Company Convicted of Fraud and False Statements Scheme on Big Dig Contract

BOSTON, MA—A company doing work on a Big Dig contract pled guilty today in federal court with submitting false claims on a federal highway project. The scheme involved the systematic, fraudulent billing of apprentice workers at the higher rate of pay for journeymen, resulting in continuing overpayments by the Central Artery/Tunnel (CA/T) project to the contractor. In addition, the scheme also involved fraud against the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program.

Acting United States Attorney Michael K. Loucks, Theodore L. Doherty III, Special Agent in Charge of the Department of Transportation Inspector General’s Office in New England, and Marjorie Franzman, United States Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations and Warren T. Bamford, Special Agent-in-Charge of the Federal Bureau of Investigation - Boston Division announced today that ADAMS MANAGEMENT GROUP, INC. (AMG) pled guilty to a single-count Information with conspiracy to defraud the United States with respect to claims on a federal highway project.

At the plea hearing, the prosecutor stated that, beginning in 2002 through 2006, AMG, a subcontractor to MCCOURT CONSTRUCTION CO., engaged in a scheme to over-bill the Central Artery/Tunnel Project by falsely categorizing apprentice workers as journeymen on work performed on the C17AA Tunnel Finishes Contract. The work, which was overbilled, was performed on a time and materials basis, which meant the subcontractor was paid for the time worked by each employee, as opposed to a fixed price for the work under contract. In addition, AMG obstructed the Department of Transportation’s DBE program since AMG was the minority subcontractor, but the work was substantially performed by ISLAND LATH AND PLASTER, INC., a company which has been convicted previously of the same scheme and which also prepared the bills submitted by AMG to the CA/T project.

AMG faces a fine of up to $500,000 and a term of probation of up to five years, as well as a mandatory $400 special assessment. U.S. District Court Judge Patti B. Saris set the sentencing for September 14, 2009 at 2:00 p.m.

MCCOURT CONSTRUCTION and two of its managers have previously been convicted in federal court regarding the same overbilling scheme. In addition, three individuals employed by Massachusetts Electric Construction Company also, a MCCOURT CONSTRUCTION subcontractor on the tunnel finishes contract, have previously been convicted in federal court for submitting false claims in connection with overbilling apprentice labor at journeyman rates.

The case was investigated by the Department of Transportation, Inspector General’s Office, the Department of Labor/Office of Labor Racketeering, and the Federal Bureau of Investigation, New England Field Division. It is being prosecuted by Assistant U.S. Attorney Eugenia M. Carris of Loucks’ Public Corruption Unit.