Investigations

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President of New York Construction Company Sentenced in a $11.4 million Disadvantaged Business Enterprise Fraud Scheme

On February 13, Charles Doherty, president of United States Rebar, Incorporated (U.S. Rebar) was sentenced in U.S. District Court, Central Islip, New York, on charges related to a fraud scheme affecting $11.4 million in Disadvantaged Business Enterprise (DBE) subcontracts on various public works construction projects in the New York metropolitan area that received DOT grant funds. In September 2005, Mr. Doherty pled guilty to money laundering conspiracy charges, and admitted that between January 1998 and July 2002, U.S. Rebar, a non–DBE firm, posing as various DBE firms, fraudulently obtained five DBE subcontracts valued at approximately $11.4 million to install rebar. Mr. Doherty was sentenced to three years probation and fined $15,000. Also as a part of the plea agreement, he agreed to forfeit $500,000 to the Government. The Federal Transit Administration has debarred both Mr. Doherty and U.S. Rebar.

The investigation revealed that Mr. Doherty conspired with the owners of the “front” DBEs and representatives of several general contractors in a scheme wherein Mr. Doherty’s employees, payroll and expenses were falsely recorded in the books, records and tax returns of the DBEs, to generate the false appearance that the DBEs were performing the subcontracts when in fact the DBEs performed no legitimate business purpose. Mr. Doherty also admitted to fraudulently cashing checks to generate cash; the cash was used to pay his employees.

This case was jointly investigated by DOT/OIG and other members of the Long Island Federal Construction Fraud Task Force.