This week’s Department of Justice “Catch of the Week” goes to Mountain States Contractors, an affiliated company of Jones Brothers. On Monday, the construction company has agreed to pay $2.25 million to settle charges of violating the False Claims Act by submitting false claims for payment in connection with the Department of Transportation’s Disadvantaged Business Enterprise (“DBE”) Program. See DOJ Press Release.
The DBE Program is designed to increase the participation of minority-owned businesses in state and local transportation projects. According to the government, Mountain States and its affiliated company, HMA, as the prime contractors on a federally-funded construction projects, used G&M Associates as a DBE certified sub-contractor. However, the government found that Mountain States had improperly “loaned” its employees to G&M to perform the DBE work on the projects. The entities claimed these employees as DBE employees to obtain payment for their work even though the prime contractors continued to provide their health insurance. The prime contractors also improperly leased equipment to G&M, which they then counted against the projects’ DBE goals.
As the government sees it, “fraud schemes like that committed by Mountain States harms the integrity of law abiding, small business contractors trying to compete for contracts on a level playing field.” The government made it clear with this settlement that it will aggressively pursue those companies “that choose to illegally take advantage of minority and women-owned business enterprise programs.”
The allegations originated in a whistleblower lawsuit by a former Mountain States employee under the qui tam provisions of the False Claims Act. The whistleblower will receive a whistleblower award of $500,000 from the proceeds of the government’s recovery.
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