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FHWA Suspends Contractor for Suspected $2.5 Million Fraud Scheme

As a result of an OIG investigation and ensuing Federal grand jury indictment, FHWA suspended two engineering companies and their owner from Federal contract work in an investigation that has so far uncovered $2.5 million in possible highway contract fraud. The FHWA suspension notice cited a January 30 indictment by a Federal grand jury in New Haven, CT, of L-C Associates, Inc.; L-C Associate A Consulting Engineer, P.C.; and Frank Chuang, all of Rocky Hill, CT, for submitting fraudulent invoices to prime contractors and state departments of transportation for Connecticut, Massachusetts, and New York. The alleged false invoices included certified payrolls where Chuang fraudulently represented that the firms’ employees worked certain hours on cost-plus contracts (where reimbursement is based on a firm’s costs and profit margin) when in fact they had been worked on lump-sum contracts. This is an ongoing investigation being conducted by OIG, with assistance from the Connecticut Department of Transportation, FBI, and IRS.