Vice President of Pennsylvania Highway Engineering Firm Pleads Guilty to $121 Million in DBE Fraud
On April 15, 2008, Timothy G. Hubler, former Vice President of Field Operations for CDS Engineers Inc. (CDS), pled guilty in U.S. District Court, Harrisburg, Pennsylvania, to one count of conspiracy to defraud the Disadvantaged Business Enterprise (DBE) Program and one count of filing a false Federal tax return. The previously filed information alleged that Mr. Hubler participated in a DBE pass–thru scheme that involved approximately 340 federally funded DBE subcontracts valued at $121 million. The Pennsylvania Department of Transportation (PennDOT) administered the contracts in question between 1993 and 2007–contracts that affected $2.94 billion in USDOT–funded projects.
Mr. Hubler admitted that officials of Schuylkill Products Inc. (SPI)and CDS used Marikina Construction Corporation (Marikina)–a certified DBE–to obtain DBE subcontracts for bridge beam installation projects with the intention of having CDS and SPI employees perform, manage, control, and supervise the beam installations. Dennis F. Campbell, former Sales and Marketing Vice President of SPI, previously admitted that SPI and CDS officials allegedly prepared bid proposals and cost estimates on Marikina letterhead to make it appear that Marikina prepared the documents. Mr. Hubler admitted that SPI and CDS paid Marikina a fixed fee–25 percent of which Mr. Hubler and Mr. Campbell each received as a kickback–for the use of its name in obtaining DBE contracts.
Mr. Hubler and a CDS work crew were paid from a Marikina payroll account to conceal the scheme. Through various regulated and required project certifications and submissions made by Marikina, PennDOT counted the entire cost of the DBE subcontracts ($121 million) toward the general contractors’s DBE goals as stipulated in the various prime contracts. Mr. Campbell pled guilty in U.S. District Court, Harrisburg, Pennsylvania, to similar criminal charges related to the DBE pass–thru scheme in February 2008.
DOT/OIG has referred the matter to the Federal Highway Administration (FHWA) for debarment proceedings. This is an ongoing, joint investigation with the FBI, U.S. Department of Labor/Office of Inspector General, and Internal Revenue Service.