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New York Steel Painting Contractor Settles DBE Fraud Allegations on Projects Receiving FHWA and FTA Funds

On August 17, 2021, Tower Maintenance Corp. (Tower) entered into a civil settlement agreement with the U.S. Attorney’s Office for the Southern District of New York. Tower agreed to pay $150,000 to resolve allegations of fraud connected to contracted painting work on two federally funded projects. The New York City Department of Transportation’s Brooklyn Bridge project received Federal Highway Administration funds and the New York Metropolitan Transportation Authority’s (MTA) Queens Plaza subway station project received Federal Transit Administration funds. Both projects included Federal Disadvantaged Business Enterprise (DBE) participation goals. Tower, a certified DBE, acknowledged in the agreement that significant portions of work that it should have performed were actually performed by Spectrum Painting Corp. (Spectrum), a non-DBE. Tower further acknowledged that Spectrum received 50 percent of the profits from its painting work on the projects and did not disclose the nature of its relationship with Spectrum to the prime contractor or project agencies.
DOT-OIG conducted this investigation with MTA-OIG with assistance from the New York City Department of Investigation.