Thursday, March 15, 2012

Details Emerge In Chicago Set Aside Fraud Charges

Details of the methods used by three Chicago area minority set aside subcontractors accused by federal prosecutors of sham involvement on major public construction projects including the North Avenue Bridge, and the Chicago Transit Authority Red Line and Brown Line projects, are emerging from documents filed in court along with the charging papers. According to e-mail documents exchanged between employees of the accused businesses, and between the accused subcontractors and McHugh Construction, McHugh employees with the needed skills were shifted off the McHugh payroll onto the subcontractors’ payrolls when the subs were active on site, and then shifted back to McHugh’s payroll as the subcontractors’ work neared completion.  Foremen, superintendents, carpenters, laborers, equipment operators and oilers were involved in this payroll transfer, according to an FBI affidavit.

Certain e-mails reflect the understanding between accused fraudulent set aside subcontractor ASI and its concrete suppliers that “we aren’t going to worry about the name change from McHugh to Perdel Contracting on delivery tickets, so long as the billing gets billed through Perdel.”  The affidavit goes on to allege that ASI’s subs and suppliers took technical questions directly to McHugh “because ASI’s project managers did not have the ability to answer the questions.”

Apparently cross checking employee names and addresses between general contractor payrolls before and after a set aside contractor is on site with the set aside contractor’s payrolls during the set aside’s on site work should be a first order priority of Mayor Emmanuel’s promised new $11 million fraud prevention program.

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