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.

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.

Feds Moving Ahead With Women Owned Set Asides

The SBA is implementing websites for self certification of women owned businesses, which could begin receiving federal government business in the first quarter of 2011, if they complete the certification process now. The set aside program will go into effect under new rules beginning February 4, 2011. Seminars are already being offered on implementation of the Women’s Contracting Rule.