Michigan Subcontractor Settles DBE Civil Fraud Lawsuit
On December 18, 2014, RMD Holdings, Ltd. (d/b/a Nationwide Construction), a Michigan-based subcontractor, agreed to pay the $416,000 to settle Disadvantaged Business Enterprise (DBE) civil fraud allegations.
It was alleged that RMD caused the prime contractor on the Federal Aviation Administration (FAA) funded LaGuardia Airport, Central Terminal Project, to falsely represent to the Port Authority of NY & NJ that a DBE supplier supplied structural steel for the project. However, RMD knew that the steel was supplied by several non-DBE suppliers. They had falsely represented that they paid MS Construction approximately $1 million for the steel when in fact they had instead paid them a commission/fee for the fraudulent use of their DBE status.
Richard Schultz, a project manager for Nationwide Construction; and Madeline Pepe, owner of MS Construction, were previously sentenced in United States District Court, New York, New York, for their role in the DBE fraud scheme.
We conducted this investigation with the U.S. Department of Labor – Office of Inspector General, the Port Authority of NY & NJ - OIG, and the New York City Department of Investigation.