One of the state’s largest road contractors has agreed to pay a $1 million settlement for falsely claiming it was subcontracting with a minority-owned business in order to be eligible to work on federal road construction projects.
The settlement to be paid by Marietta-based contractor C.W. Matthews was the culmination of a federal investigation.
Investigators found C.W. Matthews filed “false and misleading” reports to continue receiving payments under a federal construction program that encourages minority-owned business participation, known as the Disadvantaged Business Enterprise (DBE) program.
The program requires that a percentage of the work on certain projects be subcontracted to minority-owned firms. Before a contractor can even bid on such a project, the company must identify the minority-owned subcontractor it would use if awarded the contract.
Between 2006 and 2007, C.W. Matthews was awarded several highway construction contracts that required the participation of a minority-owned business. In bidding on the contracts, C.W. Matthews promised to subcontract with a minority-owned firm called Longoria Trucking.
However, investigators said Longoria Trucking actually did very little of the work.
A non-minority subcontractor, GE Robinson, used Longoria Trucking as a front to get around the federal restrictions. Longoria Trucking got kickback payments for its complicity in the scheme.
Meanwhile, C.W. Matthews continued to issue false and misleading certifications to the federal government about the trucking company’s role in highway projects. The investigation revealed C.W. Matthews “knew or should have known” about the scheme.
C.W. Matthews Contracting entered into a civil settlement agreement to pay $1 million in U.S. District Court in Atlanta earlier this month. As part of the settlement, the company also agreed to appoint a corporate compliance officer, establish a compliance program, retain an independent monitor and submit periodic reports to the Federal Highway Administration.
In a written response issued Monday by a lawyer for the company, C.W. Matthews said it did not break the law.
“It is important to understand that CWM did not admit to any unlawful conduct, and there was no allegation whatsoever that CWM had any actual knowledge that the trucking company was not a valid DBE vendor,” said Sheldon Fram, corporate counsel for C.W. Matthews. “CWM relied in good faith that the trucking company, which was listed as an approved DBE vendor by the state of Georgia, was in fact a valid DBE business.”
After it was discovered that the trucking company was not a valid DBE business, C.W. Matthews severed all ties with it, Fram said. Fram added that no C.W. Matthews employee knew of the fraud.
The settlement comes amid new scrutiny of minority participation in highway contract work in Georgia.
Last month, the Georgia Black Legislative Caucus called attention to the fact that 96 percent of state road and bridge work is completed by white-owned firms. Less than 3 percent of Georgia Department of Transportation contracts are awarded to companies owned by African-Americans.
In response to those concerns, GDOT has pledged to steer more business to minority-owned contractors.
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