Feds Seize $20 Million from Contractor

BROOKLYN (CN) – Federal prosecutors seized $20 million from Schiavone Construction Co., claiming the company earned it by lying about its compliance with mandatory hiring goals for women- and minority-owned subcontractors.




     Prosecutors say Schiavone hired women- and minority-owned businesses not to perform the work, but to collect a percentage of contracts that Schiavone passed off to a different company.
     Between 2004 and 2009, the New York City Department of Environmental Protection hired Schiavone for two capital projects on the Croton Filtration Plant, worth a combined $330 million.
     And from 2002 and 2009, the Metropolitan Transit Authority hired the company to rehabilitate the Times Square subway station and build the structural box for the South Ferry station, projects that cost a total of $351 million.
     By accepting public contracts, Schiavone had to comply with the New York State Minority and Women-owned Business Enterprises program, enacted in 1988 to mandate that all state and federally funded construction projects hire inclusively.
     Companies must submit “periodic utilization reports” notifying the lead agencies about their progress in reaching these goals.
     “Schiavone falsely represented in the reports that specific amounts of contract funds had been paid to certain MWDBE subcontractors that had performed a ‘commercially useful function’ for that project, when in fact, as Schiavone well knew, most or all of the specified work had actually been performed by non-MWDBE companies,” the complaint states.
     “These misrepresentations enabled Schiavone to falsely inflate its MWDBE company participation for each of the four DEP and MTA projects to meet its minority percentage goal required under each contract.”
     This practice “inflated the actual MWDBE company participation for the DEP and MTA projects by an aggregate approximate amount of at least $20,000,000.”

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