Owner and manager of Disaster Restoration, Inc. convicted of conspiracy and mail fraud
DENVER – A federal jury has found the owner/operator of Disaster Restoration, Inc., Michael Arthur Griggs, along with chief operating officer/general manager, guilty of conspiracy and multiple counts of mail fraud, the Justice Department announced today.
The jury found Michael Arthur Griggs guilty of one count of conspiracy and 13 counts of mail fraud. The jury also found Charles “Chip” Homer Sharp guilty of one count of conspiracy and 9 counts of mail fraud. Griggs and Sharp each face up to 5 years in federal prison, and up to a $250,000 fine, for their respective conspiracy convictions. In addition, they face up to 20 years in federal prison, and up to a $250,000 fine, for each mail fraud conviction. Sentencing for Griggs is scheduled for December 3, 2012 at 9 AM. Sentencing for Sharp is scheduled for November 26, 2012, at 9 AM.
The jury either acquitted or was not able to reach a verdict with respect to other counts regarding Griggs, Sharp, and two other defendants. The U.S. Attorney’s Office is assessing whether to retry the defendants on any counts on which the jury was unable to render a verdict. Four other defendants previously pleaded guilty after reaching plea agreements with the government, and two more are awaiting trial.
Disaster Restoration, Inc., (DRI), was a Colorado corporation located in Denver, Colorado. DRI engaged in the repair, restoration, and reconstruction of commercial and residential real estate properties that have been damaged by fire, water, and other disasters. DRI acted as a general contractor, which regularly hired and paid subcontractors to restore damaged properties and then submitted the cost of the repairs made by these subcontractors to insurance companies for payment.
The indictment alleged that beginning in or about the Fall of 2003, and continuing until approximately early 2007, the defendants knowingly agreed and conspired with each other to commit mail fraud. Further, every Tuesday, DRI would hold an internal meeting where they often discussed how to instruct many of the subcontractors working for DRI to inflate their original bid proposals by 20% to 30%. DRI employees regularly instructed subcontractors to provide DRI with two different documents reflecting their bids, one inflated and one non-inflated, for the same work they would perform for DRI. The inflated price was to be submitted to the insurance company for payment while DRI would pay the subcontractor based on the lower original price. DRI pocketed the difference between the inflated price paid by the insurance company and the lower price paid out to the subcontractor thereby increasing, often substantially, DRI’s profit margin on DRI’s restoration projects.
The insurance companies relied on these false and inflated subcontractor prices when they made payments for the restoration projects performed and supervised by DRI. Most of these insurance payments were sent through the United States Postal System. DRI would, in turn, issue checks payable to the subcontractors and mail them as well.
The case was investigated by the U.S. Postal Inspection Service and is being prosecuted by Assistant U.S. Attorneys Pegeen Rhyne and Thomas O’Rourke.