Federal Jury in NYC Convicts DCM Erectors, Inc. and Chief Executive Officer on DBE Fraud
On August 10, 2016, after an 8-day jury trial in U.S. District Court, New York, NY, Larry Davis and his company, DCM Erectors (DCM), were convicted for devising and implementing a complex fraud scheme that violated the New York Port Authority’s Minority and Women Business Enterprise (M/WBE) Program.
DCM specialized in steel erection for large construction projects. In 2007, DCM was awarded a $256 million contract for work on the One World Trade Center project, and in 2009, DCM was awarded $330 million trade contract for work to be performed on the World Trade Center Port Authority Trans-Hudson (PATH) Transportation Hub (collectively, the World Trade Center Project). The Federal Transit Administration (FTA) provided approximately $2.2 billion in grant funds in support of the projects.
DCM contracted to supply and erect structural steel and install metal decking, as well as provide drafting, engineering, and survey work. The FTA-regulated contracts obligated Davis and DCM to meet certain required minimums of minority- and woman-owned business participation. The jury found that Davis and DCM not only failed to meet these minimum contract provisions, but took significant steps to conceal their fraudulent activity. In order to satisfy the M/WBE program, DCM claimed, through certifications, that certain work was performed by minority-owned businesses, including Solera/DCM Joint Venture LLC and GLS Enterprises, Inc. (GLS), when in fact, DCM itself performed the designated work and/or arranged for the work to be performed by other non-M/WBE contractors.
DCM and Davis established Solera/DCM as a joint venture with the express purpose of using it to falsely satisfy MBE requirements on public construction projects. To facilitate the fraud, Davis directed Solera/DCM to place laborers who worked for a nonminority contractor on Solera/DCM’s payroll and then invoice DCM for such laborers’ time. Davis also enabled the creation of false invoices to conceal the fact that DCM actually procured steel and not Solera/DCM. Davis caused DCM to fraudulently claim approximately $70 million of MBE credit.
In addition, the investigation determined that to facilitate the scheme, DCM paid Johnny Garcia, a Solera/DCM official, approximately $2 million. Gale D’Aloia, who served as GLS’s president, had been a longtime DCM employee who performed payroll management services for DCM and Davis’s related companies. In 2004, D’Aloia left DCM and began performing the same payroll management services for DCM through her company, GLS, which she registered as a WBE with the Port Authority. As compensation for engaging in the fraudulent scheme, Davis paid GLS up to 10 percent of each week’s total gross payroll for the surveyors, which totaled hundreds of thousands of dollars. Both Garcia and D’Aloia previously pleaded guilty to criminal charges.
DOT OIG conducted this investigation with the U.S. Department of Labor-OIG, the Internal Revenue Service-Criminal Investigation Division, and the Port Authority of NY/NJ’s-OIG.