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Press Release

Two Companies in Business Together Agree to Pay $310,000 to Resolve DBE Fraud Allegations Arising from Platt Memorial Bridge Painting Project

For Immediate Release
U.S. Attorney's Office, Eastern District of Pennsylvania

PHILADELPHIA, PA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Hercules-Vimas Joint Venture, LLC has agreed to pay the United States $310,000 to resolve False Claims Act allegations that it participated in a fraudulent scheme designed to take advantage of the Disadvantaged Business Enterprise (DBE) program in connection with its work on the federally-funded George C. Platt Memorial Bridge painting project.

Hercules-Vimas is a joint venture formed between the Hercules Painting Company and the Vimas Painting Company. Hercules Painting Company is based in New Castle, Pennsylvania. George Savakis, a Florida resident, is president of Hercules. Vimas Painting Company is located in Lowellville, Ohio. The president of Vimas is Bessie Xipolitas.

The DBE program is set forth by statutes and regulations to provide opportunities for businesses owned by socially and economically disadvantaged individuals to work on projects financed by the federal government. The program requires contractors to award a percentage of subcontracts on a given project to DBEs that serve a “commercially useful function.” A DBE does not serve a commercially useful function if it acts as a mere pass-through – an extra participant through which funds are passed to create the appearance that historically disadvantaged persons did the work.

That scenario is what the government alleges happened in this case. Specifically, in 2011 Hercules-Vimas was awarded a $42.7 million contract by the Pennsylvania Department of Transportation (PENNDOT) to paint the George C. Platt Memorial Bridge in Philadelphia. The contract, funded largely by the federal government, required that a percentage of work be performed by a DBE. To meet this requirement, Hercules-Vimas subcontracted with Vertech International, Inc. (Vertech), an Indian-American owned company certified as a DBE in Pennsylvania, to supply materials.

According to the government’s investigation, this arrangement was a sham. While Hercules-Vimas represented to PENNDOT that Vertech served as the supplier, Hercules-Vimas actually worked directly with a large, non-disadvantaged business to deliver paint and materials for the project, while Vertech merely created invoices designed to conceal the fraud in exchange for a nominal fee. In 2016, the owner of Vertech pleaded guilty to conspiracy to commit wire fraud for Vertech’s role in this fraudulent scheme.

“By allegedly misrepresenting that Vertech was doing work on the project, Hercules-Vimas was able to submit the lowest bid and secure a large government contract,” said First Assistant U.S. Attorney Williams. “This took jobs away from the legitimate disadvantaged businesses the DBE program is intended to serve. As alleged, it was fraud – plain and simple – and it will not be tolerated in this district.”

“DBE fraud is harmful in two distinct ways. First, it prevents legitimate disadvantaged businesses from participating in transportation infrastructure contracts. And second, it compromises the integrity of the Department’s DBE program,” said Douglas Shoemaker, regional Special Agent-in-Charge, United States Department of Transportation Office of Inspector General. “We remain steadfast in our commitment to working with our law enforcement and prosecutorial partners to protect the taxpayers’ investment in our nation’s infrastructure from DBE fraud schemes that undermine DOT-funded programs and projects and the public trust.”

The settled civil claims are allegations only.  There has been no determination of civil liability.  The investigation was conducted by the United States Department of Transportation, Office of Inspector General and the United States Department of Labor, Office of Inspector General. For the United States Attorney’s Office, Assistant United States Attorneys David Degnan, Bryan Hughes, and Eric Gill handled the investigation and settlement.


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Philadelphia, PA 19106

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Updated October 26, 2020

False Claims Act