Owner of DBE Pass-Thru Charged in $4.5 Million Fraud Scheme in Pennsylvania
On February 11, 2016, Joyce Abrams of Willingboro, NJ, was charged by Information with conspiracy to commit wire fraud in U.S. District Court, Philadelphia, PA. The charges relate to a scheme involving the U.S. DOT Disadvantaged Business Enterprise (DBE) Program and work performed on two federally funded bridge renovation projects in Philadelphia. Abrams was the president and sole owner of Markias, Inc. (Markias), a now-defunct certified DBE.
In September 2009, the Pennsylvania Department of Transportation (PENNDOT) awarded a contract for approximately $70.3 million to a tri-venture to perform structural steel painting and concrete repairs on the Girard Point Bridge in Philadelphia. As part of that award, the tri-venture made a commitment to PENNDOT to subcontract approximately $4.7 million in DBE work to Markias to supply paint and materials to the project.
Likewise, in December 2010, PENNDOT awarded a $50.8 million contract to perform structural steel painting and roadway reconstruction at Amtrak’s 30th Street Train Station in Philadelphia. The prime contractor entered into a $15 million subcontract with a joint venture to complete the structural steel painting. As part of the award, the prime contractor committed to subcontract approximately $1.7 million in DBE work to Markias.
The Information alleges that Markias served as a “pass-through” and did not provide a commercially useful function. Markias allegedly served as a “front” company to give the appearance that the contractors met the DBE requirements on both of the federally funded bridge projects. In turn, the scheme caused PENNDOT to falsely credit approximately $3.26 million in DBE work on the Girard Point Bridge project and approximately $1.27 million in DBE work on the 30th Street Station project. The Information further alleges that Abrams received a fee, on both projects, of 2.25 percent of the face value of the supply invoices processed by Markias to act as a “pass-through.”
In addition, the information alleges that the joint venture subcontractor on the 30th Street Station project ordered materials for use on out-of-state projects but had the related invoices delivered to Markias. Then, Abrams allegedly issued invoices that made it appear that those supplies were used on the 30th Street Project in Pennsylvania. Those false invoices caused the prime contractor to falsely report to PENNDOT that the supplies delivered to and used on the out-of-State projects qualified for DBE credit on the Pennsylvania projects.
This ongoing investigation is being investigated jointly with the FBI, DOL-OIG, EPA-CID, HSI and IRS-CI. FHWA provided substantial assistance.
Note: Indictments, informations, and criminal complaints are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.