Government Contractor Agrees to Plead Guilty to Fraudulently Billing Federal and State Construction Contracts
For Immediate Release
U.S. Attorney's Office, District of Massachusetts
VJ Associates to pay more than $3 million to resolve overbilling scheme involving government-funded construction projects
BOSTON – VJ Associates, a group of companies based in Hicksville, N.Y., has agreed to pay $3.13 million to resolve criminal and civil charges relating to a long-running overbilling scheme involving numerous government-funded construction projects in Massachusetts and New York.
VJ Associates provided sub-contracted estimating and scheduling services for construction projects funded with state and federal money. Services included forecasting costs and resources to complete a project, and estimating the time necessary to complete milestones in a project. VJ Associates employees frequently billed government contracts hourly for their time. The U.S. Department of Transportation (DOT), the State of New York and the Commonwealth of Massachusetts funded many projects on which VJ Associates worked.
“VJ Associates defrauded government-funded infrastructure projects by billing for bogus hours, adding hundreds of thousands in unnecessary costs to projects on which it worked,” said United States Attorney Andrew E. Lelling. “Our office is committed to protecting taxpayer dollars and the integrity of federally funded infrastructure programs, and today’s resolution is another example of how we will continue to use our criminal and civil authority to ensure that government contractors are honest, upstanding corporations that do not waste federal monies.”
“This investigation illustrates our commitment to rooting-out illicit business practices aimed at defrauding the Government on public infrastructure projects for commercial gain,” said Douglas Shoemaker, Regional Special Agent-in-Charge, U.S. Department of Transportation Office of Inspector General (DOT OIG). “We will continue to work with our Federal, State, and local law enforcement and prosecutorial partners to investigate and hold accountable those who perpetrate fraud against the American taxpayer.”
“VJ Associates was hired by the Port Authority to assist with critical public infrastructure projects — and badly over-billed the agency. The Port Authority Office of Inspector General investigated, and today VJ Associates has agreed to plead guilty in federal court; to pay millions in fines and restitution; and to be debarred from doing business with a wide range of government agencies. Padding the bill is stealing from the public we serve, and today’s federal guilty plea makes it crystal clear — contractors that over-bill the Port Authority will face severe consequences,” said Port Authority of New York and New Jersey Acting Inspector General Michael Farbiarz.
In a criminal information filed today, the United States charges that, from at least January 2007 through August 2018, VJ Associates, Inc. of Suffolk—the largest and original VJ Associates entity—conspired with other VJ Associates entities and employees to pad bogus time charges on government construction contracts funded by the DOT, the State of New York and the Commonwealth of Massachusetts. As a result, the VJ Associates entities improperly received more than $1.2 million in state and federal taxpayer money. The improper billing included, for example, hours employees spent working on unrelated projects, time spent on administrative tasks and time doing no work. Under pressure from management, employees openly discussed improper billing as “juicing” and “tagging” hours in order to “maximize” bills on government projects and not “leave money on the table.” One employee summed up his billing practices to his colleague as a “shell game” and explained that, when management “gave him a bit of trouble” about how he billed his time, he fraudulently maximized his hours billed because “what the hell,” management “pay[s] me every two weeks,” and he was “not the boss.”
VJ Associates, Inc. of Suffolk has agreed to plead guilty, to make restitution to the DOT, New York and Massachusetts, and to pay a criminal fine of $530,000.
In addition, all of the VJ Associates entities—VJ Associates Inc. of Suffolk; VJ Associates of New England, Inc.; VJ Associates of New Jersey; and VJ Associates of Washington DC, Inc.—have entered into a civil settlement with the United States resolving allegations that they overbilled government contracts. Under the terms of that settlement, the VJ Associates entities have agreed to pay $2.6 million collectively to the United States and certain states and to permanent debarment from receiving federal funds.
The civil settlement with the United States arose from a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. In connection with today’s announced settlement with the United States, the whistleblower will receive 22.5% of the recovery.
The government’s resolution of this matter illustrates the government’s emphasis on combating fraud related to government-funded transportation projects. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Transportation, at 1-800-424-9071.
U.S. Attorney Lelling, Regional DOT-OIG SAC Shoemaker and Port Authority of New York and New Jersey Acting Inspector General Farbiarz made the announcement today. Assistant United States Attorneys Brian M. LaMacchia and Evan Gotlob of Lelling’s Office are handling the matter.
Updated October 29, 2020