Connecticut Construction Company Agrees to Pay $2.4 Million, Admits Making False Statements to U.S.

Deirdre M. Daly, United States Attorney for the District of Connecticut; Ted Doherty, regional Special Agent in Charge for the U.S. Department of Transportation’s Office of Inspector General; Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation; and Cheryl Garcia, Acting Special Agent in Charge, U.S. Department of Labor Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, New York Region, today announced that Plainville-based construction company Manafort Brothers Inc. (Manafort) will pay $2.4 million and implement internal reforms subject to independent monitoring to resolve a multi-agency joint criminal and civil investigation into alleged fraud committed by the company in connection with a public works project that commenced in 2007. As part of the resolution, Manafort admitted that it made false statements to the United States and the State of Connecticut Department of Transportation that disadvantaged business enterprises (DBE) performed subcontracted work on the federally and state funded relocation of Route 72 when, in fact, non-DBE performed the work.

The joint investigation revealed that, in 2007, Manafort submitted a bid to ConnDOT to serve as the general contractor on a federally and state funded project that involved a two-mile relocation of Route 72 in Bristol and Plainville, as well as the reconstruction of 2.4 miles of existing secondary roads. All qualifying bids were required to designate a percentage of work that would be performed by DBE, a requirement designed to provide socially and economically disadvantaged contractors, who have faced historical barriers to entry in the construction industry, with fair opportunities to compete for federally funded work.

In April 2007, the state of Connecticut Department of Transportation (ConnDOT) determined that Manafort was the apparent low bidder for the project with bid of approximately $39,663,000. According to the pre-award bid documents, Manafort represented to ConnDOT that a particular DBE, identified as “Company #1,” would perform work under the contract totaling approximately $3,064,372, or 70 percent of the overall DBE goal. In its pre-award submission package, Manafort stated that Company #1 would furnish all supervision, labor, and materials in respect to the work covered by the subcontract agreement. This work involved being responsible for the project’s reinforcing steel, materials for structural steel, furnishing a pedestrian bridge that would span the new roadway, and the majority of work for a large retaining wall adjacent to the new highway.

The contract for the project was officially awarded to Manafort in August 2007 based, in part, on its representations that Company #1 would perform the work described in Manafort’s pre-award submission. During the course of the project, it was determined Company #1 was not performing most of the work that Manafort claimed it was performing. In fact, the investigation revealed that Manafort was utilizing Company #1 essentially as a pass-through entity. That is, Manafort would negotiate with and supervise subcontractors that it procured to perform work that Company #1 was supposed to perform or procure and supervise. The government maintains that Manafort arranged to pay those contractors through Company #1 to skirt DBE regulations.

Under the terms of a non-prosecution agreement and civil settlement agreement with the government, Manafort represented that it has undertaken various remedial measures to ensure compliance with the DBE programs for its current and future federally funded construction projects. These measures include establishing a position for an Ethics and Compliance officer at Manafort, forming a DBE compliance committee that meets regularly to review and address DBE-related issues, mandating DBE compliance training for Manafort employees, deploying software to insure that DBE are qualified to perform the work that they bid, removing the Manafort personnel directly involved in the misconduct, and continuing to assist law enforcement in its investigation. Manafort has also agreed to pay a civil fine of $2,460,722.02.

“Manafort sought an unfair and illegal advantage over its competitors and deprived disadvantaged businesses of an opportunity to perform work on this taxpayer funded construction project,” said U.S. Attorney Daly. “The fine and the remedial measures mandated by this resolution demonstrate this office’s commitment to ensuring fairness, transparency, and equal opportunity in taxpayer funded projects. By entering into this agreement, Manafort recognized that it made false statements to the government and committed to change. While our investigation of individuals continues, we agreed to this corporate resolution in order to reflect the company’s efforts to reform itself and to avoid further damage to its many blameless employees. We thank the U.S. Department of Transportation-Office of Inspector General, Connecticut FBI, and the U.S. Department of Labor-Office of Inspector General for their excellent work on this important case.”

“The DBE program is a business assistance program of the U.S. DOT which helps economically and socially disadvantaged small businesses compete in the marketplace,” said Ted Doherty, regional Special Agent in Charge for the DOT’s Office of Inspector General. “DBE fraud harms the integrity of the program and adversely impacts law-abiding, small business contractors trying to compete on a level playing field. Working with our federal, state, and local law enforcement and prosecutorial partners, we will vigorously pursue those who violate the law and expose and shut down fraud schemes that adversely affect public trust and DOT-assisted programs.”

“Manafort Brothers Inc. sought to circumvent, misrepresent, and outright deceive the U.S. government,” said FBI Special Agent in Charge Ferrick. “Contractors that work on government-funded projects, such as those with disadvantaged business enterprise requirements, need to operate above-board or be excluded from the bidding process. Manafort has agreed to undertake remedial compliance measures and that is a step in the right direction. The DOT, DOL, and FBI will continue to investigate this matter until all outstanding issues are addressed.”

The non-prosecution agreement announced today addresses only the corporate criminal liability of Manafort, not potential criminal charges for any individual.

This matter is being investigated by the U.S. Department of Transportation-Office of Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor-Office of Inspector General, with assistance from the State of Connecticut Department of Transportation. The matter is being prosecuted by Assistant U.S. Attorneys Christopher Mattei and William Collier.