Pennsylvania Engineering Firm Agrees to Pay $1.3 Million in Corruption Fraud Scheme
On January 14, 2015, Construction Methods and Coordination, Inc., dba CMC Engineering (CMC) entered into an administrative agreement with the Pennsylvania Department of Transportation (PENNDOT) whereby PENNDOT and the FHWA will be reimbursed in excess of $1.3 million. The reimbursement is for losses incurred as a result of the fraudulent activity of CMC consultant inspectors that were recently charged with corruption and other various crimes. The investigation revealed that at least one CMC inspector participated in the fraud while working on the 100% federally funded Girard Point Bridge construction project in Philadelphia, Pennsylvania. PENNDOT is currently calculating the amounts and will reimburse FHWA for the fraud losses incurred on the affected federal project(s).
Previously, in December 2014, state criminal complaints were filed charging ten individuals for their alleged roles in a widespread corruption and bribery scheme that affected 27 federally funded contracts in Pennsylvania. The complaints alleged that a former PENNDOT permits manager, along with others, demanded kickbacks from project inspectors. This included CMC employees and required them to falsify time, attendance, and payroll records to generate illicit cash flow. The complaints also alleged that the corrupt inspectors were paid more than $500,000 through false payroll and invoice submissions. Additionally, two leading inspection firms, CMC and CZOP Corporation, were allegedly paid more than $700,000 for their employees’ unearned overtime. The inspectors then falsified documents to inflate overtime income and mileage reimbursements, kicking the money back to the PENNDOT managers.
Based on this joint investigation with the Pennsylvania Attorney General's Office and the pending criminal charges, FHWA and PENNDOT have organized a proactive inspection team to review design and construction contracts that may have been affected by this fraud.