Painting Company Officials Enter Into a Voluntary Exclusion Agreement With FHWA Related to Fraud Scheme in Philadelphia
On March 23, 2018, George Savakis, president, Michael Savakis, vice president, and Brian Balzli, treasurer and secretary, of Hercules of Painting Company (Hercules) entered into an Administrative Voluntary Exclusion Agreement with the Federal Highway Administration (FHWA). The three Hercules’ officials do not admit wrongdoing but agreed to voluntarily exclude themselves from participating in Government contracting for 3 years. FHWA agreed not to pursue any additional suspension or debarment actions unless they violate the terms of the agreement.
The agreement arises from criminal charges filed in U.S. District Court, Philadelphia, Pennsylvania, in March 2017 against Maria Savakis, owner of Hercules. In April 2017, Savakis pleaded guilty to theft from a healthcare program related to a payroll fraud scheme related to construction work on the FHWA-funded George C. Platt Memorial Bridge Project in Philadelphia. In July 2017, Maria Savakis was sentenced to 2 years of probation and $2,600 in fines.
In April 2011, the Pennsylvania Department of Transportation (PennDOT) awarded a joint venture—composed of Hercules and another company—an approximately $42.7 million contract to perform structural steel painting and repairs on the Platt Bridge.
Maria Savakis carried out a payroll scheme under which the joint venture paid its employees on two separate payrolls. One payroll, which constituted only a portion of the hours worked, was reported on the certified payrolls at the full prevailing wage rate required by the DOT-funded contract. The second payroll, which paid the employees for their remaining hours at a lower rate, was not reported on the certified payrolls. By submitting false certified payrolls to PennDOT, FHWA, and the Department of Labor (DOL), Savakis caused the joint venture to retain $61,689 that Hercules was obligated by law and under contract to deposit on behalf of its employees into the welfare fund of the International Union of Painters and Allied Trades District Council No. 21. On May 11, 2017, FHWA suspended and proposed the debarment of Hercules Painting and Maria Savakis.
DOT-OIG is conducting this investigation jointly with the Federal Bureau of Investigation (FBI), DOL-OIG, the Environmental Protection Agency Criminal Investigations Division, Homeland Security Investigations, and Internal Revenue Service Criminal Investigations. FHWA and PennDOT provided substantial assistance.
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.