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Pennsylvania Contractor Sentenced in DBE Fraud Scheme

On February 20, 2018, Watson Maloy, president, WMCC, Inc. (WMCC), was sentenced in U.S. District Court, Pittsburgh, Pennsylvania, to 2 years’ probation and a $1,000 fine. The court ordered $85,221.21 in restitution, paid joint and several with a co-defendant, to the Pennsylvania Department of Transportation (PennDOT). In November 2014, Maloy pleaded guilty to conspiracy charges for his role in a DBE-fraud scheme involving federally funded bridge projects. WMCC, a certified DBE, entered into DBE subcontracts valued at approximately $1.9 million with prime contractors.
 
Maloy admitted that in 2012 and 2013, he and co-conspirators employed by Century Steel Erectors Co. LP (CSE), agreed to use WMCC as a front company to obtain profits from contracts slated for legitimate DBE firms. CSE staff, and not WMCC personnel, found, negotiated, coordinated, performed, managed, and supervised the DBE subcontracts. Maloy’s firm failed to perform a commercially useful function, and CSE completed all DBE work, including negotiating crane rentals, ordering supplies and materials, and recruiting union workers. Maloy admitted that, to conceal the scheme, CSE officials used WMCC letterhead and email accounts when communicating with general contractors and PennDOT officials. CSE personnel also possessed WMCC business cards, T-shirts, and hard hats, as well as magnetic WMCC placards to conceal CSE logos on construction vehicles.
 
DOT-OIG conducted this investigation with the FBI and the Pennsylvania Turnpike Commission OIG.