September 2, 2016
Two North Carolina Companies and Six Officials Debarred by FHWA for DBE Fraud
On September 2, 2016, FHWA debarred two companies and six individuals for their roles in a Disadvantaged Business Enterprise (DBE) fraud scheme involving over $87 million in Federal- and State-funded contracts. Boggs Paving; Carl “Drew” Boggs, president of Boggs Paving; Kevin Hicks, chief financial officer of Boggs Paving; Greg Miller, vice president of Boggs Paving; Greg Tucker, vice president of Boggs Paving; Arnold Mann, project manager of Boggs Paving; Styx Cuthbertson Trucking Company, Inc. (“Styx”); and John Cuthbertson, president and owner of Styx, were each debarred for 3 to 4 years.
The investigation revealed that Boggs Paving and the codefendants used Styx, a road construction hauler and a certified DBE and small business enterprise, to help obtain Government-funded construction contracts. Furthermore, the codefendants took steps to conceal their fraud, including running payments for the work performed through a nominee bank account in Styx’s name and using magnetic decals bearing the Styx logo to cover the Boggs logo on company trucks. Records indicate that from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally funded contracts and was a subcontractor for two additional contracts worth $87.6 million. Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $378,000 for actual work on these contracts, and the majority of the money was funneled back to Boggs Paving and its affiliates. John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving.
DOT-OIG conducted this investigation jointly with the FBI and the Internal Revenue Service-CID.
Note: Exclusion actions (suspensions and debarments) are frequently for a specific period of time and the System for Award Management (“sam.gov”) should be consulted to find out whether a company is currently excluded.