Dive Brief:

• The owners of two Kutztown, PA, construction companies were indicted in federal court this week for allegedly defrauding the U.S. Department of Transportation of $18.7 million.

• The indictments alleged the owners of Weber Steel Service set up a sham corporation that they used to win federally funded highway construction projects through the DOT Disadvantaged Business Enterprise program. Because Weber Steel Service is not minority- or woman-owned, it did not qualify for the contracts.

• According to the indictment, the owners enlisted a female partner to become the owner of the shell company, Karen Construction, which secured the contracts, used Weber Steel resources for the work, and shared the profits with that firm’s owners. She was indicted on similar charges.

Dive Insight:

Each of the three defendants faces up to five years in prison and fines of up to $250,000. Weber Steel Services is also named in the indictment, and could be fined $500,000 and slapped with five years of probation.

Federal prosecutors said the scheme lasted from around April 1995 through November 2011 and involved 224 federally funded projects.

The federal DBE program mandates that at least 10% of federal funding for highway construction be allotted to small businesses that are "economically and socially disadvantaged."