SC contractors indicted in $350M DBE fraud case

By Kim Slowey | August 8, 2016

Dive Brief:

  • South Carolina federal prosecutors have indicted a group of seven construction executives and associates for allegedly setting up and operating a network of sham disadvantaged and minority businesses in order to win approximately $350 million in government contracts in and out of the state since 2002, according to The State.
  • In addition to creating their own shell companies, authorities alleged that the group also enlisted existing companies owned by women, minorities, veterans and disabled veterans to assist in perpetrating their fraud.
  • If convicted, the individuals and two companies – financing firm Automatic Cash and construction consultant EEC – face sentences ranging from five to 20 years in prison, as well as fines of $250,000 to $10 million.


Dive Insight:

Most publicly funded projects, particularly high-dollar ones, include some level of minority participation requirements, and because many owners and general contractors maintain there is a shortage of qualified minority contractors, some firms see this as an opportunity to gain entry into a potentially lucrative niche, even if they’re not legally entitled.

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