pleaded guilty on June 1 to mail fraud charges. Maria Lignos fraudulently collected unemployment insurance benefits from the State of Ohio by falsely stating on her application that she had been employed at LM Lignos Enterprises, when, in fact she had not. Both Maria and Michael Lignos are scheduled to be sentenced on August 23. This case is part of a larger, ongoing investigation of contract and grant fraud in the ODOT bridge inspection program. To date, 14 individuals and four companies have been convicted. This case was investigated with the FBI, the IRS Criminal Investigations Division and the U.S. Department of Labor.