New York Construction Firm Agrees to Pay $7.5 Million to Settle Fraud Allegations
On April 4, 2012, Judlau Contracting, Inc., Dragados USA Inc., and the Dragados/Judlau Joint Venture (Dragados/Judlau, JV), New York-based construction companies, signed a civil settlement agreement in the U.S. District Court, New York City, New York, in which Dragados/Judlau, JV agreed to pay a $7.5 million civil settlement related to Disadvantaged Business Enterprise (DBE) fraud on a major public works project that received $2 billion in Federal Transit Administration (FTA) funding. Dragados/Judlau, JV is the prime contractor on the "East Side Access Project" which involves the construction of a tunnel connecting the Long Island Railroad to Grand Central Station.
As part of the settlement, Dragados/Judlau, JV admitted that between 2006 and 2008, they listed four DBEs as subcontractors and indicated that the total contract amount was approximately $22 million. Rather than pay DBEs for work performed by them, Dragados/Judlau, JV paid three DBEs fees to act as "pass-throughs" while the work was being performed by non-DBE subcontractors.
As part of this settlement, approximately $6 million will be returned to the FTA. This settlement is the result of a joint investigation conducted with the U.S. Attorney's Office for the Southern District of New York and the Inspector General for the New York State Metropolitan Transportation Authority.