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Multiple New York Companies and Employees Debarred by FHWA for DBE Fraud

On September 4, 2014, the Federal Highway Administration (FHWA) issued final decisions for the debarment of MS Construction Corp. (MSC), Madeline Pepe, Richard Schultz, Crossboro Contracting Co.  (Crossboro), and Michael Paletta, each for three (3) years.  The debarments were based on criminal convictions and sentencing’s related to Disadvantaged Business Enterprise (DBE) fraud.

In 2013, Madeline Pepe, Owner of MSC; Richard Schultz, Project Manager for Nationwide Construction; and Michael Paletta, President of Crossboro; were all sentenced in U.S. District Court, Manhattan, New York for various fraud charges related to their participation in fraud schemes to defraud the DBE program.

Between approximately 1994 and March 2011, Pepe participated in a conspiracy to use MSC as a front DBE for several non-minority firms in order to give the appearance of DBE participation on multiple FHWA funded projects, and a Federal Aviation Administration (FAA) funded project. In reality, the work was performed by non-minority firms. During the same time period, Schultz conspired with Pepe by performing fencing work contracted to MSC on an FAA funded project.  Paletta conspired with Pepe to perform construction work on various FHWA bridge projects contracted to MSC. 

Note: A suspension or debarment frequently covers a specific period of time. Please consult the System for Award Management to determine whether a company or individual is currently suspended or debarred.