New York Construction Company Vice President Sentenced for MBE Fraud Scheme on Numerous Roadway Projects
On January 5, 2010, John Ruggiero, the Vice President of AFC Enterprises, Inc. (AFC) was sentenced in U.S. District Court, Brooklyn, New York, to 3 years probation, fined $50,000, ordered to pay $70,000 in restitution to the City of New York, and forfeit $120,000 to the federal government for his role in an Minority Business Enterprise (MBE) fraud scheme on numerous roadway reconstruction projects awarded by DOT grantees throughout the New York area.
Mr. Ruggiero previously pled guilty and admitted that from 1998 to 2002, he and his co-conspirators at AFC utilized a certified MBE subcontractor, VVSS, Co., Inc. (VVSS), as a "front" MBE to fraudulently meet their MBE goals on numerous public works projects throughout the New York area. VVSS was required to perform the MBE subcontract work however; AFC provided all of the labor, materials, and equipment while VVSS merely acted as a payroll and bill processing service and did not perform a "commercially useful function" as required by regulations. Mr. Ruggiero and others submitted fraudulent documentation to New York City agencies to deceive the contracting agencies and falsely indicate that AFC was complying with the New York City MBE program.
This investigation was worked jointly by members of the Federal Construction Fraud Task Force, Eastern District of New York, of which the DOT-OIG is a founding member.