Investigations

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Southeastern Pennsylvania Transit Authority (SEPTA) Contractor Ordered to Pay Over $1.2 Million for Disadvantaged Business Enterprise (DBE) Fraud

On May 18, JMG Excavating Co. (JMG), Pottstown, PA, pled guilty in U.S. District Court in Philadelphia to mail fraud related to a DBE pass-through scheme on federally-funded transit contracts. JMG was sentenced the same day to pay $1,277,152 in restitution to SEPTA and ordered to serve five years probation. JMG was also debarred from doing business with the government for five years. Between August 1997 and February 2004, JMG obtained eight contracts from SEPTA totaling about $7.8 million which required compliance with the DBE program. JMG circumvented those requirements by paying a certified DBE, Pullins Dump Truck, a 2.5% 'fee' on all DBE subcontracted work (totaling some $1.27 million) that was actually performed by JMG, but billed to SEPTA as DBE work. As part of the sentencing, JMG has been ordered to institute 20% DBE participation on all its private contracts and to submit quarterly DBE use reports detailing DBE participation for the next five years. The ongoing investigation is being conducted jointly with the FBI and with assistance from SEPTA OIG.