Chicago Grand Jury Returns Minority Set Aside Indictments

A federal Grand Jury in Chicago has followed up U. S. Attorney criminal informations with indictments of Elizabeth Perino and Anthony Capello, owners of two sham minority subcontracting firms which posed as woman owned businesses on City of Chicago construction contracts, but passed through more than $200 million of actual work to non-monority or woman owned firms, in violation of set aside rules.

Tracking criminal informations unsealed last month, the indictments accuse three subcontractors on City of Chicago contracts worth millions of dollars of defrauding the taxpayers by falsely claiming to have worked as certified woman owned or disadvantaaged businesses for which a percentage of work is set aside in City of Chicago contracting requirements. Perdel Contracting and Accurate Steel Installers, owned by Elizabeth Perino of Lockport and Diamond Coring, owned by Anthony Cappello of Homer Glen, are accused of submitting false invoices and purchase orders in support of minority and disadvantaged business set aside requirements on City of Chicago contracts with McHugh Construction Company. McHugh has not been accused of wrongdoing in the criminal charges.

Responding to the indictments, Chicago Mayor Rahm Emmanuel pledged to appropriate $11 million for better oversight of the city’ construction set asides.

Fraudulent “Disadvantaged” Businesses Taint City Set Aside Program

Three subcontractors on City of Chicago contracts worth millions of dollars have been accused in federal criminal complaints of defrauding the taxpayers by falsely claiming to have worked as certified woman owned or disadvantaaged businesses for which a percentage of work is set aside in City of Chicago contracting requirements. Perdel Contracting and Accurate Steel Installers, owned by Elizabeth Perino of Lockport and Diamond Coring, owned by Anthony Cappello of Homer Glen, are accused of submitting false invoices and purchase orders in support of minority and disadvantaged business set aside requirements on City of Chicago contracts with major Chicago area construction businesses.

In addition to evidencing how deeply political corruption runs through Chicago and Illinois public contracting, these criminal informations, unsealed last week, demonstrate that the laudable policy goal of making the American construction industry more minority and gender inclusive is often corrupted in the execution, to the considerable disadvantage of both the public and those honest business owners who go to the trouble of obtaining proper minority or woman owned, and disadvantaged business certifications from government agencies, and then submit genuine bids to general contractors to work on federal, state and local government projects.

Defense Procurement Changes Reflect Obama's Fixed Price Contracting Preference

The Senate Armed Services Committee today unanimously approved Senate Bill 454, which seeks to put a stop to weapons system cost overruns by imposing severe restrictions on the use of cost plus contracting. While weapons research, development and engineering may be thought to be more complex than construction of government buildings, the unanimous committee action sending S. 454 to the Senate floor reflects the new administration's preference for fixed price contracting over more innovative modern forms of procuring government construction projects. Like the fixed price contracting requirements in the American Recovery and Reinvestment Act, this legislation demonstrates the direction the Obama administration is taking towards all government contracting, and should be an omen for those of us in the construction industry who are involved in bidding on these jobs.