Massachusetts Company Sentenced in Connection with Disadvantaged Business Fraud
On June 2, 2016, Transit Safety Management, Inc. (TSM), a consulting company in Georgetown, MA, was sentenced in U.S. District Court, Boston, MA, to five years of probation and a fine of $84,000. In February 2016, TSM pleaded guilty to making a false statement in order to maintain its status as a Disadvantaged Business Enterprise (DBE).
TSM provided consulting services to the railroad industry, focusing on safety and operations management. Shortly after it was founded in 1999, TSM's owner certified the company as a DBE. As such, TSM was able to take advantage of Federal regulations aimed at promoting the participation of minority and disadvantaged businesses in federally funded public construction contracts. To maintain its DBE certification, TSM had to make yearly affirmations that it was still eligible and that nothing had changed to affect its eligibility for its DBE status. Despite this, TSM lied about whether it met the criteria for DBE status. According to court documents, TSM’s owner was hired as a full-time employee by a Federal agency in 2005. As a full-time Federal employee, TSM’s purported manager could not control TSM in accordance with DBE regulations. Nevertheless, TSM failed to disclose this change and continued to make its yearly affirmations to maintain its DBE status.
TSM was a certified DBE in numerous States, including Massachusetts, Vermont, New Hampshire, Maine, Connecticut, Rhode Island, Florida, California, Texas, New Jersey, Maryland, Virginia, Pennsylvania, North Carolina, Washington, and the District of Columbia, and performed work on federally funded contracts throughout the country.
DOT-OIG conducted this investigation with the FBI.