Investigations

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New Jersey Construction Firm Agrees to Pay $20 Million to Settle Allegations of Fraud

On November 29, 2010, Schiavone Construction Co. LLC ("Schiavone"), a New Jersey Construction Company, signed a civil settlement agreement in the U.S. Eastern District Court, New York, in which Schiavone agreed to pay a $20 million civil forfeiture related to DBE fraud on various public works contracts.  As part of the resolution, Schiavone admitted that between 2002 and 2007, certain now-former employees fraudulently submitted utilization reports on federally funded public works contracts that falsely represented work was performed by certified ("DBEs") and minority and women-owned business enterprises ("MWBEs") when in fact the non-DBE and non-MWBE subcontractors performed the work.  Schiavone executed two contracts with the NYS Metropolitan Transit Authority (MTA) totaling approximately $350 million.  Both of these contracts received Federal Transit Administration grant funds and required that Schiavone comply with the DBE program.  Schiavone acknowledged a $20,000,000 overstatement of actual DBE and MWBE participation.   In addition to the $20 million payment to resolve civil claims, Schiavone also entered into a separate administrative agreement with DOT to ensure future compliance with DBE  and MWBE requirements.

This settlement is the result of a joint investigation conducted by the United States Attorney's Office, the United States Department of Labor, the New York City Department of Investigation, the Inspector General for the MTA, the New York State Attorney General's Office - Organized Crime Task Force and the Internal Revenue Service.