Construction Companies Settle Civil Fraud Lawsuit for $7.5 Million

On April 4, 2012, Preet Baharara, the United States Attorney for the Southern District of New York, with investigative partners the Office of the MTA Inspector General and the U.S. Department of Transportation Inspector General, simultaneously announced the filing and settlement of a civil fraud lawsuit against two major construction companies, Dragados USA, Inc., and Judlau Contracting, Inc., and their joint venture Dragados/Judlau JV, related to their contract to perform work on the MTA's East Side Access project. The lawsuit alleged that the defendants schemed to avoid their obligations under federal law to hire disadvantaged business enterprises (DBEs) as subcontractors. As part of the settlement, the defendants agreed to pay $7.5 million, for violating the DBE regulations governing their contract with the MTA, of which $1 million is to be paid to the Office of the MTA Inspector General to cover its investigative costs. Commenting on the lawsuit and settlement, MTA Inspector General Barry L. Kluger said: "This DBE investigation, lawsuit and settlement, along with others, reflect the commitment of our Office and the MTA to create and maintain a level playing field on which all qualified minority- and womenowned businesses have a fair and equal opportunity to bid for and participate in all MTA projects. Once again, we are sending a clear message to the construction industry that we and our investigative and prosecutorial partners will continue to insist on strict compliance with law and exact a heavy price from those who abuse the DBE Program."


Office of the US Attorney, SDNY, Press Release

NY Daily News article 4/5/12 - 7.5M to settle contractor fraud suit

NY Post article 4/5/12 - MTA contractor $lammed