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Fraud And False Statements Scheme Charged on Big Dig Contract
November 21, 2008

BOSTON, MA - Boston, MA. A company doing work on a Big Dig contract was charged today in U.S. District Court with submitting false claims on a federal highway project. The scheme involved the systematic, fraudulent billing of apprentice workers at the higher rate of pay for journeymen, resulting in continuing overpayments by the Central Artery/Tunnel (CA/T) project to the contractor. In addition, the scheme also involved fraud against the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program.

United States Attorney Michael J. Sullivan, Theodore L. Doherty III, Special Agent in Charge of the Department of Transportation Inspector General’s Office; Marjorie Franzman, United States Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations and Warren T. Bamford, Special Agent-in- Charge of the Federal Bureau of Investigation, Boston Field Division announced today that ISLAND LATH AND PLASTER, INC. (ISLAND) was charged in a single-count Information with conspiracy to defraud the United States with respect to claims on a federal highway project.

The Information alleges that, beginning in 2002 through 2006, ISLAND, a company doing work on behalf of Adams Management Group, Inc. (AMG), a subcontractor to McCourt Construction Co., engaged in a scheme to over-bill the Central Artery/Tunnel Project by falsely categorizing apprentice workers as journeymen on work performed on the C17AA Tunnel Finishes Contract. Allegedly, the work which was overbilled, was performed on a time and materials basis, which meant the subcontractor was paid for the time worked by each employee, as opposed to a fixed price for the work under contract. In addition, the Information alleges that ISLAND, along with AMG, obstructed the Department of Transportation’s DBE program since AMG was the minority subcontractor, but the work was substantially performed by ISLAND. It is alleged that ISLAND prepared the bills submitted by AMG to the CA/T project.

If convicted on these charges, ISLAND faces a fine of up to $500,000.

McCourt Construction and two of its managers have previously been convicted in federal court regarding the same overbilling scheme. In addition, three individuals employed by Massachusetts Electric Construction Company, a McCourt Construction subcontractor on the tunnel finishes contract, have previously been convicted in federal court for submitting false claims in connection with overbilling apprentice labor at journeyman rates.

The case was investigated by the Department of Transportation, Inspector General’s Office, the Department of Labor/Office of Labor Racketeering, and , the Federal Bureau of Investigation, New England Field Division. It is being prosecuted by Assistant U.S. Attorneys Eugenia M. Carris, Jeffrey M. Cohen Anthony E. Fuller and Fred M. Wyshak of Sullivan’s Public Corruption Unit.



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