In several previous posts, we have talked about the growing risk to contractors that violate the federal, state, and local D/M/WBE programs. This summer we saw the sentencing of the remaining defendants in the infamous Schuykill Products case. That case was a $136 million DBE scam that the FBI called the largest DBE fraud ever.
Today, the Wall Street Journal, the New York Times, and others are reporting about a DBE fraud indictment that could far exceed Schuykill Products in size. The case involves DCM Erectors, Inc., who was the steel erector for the 1 World Trade Center project. According to the reports, DCM engaged in a classic DBE pass through scheme in order to obtain nearly $1 billion in contracts from the Port Authority of NY/NJ. The indictment seeks to hold the CEO of DCM personally liable for the fraud.
While the case is a reminder to all contractors to make sure their DBE compliance procedures are in check, those performing work in the NY metropolitan area should pay particular attention. This case was brought by the U.S. Attorney for the Southern District of New York. In recent years, the Southern District of New York has been a hotbed for DBE fraud prosecutions, including several high profile cases that have resulted in guilty pleas and convictions.