Dive Brief:

• A former U.S. Navy contractor, Andrew Persaud, has been indicted by a federal grand jury for defrauding 17 subcontractors out of more than $1.2 million on a $4.4 million renovation contract after allegedly lying to the Navy that the subs had been paid, PennLive reported.
• The Navy paid Persaud, who faces 10 years in prison if convicted, based on his certifications of payment to subcontractors, but workers began walking off the job shortly thereafter due to nonpayment.
• The Navy is seeking full restitution of the $1.2 million paid to Persaud for work on the Naval Support Activity Center in Hampden Township, PA. An arraignment date has not yet been set. 

Dive Insight:

There was some good news for subcontractors on the project: The Navy required Persaud’s company, Persaud Companies, Inc., to furnish a bond to cover labor and materials, so all the workers have now been paid.

This case is yet another instance of contractor fraud on public projects. Recently, three Pennsylvania construction executives pleaded guilty to setting up a sham company as a disadvantaged business enterprise n order to win federally funded transportation projects, and were able to perpetrate their $19 million fraud for 16 years before being arrested.

And a Minnesota contractor is currently under federal investigation for fraud after allegedly creating his own payment and performance bonds in order to win publicly funded construction projects.