Two Michigan-based companies have agreed to pay $3.8 million to settle a federal lawsuit brought by the U.S. Department of Justice (DOJ) over allegations that they fraudulently made claims for Disadvantage Business Enterprise (DBE) credits. According to the complaint, the two related businesses, Cadillac Asphalt LLC (Cadillac) and Michigan Paving and Materials Co. (Michigan Paving), claimed these credits under the program for several transportation projects that were federally funded.
Cadillac and Michigan Paving are both subsidiaries of an Atlanta-based construction service and materials company, Oldcastle Materials, Inc.
The DBE program provides funding to businesses that are owned primarily by minorities and women in order to ensure that they are well represented on federally funded projects. The DOJ’s Civil Division Assistant Attorney General Stuart F. Delery said that making false claims under the program is an affront to both taxpayers and the businesses that the DBE is designed to help.
The DOJ suit alleged that Cadillac and MPM knowingly submitted false claims for DBE credits based on the companies’ use of asphalt for their projects, which they claimed was supplied by a DBE, BN&M Trucking Inc. In order to secure federal funding under the program, a contractor is supposed to make a good-faith effort to utilize DBEs in a portion of their projects. These goals require that the contractor employ a DBE to work independently on the project, with their own employees and their own equipment.
According to the DOJ, however, Cadillac and MPM used BN&M Trucking only as a pass-through that did not actually perform an independent function or supply the asphalt as claimed.
The projects the claims are based on were undertaken in Michigan between 2006 and 2010. One of the projects involved the 2008-2009 construction of a new runway at the Detroit Metropolitan Wayne County Airport. Two other companies involved in the runway project, Angelo Iafrate Construction Co. Inc and John Carlo Inc., settled a similar dispute for more than $1 million in 2010.
The lawsuit was a collaborative effort between the Department of Transportation (USDOT) Office of Inspector General, the U.S. Attorney’s Office for the Eastern District of Michigan, and the Justice Department’s Civil Division, Commercial Litigation Branch.
U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade said the effort was undertaken to recover the funds, which were obtained through false claims, for taxpayers. Michelle T. McVicker, regional Special Agent-in Charge of USDOT’s Office of Inspector General, said that the lawsuit was part of a commitment to “maintain the integrity” of the DBE program and promised to “continue to protect the taxpayers’ investment in our nation’s infrastructure from fraud, waste, abuse and violations of law.”
Page Pate is an accomplished trial lawyer with over 25 years of experience in criminal defense, civil litigation, and whistleblower representation. Page is listed in The Best Lawyers in America, Top 100 Lawyers by The National Trial Lawyers, and named to the list of Super Lawyers for the past 15 consecutive years. Page is a frequent expert legal analyst for local and national media and has served as an Adjunct Professor at the University of Georgia Law School. Read Page’s reviews on AVVO. Follow Page on Twitter @pagepate and on Linkedin.