Monroe Construction Company, Its President, and Four Co-Defendants Sentenced for Government Contract Fraud
CHARLOTTE, NC—Today, U.S. District Judge Max O. Cogburn, Jr. sentenced Boggs Paving, Inc. (Boggs Paving), its president and part-owner, Carl Andrew “Drew” Boggs, III, and four others on charges stemming from the illegal use of a disadvantaged business enterprise to obtain government-funded construction contracts, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.
Marlies T. Gonzalez, Regional Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), Region IV; John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service—Criminal Investigation (IRS-CI), join U.S. Attorney Rose in making today’s announcement.
Drew Boggs, 51, of Waxhaw, N.C. was sentenced to 30 months in prison and two years of supervised release, and received a $15,000 fine after pleading guilty to conspiracy to defraud the United States Department of Transportation (USDOT) and money laundering conspiracy. Kevin Hicks, 44, of Monroe, N.C., was sentenced to two years of probation and was ordered to pay a $2,000 fine, after pleading guilty to conspiracy to defraud USDOT and money laundering conspiracy. Greg Miller, 61, of Matthews, N.C., was sentenced to 15 months in prison and two years of supervised release, Greg Tucker, 42, of Oakboro, N.C., was sentenced to two years of probation and was ordered to pay a $1,000 fine, and John Cuthbertson (a/k/a Styx Cuthbertson), 70, of Monroe, was sentenced to two years of probation, three of which will be served in home confinement, and was ordered to pay a $2,000 fine. They each pleaded guilty to one count of conspiracy to defraud USDOT. Judge Cogburn sentenced the company, Boggs Paving, to pay a $500,000 fine. A fifth codefendant, Arnold Mann, 56, of Fort Mill, S.C., was previously sentenced to a term of probation, after pleading guilty to one count of conspiracy to defraud USDOT.
According to documents filed in the case, statements made in court and today’s sentencing hearings, from 2003 through 2013, Boggs Paving, Drew Boggs, and their codefendants engaged in a scheme by which they fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (DBE), or a small business enterprise (SBE) would perform and be paid for portion of the work on those contracts. The purpose of USDOT’s DBE program is to increase the participation of such businesses in federally-funded public construction and transportation-related projects.
According to court records, Boggs Paving and the codefendants used Monroe-based Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler and a certified DBE and SBE, to help obtain the government-funded construction contracts. Court documents show that the codefendants took steps to conceal their fraud, including running payments for the work performed through a nominee bank account in Styx’s name and using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks, among others. According to court records, the majority of the money was funneled back to Boggs Paving and its affiliates, and John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and DBE status to be used by Boggs Paving.
Court records show that from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth over $87.6 million. Boggs Paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $375,432 for actual work on these contracts, court records show.
In court today, Judge Cogburn described the DBE program as laudable and emphasized the imortance of deterrence in sentencing the defendants.
The investigation of the case was handled by USDOT-OIG, FBI and IRS. Assistant United States Attorneys Jenny G. Sugar and Michael E. Savage of the U.S. Attorney’s Office in Charlotte handled the prosecution.