New York Construction Firm Agrees to Forfeit $8.25 Million for DBE Fraud Scheme
On November 24, 2015, the U.S. Attorney's Office, New York, New York, announced that Granite Construction Inc., a nationwide public works company traded on the New York Stock Exchange, agreed to pay more than $8 million to the Federal Government and the Metropolitan Transportation Authority (MTA) to resolve a criminal investigation of a DBE fraud scheme. Under this non-prosecution agreement, Granite Construction agreed to provide continuous cooperation and devise and implement far reaching corporate reforms.
According to the agreement, Granite Construction acknowledged and accepted responsibility for a DBE fraud scheme related to Granite's work on a federally funded bus depot in Queens, New York. Granite served as the prime contractor on the depot project and was ultimately paid approximately $222 million.
Granite admitted that it conspired with a DBE "front" company who was awarded a $22 million subcontract to perform the DBE work on the project. Granite falsified project records and payroll documents to make it appear as though the "front" company performed the work, when in reality other companies that were not certified as DBEs performed the work. Granite paid the "front" company a $500,000 "DBE fee" even though that company did not perform a commercially useful function on the project. Throughout the project, Granite submitted false DBE progress reports to MTA officials that purported to represent the percentage of work performed by DBE companies. As a result, Granite deprived legitimate DBE companies of the opportunity to win the subcontracts and perform the specified work.
The U.S. Attorney's Office agreed not to prosecute Granite Construction due to the comprehensive internal investigation performed by Granite, the fact that Granite cooperated with the government, and that Granite developed and implemented a broad compliance program that includes project compliance monitors and extensive training. This agreement secured a $7.25 million civil forfeiture to the Federal Government and a $1 million payment to the MTA.
We worked this case jointly with the MTA Office of Inspector General, IRS-CID, and Department of Labor-OIG. The Federal Transit Administration provided substantial assistance.