Michigan Construction Contractors to Pay $3.8 Million to Settle False Claims Allegations

February 3, 2014 — The U.S. Justice Department (“DOJ”) depends on whistleblowers to collaborate when contractors obtain lucrative government construction contracts without observing their obligations to comply with government programs that promote entrepreneurship in disadvantaged communities. When misconduct occurs, the qui tam provisions in the federal False Claims Act enable construction industry insiders to file a lawsuit on the government’s behalf. In return for stepping forward, tipsters receive a sizeable share of the government’s eventual proceeds.

Contractors Allegedly Made False Claims to USDOT Concerning Disadvantaged Business Credits

Michigan Paving and Materials Co. (MPM) and Cadillac Asphalt LLC (Cadillac), two related Michigan companies, will pay $3.8 million to settle allegations that they made false claims to the Disadvantaged Business Enterprise program of the U.S. Department of Transportation. According to the DOJ, the two companies falsely claimed Disadvantaged Business Enterprise (DBE) credits to obtain contracts on federally funded transportation projects.
As a condition of working on a federally funded project, building and construction contractors must attempt in good-faith to achieve DBE participation goals. These goals require contractors to employ a subcontractor DBE that is independently responsible for conducting part of the overall job with its own employees and equipment. Cadillac and MPM made false claims for DBE credit by hiring a purported asphalt contractor known as BN&M Trucking Inc. In actuality, BN&M Trucking supplied no asphalt for the job, nor did it serve any other commercially useful purpose. BN&M Trucking was allegedly a pass-through entity whose only function was to allow MPM and Cadillac to claim the DBE credit.
The settlement resolves allegations concerning a number of federally funded Michigan transportation projects from 2006 to 2010. Two other contractors working on one of those projects — a new runway at Detroit Metropolitan Wayne County Airport — have already settled similar allegations. In November 2010, Angelo Iafrate Construction Co. Inc. and John Carlo Inc. paid over $1 million to resolve false claims allegations.

Construction Industry Insiders: First Line of Defense Against Fraud

Tipsters who collaborate with the government should know their own rights before stepping forward. The qui tam lawyers with Waters & Kraus provide whistleblowers with the legal representation they deserve. Contact us or call our False Claims Act lawyers at 855.784.0268 to discuss how to file a qui tam lawsuit and how we can help you.

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