President Of Boggs Paving, Inc. Pleads Guilty To Conspiracy To Defraud The U.S. Government And Money Laundering Conspiracy In Connection With Disadvantaged Business Enterprise Fraud

President Of Boggs Paving, Inc. Pleads Guilty To Conspiracy To Defraud The U.S. Government And Money Laundering Conspiracy In Connection With Disadvantaged Business Enterprise Fraud

President Of Boggs Paving, Inc. Pleads Guilty To Conspiracy To Defraud The U.S. Government And Money Laundering Conspiracy In Connection With Disadvantaged Business Enterprise Fraud

U.S. Attorney’s Office, Western District of North Carolina
28 August 2014

FOR IMMEDIATE RELEASE

United States Attorney Anne M. Tompkins Western District Of North Carolina

CHARLOTTE, N.C. – The president and part-owner of Boggs Paving, Inc. (Boggs Paving) pleaded guilty in U.S. District Court today to federal charges stemming from a criminal investigation into the illegal use of a disadvantaged business enterprise to obtain government-funded construction contracts, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. Carl Andrew Boggs, III, 50, of Waxhaw, N.C. pleaded guilty to one count of conspiracy to defraud the United States Department of Transportation (USDOT) and one count of money laundering conspiracy.

Marlies T. Gonzalez, Regional Special Agent in Charge, U.S. Department of Transportation, Office of Inspector General (DOT-OIG), Region IV; John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division; and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation (IRS-CI), join U.S. Attorney Tompkins in making today’s announcement.

The purpose of USDOT’s disadvantaged business enterprise (DBE) program is to increase the participation of disadvantaged business enterprises (DBEs), such as minority and women-owned businesses and small business enterprises (SBEs) in federally-funded public construction and transportation-related projects.

“Cheating to obtain publicly-funded construction contracts enriched Boggs Paving and its owners and undermined the goal of the DBE program, which helps small and minority-owned businesses thrive by ensuring their ability to work on federal construction and transportation projects. This illegal conduct prevented contractors who played by the rules and legitimate DBEs from getting a fair chance to obtain work and undermines public trust. Prime contractors and subcontractors who engage in this type of illegal activity will be prosecuted and will have to face the consequences of their fraudulent acts,” said U.S. Attorney Tompkins.

“It is disheartening to think anyone would defraud government programs designed to help hard-working Americans, essentially robbing worthy business men and women of the chance to achieve their dreams. The FBI will continue to work with our state and federal law enforcement partners to aggressively investigate, expose, and dismantle criminal enterprises that engage in this type of fraud,” said John Strong, Special Agent in Charge of the FBI in North Carolina.

“DBE fraud harms the integrity of the DBE program and law-abiding contractors, including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts,” said Marlies Gonzalez, Regional Special Agent-in-Charge of the U.S. Department of Transportation, Office of Inspector General. “Our agents will continue to work with the Secretary of Transportation, and other federal, state, and local law enforcement and prosecutorial colleagues to expose and shut down DBE fraud schemes that adversely affect public trust and DOT-assisted transportation programs throughout North Carolina and elsewhere.”

“When individuals and businesses attempt to conceal their criminal profits, complex financial transactions and money laundering schemes will exist. IRS Criminal Investigation and our law enforcement partners will be present as well, unraveling such schemes in order to bring those responsible to justice” stated Thomas J. Holloman, Special Agent in Charge, IRS Criminal Investigation.

Drew Boggs is the latest defendant to plead guilty in this case. According to documents filed in the case and statements made in court, from 2003 through 2013, Drew Boggs, Boggs Paving and the other defendants fraudulently obtained federally and state funded construction contracts by falsely certifying that a DBE or an SBE would perform and be paid for portion of the work on those contracts. As described in court documents, the conspirators used Monroe-based Styx Cuthbertson Trucking Company, Inc. (“Styx”), a road construction hauler and a certified DBE and SBE, to obtain the lucrative government-funded construction contracts. Court documents indicate that the conspirators took steps to conceal their fraud, including running payments for the work performed through a nominee 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. According to court records, 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 DBE 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.

To date, six defendants have pleaded guilty to charges stemming from this investigation. Greg Miller, 60, of Matthews, N.C., Arnold Mann, 55, of Fort Mill, S.C., Greg Tucker, 41, of Oakboro, N.C., and John Cuthbertson, 69, of Monroe have each plead guilty to one count of conspiracy to defraud USDOT. Kevin Hicks, 43, of Monroe has pleaded guilty to one count of conspiracy to defraud USDOT and one count of money laundering conspiracy. Charges against Boggs Paving, Inc. remain pending.

Drew Boggs has been released on bond and will be sentenced by the Court at a later date. The conspiracy to defraud USDOT charge carries a maximum of five years in prison and $250,000 fine. The money laundering conspiracy charge carries a maximum of 20 years in prison and a $500,000 fine or twice the value of the property involved in the transaction.

The investigation of the case was handled by USDOT-OIG, FBI and IRS. The case is being prosecuted by Assistant United States Attorneys Jenny G. Sugar and Michael E. Savage of the U.S. Attorney’s Office in Charlotte.