Guam Company and its Project Manager Indicted for Buy America Billing Scheme on $1.8 million ARRA Funded Project
On April 25, 2012, a federal grand jury in the Districts of Guam and the Northern Mariana Islands indicted Hubtec International Corporation (Hubtec) and its president and project manager, Young C. Kim, on four counts of Wire Fraud, seven counts of Making False Statement in Connection with Highway Project, and one count of Major Fraud Against the United States. The indictment alleges that Hubtec and Mr. Kim devised and participated in a scheme to defraud the Department of Public Works (DPW) and Federal Highway Administration (FHWA) by falsely representing that they used U.S.-made reinforcement steel bars for a federally-funded project in Guam.
In January 2010, HUBTEC received a contract with the DPW in the amount of $1.8 million for the reconstruction and rehabilitation of the Route 2 culverts. The contract was funded in part by $1.4 million in American Recovery and Reinvestment Act of 2009 funds and required that the contractor comply with the Buy America requirement that all steel and iron permanently incorporated into the project be manufactured in the U.S.
OIG's investigation determined that Hubtec and Mr. Kim devised and participated in a scheme to defraud by falsely representing that they used U.S.-made reinforcement steel bars for the project, when in fact, they knew they had incorporated Korean-made reinforcement steel bars which were not in compliance with applicable Buy America requirements. They also committed fraud in connection with the project through a fraudulent billing scheme, which falsely over-reported the costs of materials. We determined that Mr. Kim submitted inflated invoices to the FHWA in the amount of approximately $154,392, and the overall loss to the Government is estimated to be $913,277.79.
OIG is conducting this investigation jointly with the Federal Bureau of Investigation, with assistance provided by the FHWA.
Note: Indictments, informations, and criminal complaints are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.