Two Individuals and Their Companies Charged in $4.5 Million DBE Fraud Scheme Related to Bridge Painting Projects in Philadelphia
On April 3, 2018, Alpha Painting & Construction Co., Inc. (Alpha), Baltimore, Maryland; Liberty Maintenance, Inc. (Liberty), Youngstown, Ohio; Stamatios “Tom” Kousisis, Alpha’s project manager; and Emanouel “Manny” Frangos, owner of Liberty, were indicted in U.S. District Court, Philadelphia, Pennsylvania, and charged with conspiracy to commit wire fraud, wire fraud, false statements, and forfeiture. The charges related to an alleged scheme to defraud the DOT Disadvantaged Business Enterprise (DBE) Program on two federally funded projects—Girard Point Bridge and 30th Street Station in Philadelphia. Alpha and Liberty are bridge-painting contractors that formed Alpha Liberty Joint Venture (Alpha-Liberty JV). The alleged scheme also involved Markias, Inc., a now-defunct DBE from New Jersey.
In September 2009, PennDOT awarded a contract for approximately $70.3 million to a tri-venture that included Alpha-Liberty JV to perform structural steel painting and concrete repairs on the Girard Point Bridge. As part of that award, the tri-venture made a commitment to subcontract approximately $4.7 million in DBE work to Markias, which was to supply paint and materials for the project.
In December 2010, PennDOT awarded a $50.8 million contract to perform structural steel painting and roadway reconstruction beneath and around Amtrak’s 30th Street Station. The prime contractor entered into a $15 million subcontract with Alpha-Liberty JV to complete the structural steel painting, and committed to subcontract approximately $1.7 million in DBE work to Markias.
The indictment alleges that Markias served as a pass-through and did not perform a commercially useful function as required by DOT regulations. Instead, Alpha-Liberty JV and Kousisis ordered materials directly from non-DBE suppliers and paid Markias 2.25 percent of the face value of the invoices it processed to act as a pass-through. The scheme caused PennDOT to falsely credit DBE work—approximately $3.26 million on Girard Point Bridge, and approximately $1.27 million at 30th Street Station.
In addition, the defendants allegedly ordered materials for several out-of-State projects but had the invoices delivered to Markias, which then issued invoices that made it appear that those supplies were used on the Philadelphia projects. The fraudulent invoices caused the prime contractor to falsely report to PennDOT that supplies used for out-of-State projects qualified for DBE credit on the Pennsylvania projects.
In February 2016, Joyce Abrams, owner of Markias, was charged and pleaded guilty to conspiracy to commit wire fraud in U.S. District Court, Philadelphia, for her role in the scheme. In March 2016, FHWA suspended Abrams and Markias from participating in Federal contracting.
DOT-OIG is conducting this investigation with the FBI, DOL-OIG, and Amtrak-OIG. FHWA and PennDOT provided substantial assistance.
Note: Indictments, informations, and criminal complaints are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.