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Investigations

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Pennsylvania Fuel Supplier and Its Owners Agree To Pay $692,000 To Settle DBE Fraud Claims

On June 1, 2021, a consent judgment order and stipulation and settlement order were entered in the Southern District of New York against Naughton Energy Corporation (Naughton) and its owners, Mariette Naughton and Joseph Naughton (the defendants). The judgment against the defendants ordered a total of $3,273,600 to be awarded to the United States. The settlement specifically ordered the defendants to pay $692,000 of the $3.3 million judgment to resolve their civil liability connected to the use of a non-Disadvantaged Business Enterprise (DBE) fuel supplier on the federally funded New NY Bridge Project. Naughton, a Pennsylvania-based fuel distributor and certified DBE, was contracted to supply diesel fuel to vehicles and equipment working on the multibillion-dollar project. Along with State funds, the project was supported by a Federal Highway Administration (FHWA)–approved Transportation Infrastructure Finance and Innovation Act loan of up to $1.6 billion. The settlement resolved the Government’s allegations that from August 1, 2013, through January 16, 2020, the defendants violated the False Claims Act by causing the submission of false claims for payment to FHWA. Specifically, they caused the prime contractor to misrepresent compliance with DBE rules, which require the participation of businesses owned and controlled by socially and economically disadvantaged individuals. The United States alleged that the defendants misrepresented to the prime contractor that Naughton was solely performing millions of dollars of work on the project, when in fact much of that work was primarily performed by a non-DBE subcontractor.
 
DOT-OIG conducted this investigation with the Port Authority of New York and New Jersey–OIG and New York State-OIG.