Recent announcements from the Department of Transportation’s Inspector General show that authorities’ appetite for DBE fraud cases is not letting up. On July 7, 2015, the IG announced it had reached a settlement with a certified DBE firm in Georgia that submitted false claims on a DOT funded highway project. And, on June 30, 2015, the IG announced it had reached an agreement with a Washington contractor that submitted payment applications showing work was done by a DBE firm when it was actually performed by a non-DBE firm.
Prosecutors’ Shifting Focus
In both cases, prosecutors brought claims under the civil false claims act. Unlike mail and wire fraud claims, which are two of the most common criminal claims brought in DBE fraud cases, prosecutors do not have to prove actual knowledge to show a violation of the civil false claims act. Under the false claims act, proof of specific intent to defraud the government is not required. Prosecutors can prove a false claims act violation by showing that a contractor acted with “deliberate ignorance” or “reckless disregard.” Therefore, the burden of proof in such claims is often lower and demonstrating liability easier.
Both cases demonstrate the need for a strong DBE compliance program designed to identify potential issues before authorities due. For more information about DBE fraud and DBE compliance, download our free webinar.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
