Pennsylvania Bridge Painting Contractor and Project Manager Convicted in $4.5 Million DBE Fraud Scheme
On August 30, 2018, Stamatios “Tom” Kousisis, and his employer, Alpha Painting and Construction, Inc. (Alpha), were convicted at trial in U.S. District Court in Philadelphia, Pennsylvania, for conspiracy to commit wire fraud, wire fraud, and making false statements to DOT.
In April 2018, Kousisis and Alpha were indicted in a scheme to defraud DOT’s Disadvantaged Business Enterprise (DBE) Program. The scheme was related to two federally funded Girard Point Bridge and 30th Street Station projects in Philadelphia. It also involved Alpha-Liberty JV, a joint venture between Alpha of Baltimore, Maryland, and Liberty of Youngstown, Ohio, two bridge-painting contractors, as well as Markias, Inc., a now-defunct DBE based in New Jersey, owned by Joyce Abrams.
In September 2009, the Pennsylvania Department of Transportation (PennDOT) awarded a $70.3 million contract to a tri-venture—composed of Alpha-Liberty JV and an unnamed contractor, Company C—to perform structural steel painting and concrete repairs on the Girard Point Bridge. The tri-venture made a commitment to subcontract approximately $4.7 million in DBE work—specifically, to supply painting materials—to Markias. In December 2010, PennDOT awarded a $50.8 million contract to Company X, a joint venture formed by Company C and another unnamed firm, to perform structural steel painting and roadway repairs beneath and around Amtrak’s 30th Street Station. Company X 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 to supply painting materials.
Kousisis concocted a scheme to obtain and keep these two lucrative federally funded contracts, which totaled over $120 million, at Alpha. The contracts required a qualified DBE to provide painting supplies. Kousisis used Markias to suggest the Alpha-Liberty JV had contracted with a legitimate DBE. However, the jury found that Kousisis and Alpha had used Markias as a pass-through and that Markias did not perform a commercially useful function as required by DOT regulations. Instead, Kousisis and Alpha ordered materials from non-DBE suppliers and paid Markias a small fee to provide phony invoices that falsely represented it had provided the materials.
Kousisis and Alpha also illicitly funneled, through the Philadelphia projects, millions of dollars in materials ordered for several out-of-State projects, including the Tobin Bridge in Boston, Massachusetts, Amtrak Thames River Bridge in Groton, Connecticut, and Mississippi River Bridge in East Baton Rouge, Louisiana. Kousisis instructed Markias to issue phony invoices that falsely made it appear that supplies delivered to and used on these out-of-State projects had gone to the Philadelphia bridges.
The scheme caused PennDOT to credit the contractors more than $4.5 million in fraudulent DBE work. Approximately $3.26 million went to the tri-venture for the Girard Point Bridge project, and approximately $1.27 million went to the joint venture, Company X, on the 30th Street Station project.
In February 2016, Joyce Abrams, owner of Markias, pleaded guilty to conspiracy to commit wire fraud for her role in this scheme. In March 2016, the Federal Highways Administration (FHWA) suspended Abrams and Markias from participating in Federal contracting.
DOT-OIG conducted this investigation with the FBI, Department of Labor OIG, and Amtrak-OIG. FHWA and PennDOT provided substantial assistance.