A judge in U.S. District Court for the Eastern District of California, Fresno Division recently sentenced Chester L. Neal, Jr. of Bourbon Oak, Mo., to 57 months in jail and ordered him to pay $3.735 million in restitution following a guilty plea to one count of mail fraud. Admissions in connection with the plea indicate a July 2008–December 2017 scheme during which the defendant landed contracts to purchase and transport rock, gravel and other raw materials to federal agency sites.
“After winning these contracts, Neal fraudulently induced subcontractors to perform the required work,” the Justice Department notes. “But when paid by the government for his subcontractors’ work, he did not pay his subcontractors.” In a December 2017 indictment, Justice attorneys contended that the defendant:
- Pursued federal contracts through two namesake entities, plus Elska Peninga LLC, Phoenix Construction and Phoenix Underground Construction;
- Engaged a California crushed rock and trucking service provider, along with at least 35 other small- or medium-sized businesses across the U.S.—all dubbed “victim vendors”—to act as subcontractors on contracts he and his businesses entered into with federal agencies;
- Through an online, reverse-auction service, FedBid Inc., or bids submitted directly to contracting offices, secured more than 100 aggregate supply and delivery or related materials contracts with the U.S. Air Force, U.S. Army, Bureau of Reclamation, U.S. Fish & Wildlife Service and National Park Service;
- Made misrepresentations to induce victim vendors to perform contract work or extend him credit without providing collateral;
- Led certain victim vendors to believe he was an Army private, on the federal government payroll, or an employee of a Yosemite National Park benefactor;
- Secured contract payments by arranging transfer of federal funds to bank accounts he controlled; and,
- Defrauded victim vendors of at least $2.6 million by not paying for goods provided and services rendered to the federal agencies awarding the contracts.
Two counts of mail fraud outlined in the indictment stemmed from the mailing of invoices the defendant instigated in conjunction with a contract involving the California crushed rock supplier and Yosemite Conservancy. A Justice Department Criminal Division announcement on the sentencing and fine reveals a depth of inquiry into Neal’s scheme. In addition to U.S. Attorney’s Offices and Federal Bureau of Investigation staff, the case involved the Air Force Office of Special Investigations’ Office of Procurement Fraud Unit; Army Criminal Investigation Command’s Major Procurement Fraud Unit; Defense Criminal Investigative Service; and, Interior Office of Inspector General.
OSHA HEARS WHISTLEBLOWING DRIVER’S SAFETY ALERT
The Occupational Safety and Health Administration is testing Surface Transportation Assistance Act (STAA) whistleblower protection provisions by ordering a defunct Connecticut motor carrier and its co-owner to pay more than $150,000 in backpay, fines and attorney’s fees to settle a complaint surrounding management practices and trucking regulations compliance. Investigators found that the carrier retaliated against a driver who voiced concerns about faulty vehicle maintenance, including missing or inoperative headlights and air pressure leaks, plus a directive to violate Federal Motor Carrier Safety Administration hours of service regulations.
The agency has ordered charged parties to a) pay the driver $8,300 in back pay and interest, $75,000 in punitive damages, and $50,000 in compensatory damages for mental pain and emotional distress; b) pay complainant’s attorney fees of $21,300; and, c) refrain from retaliating or discriminating against the complainant in any manner for exercising STAA rights. The order is subject to appeal to the OSHA Office of Administrative Law Judges.
“Truck drivers are protected from retaliation when they refuse to violate laws put in place to protect their safety and health,” says OSHA Regional Administrator Galen Blanton in Boston. “This order reinforces the agency’s commitment to protect workers who exercise their right to a safe workplace, and refuse to place themselves and the public at risk.”