Upstate New York Construction Company And Individuals To Pay More Than $1 Million To Settle Fraud Claims
ING Civil and RAMSCO Collaborated with a Disadvantaged Business Enterprise to Submit False Filings to the Government in Violation of False Claims Act
ALBANY, NEW YORK – An upstate New York construction company and three individuals have paid $1,012,000 to resolve claims that they defrauded a government program designed to benefit women- and minority-owned contractors, announced United States Attorney Richard S. Hartunian. The settling parties are Watervliet-based ING Civil, Inc. and its owner, Corey Ingerson; James Beaudoin, who is the former president of Watervliet-based Rexford Albany Municipal Supply Company, Inc. (RAMSCO); and former RAMSCO salesman John Leary.
The United States Department of Transportation (DOT) has promulgated regulations intended to provide opportunities for businesses owned by socially and economically disadvantaged individuals to perform work on projects financed, at least in part, by the federal government. DOT also administers a Disadvantaged Business Enterprise (DBE) program that requires state and local governments receiving federal funding to establish goals for the participation of DBEs on federally-funded projects. A contractor may claim credit for a DBE’s participation on a project only if the DBE serves a "commercially useful function." A DBE performs a commercially useful function when it is responsible for execution of a distinct element of work on a contract. A DBE does not serve a commercially useful function if its role is limited to that of an extra participant to a transaction through which funds are passed to create the impression that members of a historically disadvantaged group worked on a contract.
The settlements resolve the following allegations:
In 2009, when preparing to submit a bid to the City of Cohoes to reconstruct the Bridge Avenue Bridge over the Mohawk River, Corey Ingerson spoke with John Leary to see if RAMSCO would provide a quote for materials that ING Civil would need if awarded the project. Leary explained to Ingerson that RAMSCO could both provide the materials for the project and bill them through a DBE, American Indian Builders & Suppliers, Inc. (AIB), to help ING Civil satisfy the project’s DBE goals. Shortly thereafter, Ingerson learned that ING Civil had been awarded the project, and he signed a DBE Utilization Worksheet representing that AIB would supply $306,285 worth of materials for the project. When Ingerson signed the DBE Utilization Worksheet agreeing to work with AIB, he knew virtually nothing about the company and had not had any substantive discussions with anyone from AIB about the materials needed for the project. All of Ingerson’s discussions on that topic were with RAMSCO officials. ING Civil ended up purchasing all materials on its DBE Utilization Worksheet from RAMSCO, rather than AIB.
In November 2010, after work on the Bridge Avenue Bridge was substantially complete, local government officials asked Ingerson to document ING Civil’s DBE expenditures on the project. Ingerson then contacted Leary to explain that ING Civil did not have the documentation necessary to support a claim that it had purchased materials from AIB, as it had represented it would do on its DBE Utilization Worksheet. At that time, Leary and Ingerson decided to prepare documents to create the appearance that the materials ING Civil purchased from RAMSCO had been purchased from AIB. Over the next few months, officials from ING Civil, RAMSCO, and AIB exchanged invoices, purchase orders and other documents to make it appear as though ING Civil had purchased materials from AIB that it had actually purchased from RAMSCO. In February 2011, ING Civil submitted electronic documentation to the City of Cohoes falsely representing that it had satisfied its DBE goals on the project by working with AIB.
In the settlement agreement, Ingerson admitted that he made a false filing indicating that materials for the Bridge Avenue Bridge project had been supplied by AIB when, at the time he made that filing, he knew the materials had been provided by RAMSCO, which was not a DBE. Beaudoin (for RAMSCO) and Leary admitted that they took steps to aid ING Civil in making that false filing. The parties also acknowledged that their conduct violated the False Claims Act.
United States Attorney Hartunian said: "The Disadvantaged Business Enterprise program was established to help small businesses owned by minorities and women obtain work on federally funded projects. As these and our other recent DBE fraud settlements demonstrate, this office will aggressively pursue individuals and entities that undermine this important objective."
"As evidenced by the settlement agreements entered into by ING Civil, Inc., Corey Ingerson, James Beaudoin, and John Leary, we remain steadfast in our commitment to maintaining the integrity of the United States Department of Transportation’s Disadvantaged Business Enterprise program," said Douglas Shoemaker, regional Special Agent-in-Charge of DOT’s Office of Inspector General. "Working with the Secretary of Transportation and other DOT leaders, and our law enforcement and prosecutorial colleagues, we will continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse and violations of law."
In August 2015, HD Supply Waterworks, a company that acquired RAMSCO, paid $4,945,000 to resolve allegations that it also enabled several prime contractors to represent falsely that AIB had performed commercially useful functions on federally-funded contracts. Each of these investigations and settlements were the result of a coordinated effort among the United States Attorney’s Office for the Northern District of New York, the United States Department of Transportation’s Office of Inspector General and the United States Environmental Protection Agency’s Office of Inspector General, with the assistance of the Federal Bureau of Investigation and the New York State Department of Transportation’s Investigations Bureau. The United States was represented in each matter by Assistant United States Attorney Adam J. Katz.