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New Jersey Trucking Firm Owner Ordered To Pay $1 Million for Fraud Scheme on DOT-Funded Projects
On March 15, 2017, Nicholas Farnsworth, former owner of Rainbow Transport, as part of Rainbow Transport Corp., et al., was sentenced in U.S. District Court, Brooklyn, New York, to 3 years’ probation and ordered to pay $1 million in restitution. On December 10, 2012, Farnsworth pleaded guilty to embezzlement of union funds, based on a March 2012 indictment charging conspiracy, embezzlement, providing and accepting unlawful payments to a union representative, and health-care fraud.
Rainbow Transport included multiple non-union trucking companies all based in New Jersey—Nicholas J, Happy Time, Marky OG, and SDT Hauling. They entered into a scheme with Greenwood 2, LLC, a unionized trucking company with the International Brotherhood of Teamsters Local 282, to defraud union benefit funds from their employees on projects receiving DOT grant funds. During the alleged scheme, Rainbow Transport was a subcontractor on the Metropolitan Transportation Authority, New York City Transit Authority, Second Avenue Subway (SAS) project, and Greenwood 2 was a subcontractor on both the SAS project and the World Trade Center Transportation Hub project managed by the Port Authority of New York & New Jersey. Both projects are funded in part by the Federal Transit Administration. The amount of the fraud to the union benefit funds is approximately $11 million.
DOT-OIG is conducting this investigation jointly with the U.S. Department of Labor’s (DOL) Office of Labor Racketeering and Fraud Investigations, DOL’s Employee Benefits Security Administration, and the New York City Business Integrity Commission.