Evans Landscaping Officials Convicted of Defrauding City, State 'Small Business' Programs
CINCINNATI – A jury has convicted Evans Landscaping, Inc. and company executives on all counts charged in a fraud case.
The company; the owner of Evans Landscaping, Inc., Doug Evans; and the vice president of operations for Evans Landscaping, Jim Bailey, were convicted of defrauding the City of Cincinnati and other public entities through fraudulent small business contracts.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Todd Wickerham, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, and Ohio Attorney General Mike DeWine announced the verdict reached today following a trial that began on November 9.
Evans Landscaping is an Ohio company headquartered in Cincinnati that performs demolition, site-work, grading, hauling, recycling and landscaping services. Given the size and ownership of the company, Evans Landscaping does not qualify as a small business enterprise (SBE).
In order to qualify for the City of Cincinnati’s SBE program, a company must be independently controlled, operated and managed by a qualifying individual whose net worth does not exceed certain limits. The program also requires that the company be directly responsible for providing the supplies or services to the City without relying upon others who are not owners or employees of the company.
Similarly, the State of Ohio has established an Encouraging Diversity, Growth, and Equity program (EDGE) for economically disadvantaged businesses that are at least 51% owned and controlled by an economically disadvantaged person. The size of the business must not exceed the definition of a “small business.”
In 2008, the defendants (along with others) established, controlled and operated a demolition company, Ergon Site Construction, LLC, for the benefit of Evans Landscaping. Ergon’s president and owner, Korey Jordan, had no prior experience in the field but provided IT services for Evans Landscaping. Ergon (with the help of the coconspirators) fraudulently obtained certifications as an SBE and EDGE contractor while concealing Evans Landscaping’s involvement in and control over Ergon.
Evans and Evans Landscaping provided startup funds to Ergon. Jordan did not make any capital contributions to the establishment of the company.
Evans Landscaping personnel prepared and filed the legal documentation to register Ergon as an LLC, created the company’s name and logo, ordered Ergon apparel, and bought equipment labels with Ergon’s logo.
Jordan performed little work for Ergon and had little, if any, actual control over Ergon’s management, finances and operations. He was not permitted to make certain decisions or take certain actions without Doug Evans’ approval.
Evans paid Jordan a monthly salary through the Ergon payroll and Evans Landscaping employees handled virtually all of the accounting and office management functions of Ergon. For example:
- Ergon’s bookkeeping was kept by Evans Landscaping employees;
- Evans Landscaping personnel had Jordan sign blank Ergon checks for the employees to use;
- Evans Landscaping was a guarantor for Ergon’s line of credit and arranged for the purchase of two Mack Trucks in Ergon’s name;
- At various times, Ergon’s business office and address was located on property owned by Evans or one of his companies;
- Evans, Bailey and others controlled hiring and firing by Ergon, and at one point, Evans terminated the Ergon health care plan;
- Evans Landscaping housed, maintained and dispatched the vehicles and equipment in Ergon’s name, which was used by both companies; and
- Evans Landscaping officers and employees directed virtually all field and construction operations of Ergon, including on-site supervision and the managing of Ergon field workers.
From 2011 through 2014, Ergon bid on and received more than 100 residential demolition contracts with the City of Cincinnati, totaling approximately $1.9 million, by leveraging Ergon’s fraudulent SBE status.
In a similar fashion, during the same timeframe, Evans Landscaping bid on State demolition and construction projects – particularly public school, university and municipal projects – by claiming Ergon would provide a percentage of the services and receive part of the funds to be paid.
On at least one occasion, Evans Landscaping listed a different subcontractor, won the contract, and performed the work without using, paying or even notifying the EDGE subcontractor named.
Specifically, the company and both men were convicted of two counts of conspiracy to commit wire fraud and three counts of wire fraud. The two men were also convicted of one count of misprision of a felony.
Korey Jordan (president of Ergon), Maurice Patterson (former CFO of Evans Landscaping), John Dietrich (former CFO of Evans Landscaping) and Michael Moeller (former manager at Evans Landscaping) have pleaded guilty in relation to this case.
U.S. Attorney Glassman commended the investigation of this case by the FBI’s Southern Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation, as well as Assistant United States Attorney Timothy S. Mangan and Deputy Criminal Chief Emily N. Glatfelter, who prosecuted the case.
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