RMD Holdings, LTD D/B/A Nationwide Fence And Supply Co. Settles Alleged False Claims Act Violations Involving Disadvantaged Business Enterprise Requirements In Federally Funded Projects
- Alleged Violations Involved Federally Funded Transportation Projects in Kentucky, Indiana, Illinois, Georgia and New York
LOUISVILLE, Ky. – RMD Holdings, Ltd d/b/a Nationwide Fence and Supply Co. (Nationwide) agreed to pay a $1,750,000 to settle allegations that it circumvented the Disadvantaged Business Enterprise requirements in federally funded construction projects. Of that amount, $416,000 will be paid pursuant to a stipulation of settlement being submitted for Court approval today by the U.S. Attorney’s Office for the Southern District of New York.
Today’s announcement was made by Acting U.S. Attorney John E. Kuhn, Jr., the U.S. Department of Transportation Office of Inspector General (DOT-OIG) and the Federal Highway Administration’s Office of Civil Rights.
“The Disadvantaged Business Enterprise program was created to ensure a level playing field for minority-owned and women-owned companies in federally funded transportation projects,” stated Acting U.S. Attorney Kuhn. “By circumventing the law, RMD undermined the goal of assisting disadvantaged companies in a market where the federal government invests many millions of dollars.”
According to the settlement agreement, beginning in 2008, the DOT-OIG began investigating Nationwide for improperly utilizing Disadvantaged Business Enterprise (DBE) companies as a pass through in order to satisfy the DBE requirements specified in federally funded construction projects. The projects were performed between October 20, 2006, through July 16, 2010, in Kentucky, Indiana, Illinois, Georgia and New York and most involved the installation of guardrails, security fencing, and cable barriers along interstates. In Kentucky, Nationwide installed high tension cable barriers in Barren, Bullitt, Hart and Jefferson Counties in June of 2008.
At the time, Nationwide was co-owned by two brothers: Micheal DeMil and Robert DeMil. The company was a specialty construction group that conducted business in 33 states with its principal office located in Chesterfield Township, Michigan. Many of the transportation projects on which Nationwide worked were funded in whole or in part by the United States, and each project required a certain percentage of DBE participation. Nationwide was not a certified DBE.
The DBE program generally requires that recipients of federal highway funds establish a program to assist women owned or minority owned businesses to compete for work on federally funded construction projects. Recipients of these funds often accomplish this goal by requiring that each construction project include a certain percentage of participation by a DBE company. This percentage can be met by contractors utilizing DBE subcontractors to either perform work on the project or to supply materials.
The United States contends that, during the period from October 20, 2006, through July 16, 2010, Nationwide misrepresented how it utilized Sallie’s Wholesale Construction, Inc. (a DBE company) and Access Control Company, Inc. (a DBE). Nationwide claimed that Sallie’s Wholesale Construction, Inc. (SWC) was a DBE providing materials on projects in Indiana, Kentucky and Georgia. In reality, SWC was not acting as a material supplier and did not have in its possession those materials Nationwide needed for its projects. Instead, Nationwide would negotiate a price with non-DBE material suppliers and then request SWC to contract with the non-DBE material supplier so that it appeared SWC was furnishing the materials to Nationwide=s job site. SWC never touched the material purchased from the true material suppliers and was simply acting as an extra participant in the procurement of materials. In the case of Access Control Company, Inc. (Access), Nationwide represented that Access would furnish materials on a project in Illinois when, in fact, Access never provided materials and never agreed to act as a pass-through for materials. The government’s investigation did not find any wrongdoing by Access and Access cooperated fully with the government’s investigation.
Nationwide has also agreed to enter into an administrative settlement and three year compliance agreement with the United States Department of Transportation, Federal Highway Administration (FHWA). This agreement requires Nationwide, in part, to undertake remedial measures including: (1) the adoption and implementation of an Ethics Code and Corporate Compliance Program; (2) the appointment of a Corporate Compliance Officer ; and (3) the retention of an independent Monitor to evaluate the Company's performance of this Agreement and to submit periodic reports directly to the FHWA.
This settlement agreement is neither an admission of liability by Nationwide or its co-owners, nor a concession by the United States that its claims are not well founded.
This case was investigated by the U.S. Attorney’s Offices for the Western District of Kentucky, Northern District of Georgia, Middle District of Georgia, Southern District of Georgia, Southern District of Indiana, Central District of Illinois, and the Southern District of New York. The matter was prosecuted by Assistant United States Attorney Benjamin S. Schecter in the Western District of Kentucky, Trial Attorney Kelley Hauser with the U.S. Department of Justice, Civil Division, Commercial Litigation Branch, Frauds Section, The U.S. Attorney’s Office for the Southern District of New York and was investigated by U.S. Department of Transportation Office of Inspector General (DOT-OIG) and the Federal Highway Administration’s Office of Civil Rights.