North Carolina Road Builder Sentenced to Prison - Global Trade Magazine
  December 3rd, 2015 | Written by

North Carolina Road Builder Sentenced to Prison

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  • Company obtained road construction contracts by false claim that disadvantaged business would participate.
  • Defendants in fraud case received most of the road construction contract funds, kicking back some to small company.
  • Over nine years, Boggs Paving was a contractor on 37 federally-funded contracts worth $87.6 million.

A United States District judge in Charlotte, North Carolina, has sentenced Boggs Paving, Inc., its president Drew Boggs, and four others on charges stemming from the illegal use of a disadvantaged business enterprise to obtain government-funded construction contracts.

Boggs, 51, was sentenced to 30 months in prison and two years of supervised release, and received a $15,000 fine after pleading guilty to conspiracy to defraud the United States Department of Transportation (USDOT) and money laundering conspiracy. Another defendant was sentenced to 15 months in prison and ordered to pay a fine while the two other codefendants received sentences of probation and fines. Boggs Paving was ordered to pay a $500,000 fine.

According to documents filed in the case, from 2003 through 2013, Boggs Paving, Drew Boggs, and their codefendants engaged in a scheme by which they fraudulently obtained federally and state funded construction contracts by falsely certifying that a disadvantaged business enterprise or a small business enterprise would perform and be paid for portion of the work on those contracts. The purpose of USDOT’s disadvantaged business program is to increase the participation of such businesses in federally-funded public construction and transportation-related projects.

According to court records, Boggs Paving and the codefendants used Monroe-based Styx Cuthbertson Trucking Company, a road construction hauler and a certified disadvantage and small business, to help obtain the government-funded construction contracts. The codefendants took steps to conceal their fraud, including running payments for the work performed through a bank account in Styx’s name and using magnetic decals bearing the Styx company logo to cover the Boggs logo on company trucks, among others. The majority of the money was funneled back to Boggs Paving and its affiliates, and John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and disadvantaged status to be used by Boggs Paving.

Court records show that from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally-funded contracts, and was a subcontractor for two additional contracts, worth over $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, court records show.

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