New York Construction Company Associate Sentenced to Three Years Probation for DBE Fraud Scheme
On May 20, 2011, Lester Hamilton, salesman for V.V.S.S. Co., Inc. (VVSS) was sentenced in U.S. District Court, Central Islip, New York, for his role in a $21 million Disadvantaged Business Enterprise (DBE) fraud scheme. Mr. Hamilton was sentenced to serve three years probation; pay a $100 special assessment and restitution to the IRS in the amount of $12,161.86 for unpaid taxes, interest and penalties.
Mr. Hamilton admitted that VVSS, a certified DBE, acted as a DBE "front" on approximately 35 public works construction projects for numerous general contractors in the New York City area. He further admitted that he helped negotiate some of these fraudulent subcontracts between VVSS and the general contractors. In return, VVSS agreed to receive "fees" from the general contractors of approximately 5 percent of the value of the subcontracts for the use of their DBE status. VVSS served as a payroll and invoice processing service for the general contractors. Mr. Hamilton admitted that he falsified the books and records of VVSS and submitted false documentation to various unions and union benefit funds to conceal the fact that the VVSS DBE subcontracts were actually performed by the general contractors. VVSS prepared and routinely submitted false certified payrolls and other documents to public contracting agencies who received DOT grant funds, including the New York State Department of Transportation, the New York City Department of Transportation, the New York State Metropolitan Transportation Authority, and the Port Authority of New York & New Jersey.
The investigation was conducted by the Federal Construction Fraud Task Force for the Eastern District of New York, whose members include the DOT OIG; the Internal Revenue Service, Criminal Investigation Division; the U.S. Department of Labor OIG Office of Labor Racketeering and Fraud Investigations; and the New York City Department of Investigation.