Criminal Law

Largest WMBE Fraud Ever?

Posted on September 23, 2008
So far three people have pleaded guilty in a scheme that federal prosecutors say defrauded the US and the Pennsylvania Department of Transportation of $121 million in federal contracts meant for minority owned businesses. This is a classic example of...

Commercially Useful Purpose

Posted on July 23, 2008
Here is a report by the Indiana Department of Transportation highlighting problems with prime contractors claiming dollars towards their MBE goals that did not have a "commercially useful purpose." "During the past several months, INDOT has discovered problems concerning the...

Learning from Missouri's M/WBE audit

Posted on July 16, 2008
Here is what the Office of the State Auditor of Missouri found when it took a look at the state's MBE and WMBE programs: 1) Some results overstated by the Office of Administration OA's reporting of its program results was...

Remedial Best Practices

Posted on April 28, 2008
This is more of a personal pet peeve list of dealing with supplier diversity programs from a diverse supplier's viewpoint. I know some of these "best practices" are going to sound ridiculously elementary but I routinely find these in supplier...

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Largest DBE Fraud Scheme in DOT History

Posted on March 11, 2008
Here is a press release from the Department of Transportation's Office of the Inspector General in what they refer to as the "largest reported DBE fraud scheme in DOT history." Some of the highlights are below: On February 13 2008,...

What does Johnny Cochran have to do with Supplier Diversity?

Posted on March 11, 2008
Not much, really but his wife got drawn into a mess down in Louisiana several years back regarding the airport's DBE program. Here's a quote from the Time Picayune: In its analysis of seven local agencies' programs aimed at helping...

What a debarment looks like

Posted on March 11, 2008
If you ever wondered what a debarment looks like, here's your chance. This is the debarment proceedings against Peter Scalamandre & Sons. In the section titled "What is the cause for debarment?" you'll find: Additionally, in the performance of the...

Chicago Update

Posted on February 14, 2008
The City of Chicago recently hired a new Director of Procurement who is also responsible for the city's WMBE program.  See this story from WBBN 780 about this controversial hire. http://www.wbbm780.com/pages/1425233.php? Here's some other Chicago stories I've blogged on: The Risks DBE allegedly defrauds DBE program Vending Gender and the Race to Defraud Chicago is Not the most corrupt...

Tips on Avoiding DBE Fraud from the DOT, ASAP!

Posted on February 04, 2008
Here's a powerpoint presentation by John Long, Special Agent-in-Charge DOT Inspector General on Preventing DBE Fraud. He includes a couple of case studies for you to ponder.  Here's his thoughts on why DBE Fraud has increased:- TEA 21: increase in construction dollars has lead to an increase in DBE contractor participation -  Technology has aided fraud schemes -  Lack of oversight of DBE programs -  Inconsistency in enforcing the regulations -  Contractors have invented new and innovative schemes to commit DBE FraudI'm a bit curious as to how technology has "aided fraud schemes...

Contract Attorney Diversity Study

Posted on January 31, 2008
Here's a study from JDWired Blog on contract attorney diversity.  Whereas this is not exactly supplier diversity, it is another resource for law firms when they are looking to diversify. A study by Altman Weil shows that 50% of responding law firms have a diversity manager...

How to Investigate MBE fronts- thanks Richmond

Posted on January 17, 2008
The City of Richmond Auditor looked into allegations by the Minority Business Development Department and by an anonymous tip reported through a hotline about MBEs being used as front companies to meet minority contracting goals.  You can read the well-organized report here although it does not delve into what type of investigation it did on the hotline tip...

Cleveland Rocks! Cement and Gravel

Posted on January 16, 2008
Here's a really thorough piece on the beginnings and ultimate distortion of Cleveland's minority contracting program by Lisa Rab of Scene News, an alternative newspaper in Cleveland.  This story demonstrates how a program can be perverted when there is no accountability or concern for compliance...

Cleveland Takes a Stand against DBE Fraud...kind of

Posted on January 16, 2008
The Cleveland Plain Dealer wrote a year-end follow up story regarding an airport contractor, Anthony Allega Cement, that the city found to be using front companies to meets its minority subcontracting goals.  Here?s some highlights from the story:In April, Mayor Frank Jackson suspended the company indefinitely after a city investigation found Allega used front companies to get around city rules requiring work at Cleveland Hopkins International Airport to be set aside for companies owned by minorities and women...

The Risks

Posted on December 18, 2007
During my presentation on Managing and Mitigating Risk in Supplier Diversity programs, I discuss the risk of lawsuits.  The suits can come from different angles such as whistleblowers, former employees, and WMBEs that lost out on contracts.  I linked below a couple of different articles that involve supplier diversity lawsuits but remember that even if the claimant didn't win the lawsuit, the firm or government agency involved still "lost" time, reputation, and money spent on legal defense...

Philadelphia, the new Chicago?

Posted on December 04, 2007
Here's another intriguing story that involves policitical connections and alleged WMBE fraud.  This time it takes place in Philadelphia with the current mayors brother Milton Street being indicted on mail fraud, wire fraud, filing false tax returns, etc...

6 Years in Jail and $5,000,000 forfeited

Posted on December 04, 2007
The chips continue to fall in the Senator Bromwell case.  The former CEO of a company that ran the front company with Senator Bromwell was sentenced to 6 and a half years and ordered to forfeit $5,000,000.  Here's the press release from the Department of Justice and here's an excerpt:According to the statement of facts, Stoffregen participated in a minority ?front? company fraud scheme with Michael Forti, his wife Geraldine Forti and Bromwell?s wife...

Strategy vs. Tactics

Posted on November 26, 2007
One common question I often receive is "Why to I need to think about supplier diversity fraud?  We only used 3rd party certified companies and use procurement software, so shouldn't we be safe?"  The short answer is that 3rd party certification and software are tactics whereas if your goal to thwart supplier diversity fraud you need a strategy...

SBA Miscertification article

Posted on November 08, 2007
I recently came across this well-written article by Albert Krachman, a partner at Blank Rome LLC in Washington DC.  Mr. Krachman explains how miscertified small businesses win federal contracts, the problems of prosecuting companies that intentionally miscertify themselves and suggests changes to improve enforcement...

Hmm, that looks odd

Posted on November 06, 2007
Here are a couple of red-flag bank account transactions for a minority front company.  If you are a person responsible for certifying WMBEs or a banker working with corporate client, be on the look-out for these signs of a possible fraudulent WMBE: 1) High velocity in the movement of funds but low daily balance 2) Business financial statements noticeably different from those of a similar business 3) Corporate accounts that show little or no regular activity tags | money laundering | MWBE certification | minority business fraud | woman owned business fraud

The entrails of WMBE Fraud

Posted on November 02, 2007
Here is a case study on how to go about setting up a front company to take advantage of MWBE programs in order to win government construction contracts.  This is also from the story on Senator Bromwell and his wife mentioned in the post below.  I think this is an instructive example of the lengths that people will go to commit this type of fraud...

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