Missouri Construction Company Owner and COO Admits Minority Business Enterprise Fraud Scheme
ST. LOUIS – The former owner and chief operating officer of a Clayton, Missouri construction company on Wednesday admitted committing fraud to sidestep St. Louis, Missouri requirements that encourage the participation of minority-owned businesses in city contract opportunities.
Brian Kowert Sr. pleaded guilty in front of U.S. District Judge Henry E. Autrey to two counts of wire fraud.
Kowert was co-owner and chief operating officer of HBD Construction Inc., a general contracting, construction management and development company. At the time, Kowert was also acting as the project manager for the renovation and redevelopment of a building for Greater Goods LLC on Chouteau Avenue in St. Louis. Kowert and Charles Kirkwood, the owner of Midwestern Construction, a company that was a Minority Business Enterprise, agreed to falsely list Kirkwood’s company as providing materials and performing work on the project. Kowert sought to falsify the information to comply with St. Louis requirements for 25% participation by MBEs to qualify for a 10-year tax abatement.
The MBE participation requirements seek to address historical social and economic disadvantages experienced by minority group members and to reduce minority-based barriers to and foster participation by minority-owned businesses in city contract opportunities.
Kowert used a series of measures to conceal his violations of the city’s MBE guidelines, according to his guilty plea. On April 20, 2020, Kowert issued duplicate HBD subcontracts to Kirkwood’s company for work that was performed and materials that were supplied by two other, non-MBE companies. Kowert also issued a duplicate HBD purchase order to Kirkwood’s company for materials provided by a third non-MBE company.
On June 22, 2020, Kowert submitted a false chart of projected costs for the redevelopment project to the St. Louis Development Corporation, the city agency charged with reviewing, approving and recommending tax abatements. The chart falsely listed Kirkwood’s MBE company as providing labor and materials valued at approximately $198,000 on the Greater Goods redevelopment project and falsely omitted the three non-MBE companies which actually did the work and provided the materials.
Beginning on August 4, 2020, Kowert caused 14 HBD checks with a total value of about $220,000 to be issued to Kirkwood’s company for the work performed and materials provided by the three non-MBE companies. Kirkwood deposited those checks into his company bank account and then issued checks to the three non-MBE companies, at Kowert’s direction. Thus, Kowert used Kirkwood’s company as a fraudulent “pass through” in order to exchange the checks and violate the MBE requirements on the construction project.
Kirkwood was paid approximately $2,000 by Kowert for his role in acting as the fraudulent “pass through” MBE company.
Kowert admitted being “fully aware” that St. Louis Development Corporation guidelines required that an MBE company “perform a commercially useful function” and that his agreement with Kirkwood violated the city’s published MBE guidelines.
Between May 2021 and November 2021, Kowert and HBD caused a false application for tax abatement on behalf of Greater Goods for the Chouteau Avenue redevelopment project to be submitted to the St. Louis Development Corporation. The application falsely represented that Kirkwood’s MBE company had performed about $224,361 in project costs and omitted the three non-MBE companies. The $224,361 comprised approximately 6 ½% of the required 25% MBE participation in the project.
Greater Goods, which sells and distributes various kitchen, home, fitness, health and wellness products and donates a portion of the sales price to various charitable organizations, had no knowledge of Kowert’s scheme. Nor did its employees.
Kowert is scheduled to be sentenced April 26. Each wire fraud charge carries a penalty of up to 20 years in prison, a $250,000 fine, or both.
The case was investigated by the FBI. Assistant U.S. Attorney Hal Goldsmith is prosecuting the case.