Dive Brief:
- Former U.S. Navy contractor Anthony Persaud has pleaded guilty to giving false statements to the government after he defrauded subcontractors out of more than $1.2 million on a $4.4 million Navy contract, according to PennLive. A date has not yet been set for sentencing, but Persaud faces up to five years in prison and a fine of $250,000.
- Prosecutors alleged that Persaud hired 17 subcontractors to work on warehouse renovations at the Naval Support Activity Center in Hampden Township, PA, and that when he submitted invoices to the Navy, he falsely certified that the subs had been paid.
- When Persaud did not pay his subcontractors, prosecutors said they walked off the project, leading the Navy to terminate Persaud’s contract. Persaud’s bonding company ended up paying the subcontractors, PennLive reported.
Dive Insight:
Under the terms of Persaud's plea agreement, prosecutors said he has agreed to pay restitution of $1.2 million and to forfeit prior payment in the same amount.
There have already been several other construction-related fraud cases this year. Earlier this month, three Pennsylvania steel executives accused of DBE fraud dodged jail time but were ordered to pay $1.3 million in fines.
Another DBE fraud appeared on the radar this year in New York when ING Civil, its CEO Corey Ingerson and two others paid $1 million to settle charges that they defrauded the federal DBE program by falsely asserting they were buying materials for a federal project from a minority supplier. And Colorado contractor MCC Construction Company pleaded guilty earlier this month to using other companies’ small business status to snag lucrative government contracts.
While these cases deal with federal or state governments, construction-related fraud is also a major problem in private sector. In fact, a Kroll report in November found the construction industry is second only to retail in the incidents of fraud. Kroll said 75% of construction, engineering and infrastructure companies have experienced a fraud incident in the past year.
