Pennsylvania Contractor Pleads Guilty in DBE Fraud Scheme
On November 12, 2014, Watson Maloy, President, WMCC Incorporated (WMCC), pleaded guilty to conspiracy in U.S. District Court, Pittsburgh, Pennsylvania. Maloy was previously charged with conspiracy to commit mail and wire fraud for his role in a disadvantaged business enterprise (DBE) fraud scheme involving federally funded bridge projects. WMCC, a certified DBE, entered into DBE subcontracts valued at approximately $1.9 million with prime contractors. The prime contracts related to this scheme are valued at $43.6 million.
Maloy admitted that in 2012 and 2013, he and co-conspirators employed by Century Steel Erectors Co. LP (CSE), agreed to use WMCC as a front company to obtain profits from DBE contracts slated for legitimate DBE firms. CSE staff and not WMCC personnel actually found, negotiated, coordinated, performed, managed, and supervised the DBE subcontracts. Maloy's firm failed to perform a commercially useful function and CSE actually completed all DBE work including negotiating crane rentals, ordering supplies and materials, and recruiting union workers.
To conceal the scheme, Maloy admitted that CSE officials used WMCC letterhead and email accounts when communicating with general contractors and Pennsylvania Department of Transportation officials. CSE personnel possessed WMCC business cards, t-shirts, and hard hats, as well as magnetic WMCC placards to conceal CSE logos on construction vehicles.
Maloy received a fee for his participation in the scheme, which resulted in approximately $1.8 million in illicit proceeds.
We are conducting this investigation with the Federal Bureau of Investigation and the Pennsylvania Turnpike Commission - Office of Inspector General.