Two Michigan-based paving companies pay $3.8 million over Disadvantaged Business Entity allegations

by Ben Vernia | January 10th, 2014

On January 9, the Department of Justice announced that two related Michigan paving companies had agreed to pay nearly $4 million to resolve claims that they falsely claimed to be disadvantaged business enterprises (DBE) to receive preferential treatment in federal contracts. According to DOJ’s press release:

The Justice Department announced today that two related entities, Michigan-based Cadillac Asphalt LLC (Cadillac) and Michigan Paving and Materials Co. (MPM), have agreed to pay $3.8 million to resolve allegations that they falsely claimed Disadvantaged Business Enterprise (DBE) credits on a number of federally funded transportation projects. Both Cadillac and MPM are subsidiaries of Oldcastle Materials Inc., a construction material and services provider based in Atlanta.

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The settlement announced today resolves allegations that Cadillac and MPM knowingly and falsely claimed DBE credit for asphalt purportedly supplied by a DBE known as BN&M Trucking Inc. As a condition of federal funding, contractors, such as Cadillac and MPM, working on a federally funded project must make a good-faith attempt to meet DBE participation goals. For the contractors to meet their DBE participation goal, a DBE employed by the contractors must be independently responsible for performing a portion of the work with its own employees and equipment. Allegedly, BN&M Trucking was merely a pass-through company that did not supply any asphalt or perform any other commercially useful function.

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The allegations resolved by the settlement involved numerous federally funded transportation projects in Michigan between 2006 and 2010, including a project to construct a new runway at Detroit Metropolitan Wayne County Airport in 2008 and 2009. In November 2010, two other entities, John Carlo Inc. and Angelo Iafrate Construction Co. Inc., paid more than $1 million to resolve similar allegations related to the airport runway project.

The case apparently arose from an agency investigation, and not from a whistleblower’s case.

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