Pennsylvania DBE Subcontractor Pleads Guilty to Tax Evasion Related to $121 Million DBE Fraud Scheme
On January 9, Romeo P. Cruz, owner and operator of Marikina Construction Corporation, pled guilty in U.S. District Court, Harrisburg, Pa., to one count of tax evasion in connection with the largest reported Disadvantaged Business Enterprise (DBE) fraud in USDOT history. Mr. Cruz previously pled guilty to criminal fraud charges related to a DBE pass–through scheme that involved approximately 340 federally funded highway DBE subcontracts valued at $121 million. Mr. Cruz admitted that he under–reported his 2005 income–receiving illicit proceeds from his participation in the fraud scheme–and fraudulently disguised numerous payments made to himself as legitimate business expenses on the books and records of Marikina.
Previously, Dennis F. Cambell, a Vice President of Schuylkill Products Incorporated (SPI), and Timothy G. Hubler, a Vice President of CDS Engineers (CDS) pleaded guilty to criminal fraud charges. Both Cambell and Hubler admitted that they fraudulently used Marikina as a pass through DBE to obtain Federal Highway Administration (FHWA) regulated contracts. On December 2, 2008, the FHWA suspended SPI, Marikina, and CDS from bidding on any projects using federal funds. On December 9, 2008, the Pennsylvania Department of Transportation issued a report recommending that SPI, CDS, and its owners be permanently prohibited from bidding on Pennsylvania highway projects. This is an ongoing, joint investigation with the Federal Bureau of Investigation, the U.S. Department of Labor–Office of Inspector General, and the Internal Revenue Service–Criminal Investigation Division.