Guam Company and its President Plead Guilty to Charges Related to a Buy America Billing Scheme on a $1.8 million ARRA Funded Project
On October 29, 2012, in the Districts of Guam and the Northern Mariana Islands, Hubtec International Corporation (Hubtec) and its president and project manager, Young C. Kim, pleaded guilty to false statements in connection with a highway project. Hubtec and Kim admitted devising a scheme to defraud the Department of Public Works (DPW) and 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 ("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 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 through a billing scheme, which falsely over-reported the costs of materials. We determined that Kim submitted inflated invoices to the FHWA in the amount of approximately $154,392. In its plea agreement, Hubtec has agreed to pay restitution of approximately $150,000.
OIG is conducting this investigation jointly with the Federal Bureau of Investigation, with assistance provided by the FHWA.