Owner of DBE Pass-Thru Charged in a $2 Million Fraud Scheme in Pennsylvania
On February 11, 2016, Rajat K. Verma, of Quakertown, PA, was charged by Information with conspiracy in U.S. District Court, Philadelphia, PA. The charges relate to a fraud scheme involving the U.S. DOT Disadvantaged Business Enterprise (DBE) Program and work performed on the federally funded George C. Platt Memorial Bridge Project (Platt Bridge) in Philadelphia. Verma is the president and sole owner of Vertech International, Inc. (Vertech), a certified DBE.
In April 2011, the Pennsylvania Department of Transportation (PENNDOT) awarded an approximately $42.7 million contract to perform structural steel painting and repairs on the Platt Bridge in Philadelphia. The contract was awarded to a joint venture composed of two companies, neither of which is certified as a disadvantaged business. During the bid process in March 2011, that joint venture submitted a commitment to PENNDOT to subcontract approximately $3.1 million in DBE work to Vertech to supply paint materials for that project.
The Information alleges that Vertech served as a pass-through and did not provide a commercially useful function. The joint venture allegedly negotiated contracts and ordered materials for the Platt Bridge directly with suppliers that were not DBEs, and without the involvement of Vertech. Verma’s company served as a front to give the appearance that the joint venture met the DBE requirements on the Platt Bridge project. This scheme caused PENNDOT to falsely award approximately $1.97 million in DBE credit to the joint venture. The Information further alleges that the joint venture paid Vertech a fee of 1.75 percent of the face value of the supply invoices processed by Vertech to act as a pass-through.
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.