Construction Companies Settle for $1.4 Million to Resolve False Claims Allegations
Companies Alleged to Have Falsely Certified Compliance with Minority-Owned Subcontractor Requirements; Portion of Settlements to Fund Program to Promote Equal Opportunity in Public Construction, Education, or Employment
BOSTON – Three construction companies have agreed to settle for a total of $1.4 million to resolve allegations they falsely certified compliance with equal opportunity requirements on multiple public construction contracts in Massachusetts, Attorney General Maura Healey announced today.
“Our office expects contractors to be honest in their efforts to employ minority- and women- owned businesses and not pretend to be in compliance,” AG Healey said. “Equal opportunity requirements in government contracts should not be intentionally subverted.”
The Commonwealth’s complaint alleges that CTA Construction Company, Inc., MDR Construction Company, Inc., and minority-owned business enterprise Luxor Equipment Corporation, Inc., now known as Margen, Inc. violated the Massachusetts False Claims Act in connection with three contracts.
CTA acted as general contractor on all of the projects, which included:
- a 2006 contract with the Massachusetts Division of Capital Asset Management (DCAM) to build the Camp Curtis Army National Guard Field Maintenance Shop in Reading;
- a 2008 contract with the Massachusetts Port Authority (MassPort) to build the State Police Barracks at Logan International Airport; and
- a 2008 contract with the Town of Hingham to build the Hingham East Elementary School.
State and federal laws establish programs to promote equal opportunity in public contracts by requiring provisions that ensure a certain percentage of jobs go to minority, women, and disadvantaged business enterprises.
Contractors seeking to bid on public construction contracts must certify that they will comply with these provisions, and then document their compliance as they performed the contract. Failure to comply with the provisions can result in a loss of the contract or damages.
The complaint alleges that CTA falsely claimed minority owned business enterprise (MBE) credits for its subcontracts with Luxor, even though the work was managed and performed by non-MBEs, namely MDR on the DCAM and MassPort projects, and CTA on the elementary school project in Hingham.
Under the terms of the settlements, CTA and its principals have agreed to pay $1.05 million, $70,000 of which is currently being held and will be released to MassPort. Additionally, MDR agreed to pay $150,000. CTA and MDR are also permanently enjoined from making false or misleading representations concerning minority- and woman-owned businesses participation on contracts with the Commonwealth or its political subdivisions. Margen also agreed to pay $200,000 and is permanently enjoined from entering into any contract with the Commonwealth or its political subdivisions.
A portion of the money paid under the settlements will be directed to a program designated by the Attorney General for the purpose of promoting equal opportunity programs in public construction, education, or employment. Restitution will also be provided to the award’s authorities on the three contracts at issue.
This matter was referred for investigation to the Attorney General’s Office by MassPort, based on its concerns Luxor was not performing, managing or supervising its subcontract work. MassPort has cooperated with the Attorney General’s investigation.
This matter was handled by Assistant Attorney General Alistair Reader, Paralegal Krista Roche and Division Chief Gillian Feiner of the Attorney General’s False Claims Division, with assistance from Financial Investigators Shannon Roark and Jim O’Hara from Attorney General Healey’s Civil Investigations Division, and Analyst James McCoy, Jr. of the Attorney General’s Digital Evidence Laboratory.