Pennsylvania DBE Owner Pleads Guilty to Fraud Charges
On March 2, 2016 Rajat Verma of Quakertown, PA, pleaded guilty in U.S. District Court, Philadelphia, PA, to conspiracy to commit wire fraud in a scheme involving the DOT’s Disadvantaged Business Enterprise (DBE) Program and work performed on the federally funded George C. Platt Memorial Bridge Project (Platt Bridge). Verma is the president and sole owner of Vertech International, Inc. (Vertech), a corporation that is currently certified as a DBE. On February 11, 2016, Verma was charged with conspiracy.
In April 2011, the Pennsylvania Department of Transportation (PENNDOT) awarded an approximate $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.
Verma admitted 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. Verma admitted 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.
DOT-OIG is conducting this ongoing investigation jointly with DOL-OIG and the FBI. FHWA has provided substantial assistance.