Idaho Contractor Sentenced in DBE Fraud Scheme
On February 27, 2014, Elaine Martin, of Meridian, Idaho, the former president and majority stockholder of MarCon, Inc., was sentenced in U.S. District Court, Boise, Idaho, to 84 months in prison followed by three years of supervised release for conspiracy, wire fraud and mail fraud. The Court also ordered Martin to pay restitution of $98,825.20 to the Internal Revenue Service, $32,575.28 to the Idaho Disadvantaged Business Enterprise (DBE) Program and prosecution costs of $22,859.60. She was also ordered to forfeit $3 million in proceeds she received from her fraudulent activity.
Martin submitted false and fraudulent applications so that her construction company, MarCon, could participate in two different federally funded programs, the U.S. Small Business Administration (SBA) 8(a) Program, and the Department of Transportation Disadvantaged Business Enterprise (DBE) Program. Both programs are designed to help economically and socially disadvantaged businesses compete in the marketplace. To be admitted into the programs, the owner/shareholder must demonstrate economic disadvantage, in part by having a personal net worth below a certain statutory cap. The investigation determined that Martin took steps to artificially lower her personal net worth, such as transferring assets into the names of others in order to appear to be economically disadvantaged. This allowed Martin's construction firm, MarCon, to qualify for the DBE and SBA 8(a) programs.
We investigated this case jointly with SBA-OIG, IRS-CID, and FBI.