Michigan construction firms pay $1.4 million to settle Disadvantaged Business Enterprise allegations under False Claims Act

by Ben Vernia | November 21st, 2010

On November 19, the Department of Justice announced a settlement with two construction firms employed for work at Detroit’s airport of allegations that they false certified their subcontracting with Disadvantaged Business Enterprises on airport contracts. According to the Department’s press release:

Two Michigan construction companies have agreed to pay the United States $1.407 million to resolve allegations that they knowingly submitted false claims relating to a federally funded construction project at Detroit Wayne County Metropolitan Airport, the Justice Department announced today. The United States alleges that the companies, John Carlo Inc. and Angelo Iafrate Construction Company, falsely claimed that they had used Disadvantaged Business Enterprises (DBEs) for part of the work on the project when they had not. The DBE program provides assistance to businesses owned by minorities, women, and other socially and economically disadvantaged individuals to enter federally-funded construction and design industries.

Under their contracts, the two firms were required to comply with the Department of Transportation’s (DOT) DBE regulations and accurately report their DBE contracting to obtain and maintain the construction contracts. The companies claimed BN &M Trucking, a DBE, performed substantial work on the contracts when, in fact, the trucking firm did not and was merely a pass-through used to obtain the appearance of DBE participation.

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In addition to the $1.407 million payment to resolve civil claims, Angelo Iafrate Construction has also entered into a separate administrative agreement with DOT to ensure future compliance with DBE requirements.

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The government’s claims were based upon an investigation conducted by the Civil Division of the Justice Department, the U.S. Attorney’s Office for the Eastern District of Michigan, DOT’s Office of Inspector General and the Federal Aviation Administration, as well as the Wayne County Airport Authority. The Wayne County Airport Authority first brought the case to the government’s attention and provided substantial assistance throughout the investigation and resolution of the matter.

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