Another week and another case of DBE fraud resulting in significant fines. This one involves Connecticut construction firm that agree to pay $2.4 million in fines to settle the fraud allegations. The story follows an all to familiar “pass through” fact pattern: a construction company obtains transportation contracts, commits to performing work using certain DBE firms, and then those firms perform no commercially useful function and act as merely a pass through.
What is notable is what the firm did when it discovered the fraud. According to the firm’s settlement agreement, when the firm first learned of the alleged fraud, it self instituted a strong DBE compliance program. Because of the compliance program, the firm and its employees avoided prosecution. As I have blogged about before and discussed in my DBE compliance webinar, a strong DBE compliance program can be a mitigating factor if your firm is accused of DBE fraud.
While the $2.4 million fine is no doubt significant, it still beats jail time for the company executives.