New York Construction Firm Owners Indicted on $19.6 Million Dollar Public Works Fraud Involving Disadvantaged Business Enterprise
On March 30, 2011, Balu Kamat and Carmine Desio, president and vice president, respectively, of Environmental Energy Associates (EEA), were indicted in the U.S. District Court of New York for conspiracy and mail fraud regarding the use of EEA, a Disadvantaged Business Enterprise (DBE), as a "front" DBE on projects receiving DOT grant funds.
The indictment alleges that since approximately 1997, Mr. Kamat and Mr. Desio caused EEA to enter into public contracts to perform an array of subcontract work knowing that EEA lacked the labor, equipment, and financial wherewithal to perform the work. As part of the alleged scheme, they agreed to put employees of a specific general contractor (unnamed in the indictment) on EEA certified payrolls in exchange for a 5% markup to each invoice as their fee for the use of their DBE status. This scheme occurred on the Metropolitan Transportation Authority (MTA) New York City Transit Authority (NYCTA) Fulton Street Transit Center-Dey Street Concourse project and on approximately six other MTA-NYCTA projects, with a total DBE subcontract value of $19.6 million.
It was further alleged that EEA entered into a similar fraud scheme with other general contractors on the Port Authority of New York & New Jersey (PANYNJ) World Trade Center Transportation Hub and other projects. The MTA-NYCTA projects and the PANYNJ-WTC project were all funded in part by the Federal Transit Administration.
Mr. Kamat and Mr. Desio surrendered to USDOT agents. If convicted, Mr. Kamat and Mr. Desio each face a maximum of 40 years in prison.
The investigation is being conducted jointly with the MTA-OIG, the U.S. Department of Labor, Office of Labor Racketeering and Fraud Investigations, and the PANYNJ-OIG.
Note: Indictments, informations, and criminal complaints are only accusations by the government, all defendants are presumed innocent unless and until proven guilty.