$87M Fraud indictment for US construction company
FBI Charlotte Division
U.S. Attorney’s Office July 24, 2013
Western District of North Carolina
Monroe Construction Company and six co-conspirators indicted for government contract fraud
Government alleges the defendants lied to obtain more than $87 million in federally funded construction contracts and used nominee bank account to conceal the fraud
CHARLOTTE, NC—A criminal indictment charging a Monroe-based construction company, its president, and owner and his co-conspirators with government procurement fraud was returned by a grand jury today in U.S. District Court, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.
The 29-count indictment charges Boggs Paving Inc., Carl Andrew Boggs, III (a/k/a Drew Boggs), 49, of Waxhaw, North Carolina; Kevin Hicks, 42, of Monroe, North Carolina; Greg Miller, 59, of Matthews, North Carolina; Greg Tucker, 40, of Oakboro, North Carolina; John Cuthbertson (a/k/a Styx Cuthbertson), 68, of Monroe; and Styx Cuthbertson Trucking Company Inc., of Wingate, North Carolina; with conspiracy to defraud the United States Department of Transportation (USDOT), conspiracy to commit wire fraud, conspiracy to commit mail fraud, money laundering conspiracy, money laundering, and wire fraud for a scheme that lasted more than 10 years and involved more than $87 million in government contracts. All the defendants except Greg Tucker are also charged with mail fraud.
Marlies T. Gonzalez, Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), Region IV; John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CI), join U.S. Attorney Tompkins in making today’s announcement.
According to allegations contained in the indictment, beginning in 2003 and through the present, Boggs Paving Inc. (“Boggs Paving”) fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise (“DBE”) or a small business enterprise (“SBE”) would perform and be paid for portion of the work on such contracts. USDOT’s DBE program provides a vehicle for increasing the participation of disadvantaged business enterprises in federally funded transportation-related projects. The indictment alleges that Styx Cuthbertson Trucking Company Inc. (“Styx”), a road construction hauler based in Monroe, North Carolina, owned by Styx Cuthbertson, was a certified DBE and SBE used by the defendants as a “pass through” entity to obtain such contracts.
To create the illusion that Styx was doing and being paid for the necessary work, the indictment alleges that, among other things, the conspirators ran payments through a nominee bank account in Styx’s name but funneled checks back to Boggs Paving and its affiliates, which were not DBEs or SBEs but were doing the actual work. The indictment further alleges that each time a deposit was made into the nominee account as supposed payment for construction work performed by Styx, a Boggs Paving employee would immediately cut a check from that Styx nominee account to the Boggs entity or another firm that had actually performed the work. In return, according to allegations contained in the indictment, Styx Cuthbertson received a kickback for allowing his name and DBE status to be used by Boggs Paving.
The indictment further alleges that the defendants took careful steps to conceal their fraud. For example, according to allegations contained in the indictment, the defendants made false and misleading statements to both the North and South Carolina Department of Transportation on DBE applications, renewal statements, and certifications. The indictment alleges that the defendants submitted bids purporting to be from Styx when in fact they were from Boggs Paving. The indictment also alleges that the defendants further tried to conceal the fraud by using magnetic decals bearing the “Styx” company logo to cover the “Boggs” logo on company trucks to create the appearance that Styx was the company performing the work. The indictment alleges that Boggs Paving also performed numerous clerical functions in Styx’s name, including creating quotes on Styx letterhead for construction contracts; drafting fraudulent contracts between Boggs Paving and Styx for subcontract work purportedly performed by Styx; creating invoices for work supposedly done by Styx; and giving Styx Cuthbertson pre-prepared documents (including quotes, contracts, and DBE reports) for his signature.
The indictment alleges that from June 2004 through the present, Boggs Paving was the prime contractor on 35 federally funded contracts and was a subcontractor for two additional contracts worth more than $87.6 million. Boggs paving claimed DBE credits of approximately $3.7 million on these contracts for payments purportedly made to Styx. Styx only received payments of approximately $375,432 for actual work on these contracts, all according to the indictment.
The conspiracy charge carries a maximum of five years in prison. Each wire and mail fraud count carries a maximum of 20 years in prison. The money laundering conspiracy charge carries a maximum of 20 years in prison. The money laundering charge carries a maximum of 10 years in prison. Each of the charges also carries a $250,000 fine.
The defendants’ initial appearances in federal court have been set for August 20, 2013.
The charges contained in the indictment are allegations. The defendants are presumed innocent unless and until they have been proven guilty beyond a reasonable doubt in a court of law.
The investigation of the case was handled by DOT-OIG, FBI, and IRS. The case is being prosecuted by Assistant United States Attorney Jenny Sugar of the U.S. Attorney’s Office in Charlotte.
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