Guam Firm Sentenced for its role in a Buy America Billing Scheme on a $1.8 million ARRA Funded Project
On December 11, 2013, in the Districts of Guam and the Northern Mariana Islands, Hubtec International Corporation (Hubtec), was sentenced to 5 years of probation, and ordered to pay restitution in the amount of $150,266 after having admitted to devising a scheme to defraud the Department of Public Works (DPW) and the Federal Highway Administration (FHWA) by falsely representing that they used U.S. made reinforcement steel bars for an ARRA funded project in Guam.
On June 27, 2013, Hubtec president and project manager, Young C . Kim, of Tamuning, Guam, was sentenced to 2 years of probation for his role in the scheme.
In January 2010, Hubtec received a $1.8 million contract with the DPW 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 (ARRA) 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 Kim falsely represented that U.S. made reinforcement steel bars were used for the project, when in fact, they had incorporated Korean-made reinforcement steel bars. They also committed fraud through a billing scheme which falsely over-reported the costs of materials. In May 2012, the FHWA debarred Kim for 3 years and in June 2012, FHWA debarred Hubtec for 3 years.
The investigation was conducted jointly with the Federal Bureau of Investigation, with assistance provided by the FHWA.