Judgment Granted Against Two Individuals Who Defrauded the Government Under U.S. Forest Service Contracts

United States Attorney Randolph J. Seiler announced that civil judgment has been entered against Aurelio Munoz-Escalante, d/b/a Black Hills Thinning, of Rapid City, South Dakota, and Sergio Munoz-Escalante, d/b/a SM Logging & Services, of Hermosa, South Dakota, in the amounts of $759,999.12 and $458,374.02, respectively.

The monetary awards consist of treble damages and 44 separate penalties for employing undocumented aliens in U.S. Forest Service contract work related to thinning unhealthy timber in the Black Hills National Forest. Federal contracts do not permit work to be done by undocumented aliens. These contractors submitted invoices for payment, which falsely certified that the work was performed by legal workers.

The False Claims Act imposes treble damages and penalties liability on persons and companies who knowingly submit false claims to the government. 

The U.S. Attorney’s Office places a high priority on criminal and civil cases involving all types of fraud committed against the government.  As a result of investigations conducted by the U.S. Immigration and Customs Enforcement’s Homeland Security, in cooperation with the U.S. Forest Service, Rapid City Police Department, Pennington County Sheriff’s Office, South Dakota Division of Criminal Investigation, Custer County’s Sheriff’s Office, U.S. Department of Labor, and other federal and state law enforcement agencies, the U.S. Attorney’s Office was able to obtain criminal convictions for this fraudulent conduct. The civil lawsuit followed, which resulted in this judgment.

Civil settlements (totaling $455,000) were reached in November 2014 involving five other individuals: Angel Munoz-Escalante and Barbara Munoz, d/b/a Munoz Logging and Construction Company ($375,000); Rogelio Escalante Sr., d/b/a Escalante Logging and Services ($50,000); Rogelio Escalante Jr., d/b/a Escalante Logging and Thinning Company ($15,000); and Raul Munoz, d/b/a R Munoz Thinning ($15,000)).

All of these False Claim cases involving fraud committed against the U.S. Forest Service were handled by Assistant U.S. Attorney Cheryl Schrempp DuPris. The total civil recovery obtained by the United States Attorney’s Office amounts to $1,673,373.10.