Alleged Dbe Fraud Nets $11.75 Million Penalty

In a deal reached last month with the Department of Justice, Michigan-based Ajax Paving Industries (Troy) and Dan’s Excavating (Shelby Township) agreed

In a deal reached last month with the Department of Justice, Michigan-based Ajax Paving Industries (Troy) and Dan’s Excavating (Shelby Township) agreed to pay the United States $11.75 million to resolve claims that they knowingly violated Disadvantaged Business Enterprise (DBE) contracting requirements for three Detroit Wayne County Metropolitan Airport projects from 1998-2003. The payment settles False Claims Act and administrative claims involving alleged misrepresentations about the amount of work performed by a DBE, Borbolla Construction & Concrete Supply, Inc., on the federally funded jobs for which an Ajax/Dan’s joint venture was prime contractor. In addition to the payment resolving civil claims, the contractors have entered into an administrative agreement with the U.S. Department of Transportation to ensure future DBE requirement compliance.

The government’s claims were based on an investigation by the Justice Department’s Civil Division, U.S. Attorney’s Office for the Eastern District of Michigan, U.S. DOT’s Office of Inspector General, and Federal Aviation Administration. Under the Detroit Metro contracts, Ajax/Dan’s was required to comply with DOT DBE regulations and accurately report DBE contracting. The companies claimed Borbolla Construction performed substantial work when the Clinton Township, Mich., firm had handled what Justice officials consider little more than minor administrative tasks. The DBE program provides assistance to businesses owned by minorities, women, and other socially and economically disadvantaged individuals to enter the highway construction and design industries.