October 26, 2020
Joint Venture Agrees To Pay $310,000 To Resolve False Claims Allegations Related to Pennsylvania Bridge Painting Project
On October 26, 2020, the U.S. Attorney’s Office for the Eastern District of Pennsylvania entered into a civil settlement agreement with Hercules-Vimas Joint Venture, LLC—formed between the Hercules Painting Company, New Castle, Pennsylvania, and the Vimas Painting Company, Lowellville, Ohio. Hercules-Vimas agreed to pay the United States $310,000 to resolve allegations that it violated the False Claims Act by participating in a fraudulent scheme designed to take advantage of the DBE program.
In 2011, the Pennsylvania Department of Transportation (PENNDOT) awarded Hercules-Vimas a federally funded $42.7 million contract to paint the George C. Platt Memorial Bridge in Philadelphia. The contract required a percentage of the work to be performed by a DBE. To meet this requirement, Hercules-Vimas subcontracted with Vertech International, Inc. (Vertech), an Indian-American owned company certified as a DBE in Pennsylvania, to supply materials.
The Government contended that this arrangement with Vertech was a sham and that Hercules-Vimas actually worked with a large, non-disadvantaged business, among other suppliers, to deliver paint and materials for the project. According to the Government, Vertech merely created invoices designed to conceal the fraud in exchange for a nominal fee. In 2016, Vertech’s owner acknowledged his company’s role in this fraudulent scheme by pleading guilty to conspiracy to commit wire fraud.
This settlement agreement is neither an admission of facts or liability by Hercules-Vimas nor a concession by the United States that its claims were not well founded.
DOT-OIG conducted this investigation with the Department of Labor OIG and the FBI. FHWA provided substantial assistance.