Buffalo Man Convicted of Defrauding Disadvantaged Business Enterprise Program

BUFFALO, NY—U.S. Attorney William J. Hochul announced today that Oscar E. Rayford, 71, of Buffalo, New York, pleaded guilty before Chief U.S. District Judge William M. Skretny, to a felony mail fraud charge in connection with a scheme to defraud the federal disadvantaged business enterprise program. The charge carries a maximum sentence of 20 years in prison and a fine of $250,000.

U.S. Attorney Hochul described the Disadvantaged Business Enterprise (DBE) program as a federal program that awards a percentage of certain public works projects to businesses that are owned by minority or other disadvantaged business persons. The goal of the DBE program, which was first passed by Congress in 1998, is to increase the numbers of such disadvantaged persons involved in federal projects. The program is administered by state agencies in all 50 states of the country.

Regarding Rayford, Assistant U.S. Attorney Edward H. White, who handled the case, stated that between 2001 and 2007, Rayford made numerous fraudulent representations to the New York State Department of Transportation regarding his company, Rayford Enterprises, Inc. He claimed the company was a bona fide DBE that performed concrete work on five separate highway construction projects in Western New York. In truth, Rayford used Lafarge North America, a non-DBE manufacturer of ready-mix concrete, to perform all of the concrete work on the projects. While Rayford paid Lafarge for the work, his scheme permitted Rayford to keep a significant percentage of the federal dollars for himself. As part of the plea, Rayford agreed to forfeit $1.8 million as fraudulent proceeds from the scheme.

“The federal Disadvantaged Business Enterprise program is intended to level the playing field for all businesses wishing to do business with the government,” said U.S. Attorney Hochul. “The penalties for defrauding such a program are stiff including both jail time and restitution. My office will vigorously prosecute any business owner who attempts to take advantage of a program intended to benefit the disadvantaged among us.”

The plea was the culmination of an investigation on the part of the United States Department of Transportation's Office of the Inspector General, New York Office Region 2, under the direction of Special Agent in Charge Ned E. Schwartz; and the Federal Bureau of Investigation, under the direction of Special Agent in Charge James H. Robertson.

Sentencing is scheduled for January 5, 2011 at 9:00 a.m. EST, in Buffalo, NY, in front of Judge Skretny.