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Justice News

Department of Justice
U.S. Attorney’s Office
District of Rhode Island

FOR IMMEDIATE RELEASE
Thursday, September 11, 2014

Rhode Island Builder Pleads Guilty To Filing False Claims, Making False Statements To Collect More Than $500,000 In Federal Stimulus Funds






PROVIDENCE, R.I. – Donald F. Ihlefeld, 71, of Cranston, R.I., owner of Alhambra Building Company of Warwick, R.I., pleaded guilty in federal court in Providence on Wednesday to filing false claims and false documents in order to collect more than $500,000 in federal stimulus funds during a renovation project of a former textile mill building in West Warwick, announced United States Attorney Peter F. Neronha and Phillip Coyne, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General (HHS OIG).

An investigation by the Department of Health and Human Services, Office of Inspector General and the United States Attorney’s Office determined that Ihlefeld falsely represented that he paid employees locally prevailing wages for work performed during the renovation project of the former mill building into a walk-in health center. The construction project, known as the Cotton Shed Project, was funded by the American Recovery and Reinvestment Act of 2009, through grants provided by the U.S. Department of Health and Human Services, Health Resources and Services Administration.

 According to court documents and information presented to the court, in October 2010, Thundermist Health Center, a non-profit community health center, awarded a contract to Alhambra Building Company as construction manager for the Cotton Shed Project. As a condition of payment, as required by the Stimulus Program pursuant to the Davis-Bacon Act, Alhambra Building Company was required to pay laborers no less than locally prevailing wages plus benefits.  In bidding on the project, Alhambra noted its prior experience working on Davis-Bacon projects.

According to information presented to the court, in February 2011, Ihlefeld submitted an invoice for $521,022.60 for payment for construction work performed by his company from December 2010 through January 2011, knowing that he and his company failed to pay employees local prevailing wages. Further, between January 1, 2011 and April 13, 2011, Ihlefeld and his company submitted false certified payroll reports to Thundermist which misrepresented the identity of employees working on the project, total hours worked by employees and that it was paying Davis-Bacon wages to employees working on the project. According to information presented to the court, the employees to whom Alhambra failed to pay the appropriate wages were non-citizen Spanish speaking employees hired by Alhambra. Those employees were paid substantially less than the prevailing wage of approximately $34 per hour.

U.S. Attorney Peter F. Neronha commented, “Federal stimulus funds are intended to benefit both employers and employees, and through them, the broader economy.  Here, the defendant/employer wanted the benefit largely for himself, at the expense of his workers.  To make matters worse, the defendant pocketed federal funds at the expense of those employees who perhaps were least able to make meaningful protest.  Such conduct cannot stand.”
"What Donald Ihlefeld did is not only reprehensible, it’s illegal:  he underpaid laborers, billed the federal government as if he had paid prevailing wages, and then pocketed the difference for his own personal use,” said Special Agent in Charge Coyne, HHS OIG.  “We will continue to protect the integrity of federal grant dollars and hold those accountable for such fraudulent schemes.”

Filing a false claim and filing false documents are punishable by statutory penalties of up to 5 years in federal prison; a fine of up to $250,000; and a term of supervised release of up to 3 years.

Ihlefeld is scheduled to be sentenced by U.S. District Court Judge John J. McConnell, Jr., on December 2, 2014.

The case is being prosecuted by Assistant U.S. Attorney Dulce Donovan.

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Updated June 22, 2015