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New York Painting Contractor Settles DBE Fraud Allegations

On October 31, 2019, Ahern Painting Contractors, Inc. (Ahern), of Woodside, New York, entered into a civil settlement agreement with the U.S. Attorney’s Office, Southern District of New York. Ahern agreed to pay $3 million to resolve allegations of fraud connected to contracted work on two DOT-funded public works projects: the Federal Highway Administration–funded Brooklyn Bridge Rehabilitation Project and the Federal Transit Administration–funded Queens Plaza subway station painting project for the New York Metropolitan Transportation Authority (MTA) and New York City Transit Authority.
From 2010 to 2015, Ahern engaged Tower Maintenance Corp. (Tower), a Disadvantaged Business Enterprise (DBE), to perform required DBE work on both the Brooklyn Bridge and Queens Plaza projects. As a DBE, Tower was required to perform a commercially useful function, including managing and supervising the work. However, DOT-OIG’s investigation found that Spectrum Painting Corp., a non-DBE, managed and supervised the work assigned to Tower. Ahern also presented false claims for payment for the DBE work to the New York City DOT and MTA.