U.S. Attorney James P. Kennedy, Jr. announced Tuesday the United States Attorney’s Office has filed charges against three Rochester-area businesses for the improper use of “pass through” minority contractors on the Rochester Schools Modernization Program.
The three companies in question are Journee Construction Inc., Bell Mechanical Contractors, and Kaplan Schmidt Electric.
Between April 2013 and November 2013, the defendants conspired with contractors to defraud the RSMP, a public-works project to renovate and improve school facilities in the City of Rochester, according to Assistant U.S Attorney John J. Field, who is leading the case.
“The defendants created and submitted required documentation that falsely and fraudulently represented that contractors hired for program projects had complied with the Diversity Plan established for the program,” Field said in a statement. “In truth and fact, the contractors had not complied, and did not intend to comply.”
In addition to filing the charges, the government also entered into a deferred prosecution agreement (DPA) with each of the defendants.
Pursuant to the DPAs, the government has requested that its prosecution of the charges against each defendant be stayed in order to afford each defendant the opportunity to comply with the terms and conditions of such DPA.
Under the terms of their DPAs, each defendant must:
- Fully cooperate with the government’s investigation going forward;
- Conduct its operations with respect to any disadvantaged business programs in compliance with all applicable laws and requirements for such programs; and
- Pay a financial penalty: Journee Construction Inc. will pay $70,000; Bell Mechanical Contractors will pay $50,000; and Kaplan Schmidt Electric will pay $25,000.
Should the defendants successfully fulfill all of the terms and conditions of their DPAs with the government, the charges against them will be dismissed, read the statement.
Norman H. Jones, Rochester Joint Schools Construction Board Chair, thanked the Department of Justice for its work in the investigation and “exposing efforts to subvert the board’s diversity plan.”
“This resolution returns thousands of dollars to this community’s Rochester Joint Schools Construction Board,” Jones said. “The Board is proud of its Diversity Plan, which has ensured that minority-owned, women-owned, disadvantaged-owned and small business enterprises, as well as women and minorities in the workplace, have meaningful opportunities to participate in the RSMP.”
The RSMP is a multiphase capital initiative of the Rochester City School District in partnership with the City of Rochester. The initiative is overseen by the Rochester Joint Schools Construction Board (RJSCB) which is made up of seven members appointed by the Mayor of the City of Rochester and the Superintendent of Schools.
The Facilities Modernization Plan is now in Phase 2 with $435 million to renovate Rochester Schools from 2016 to 2021. Phase 1 was completed in 2016.
The charges are the result of an investigation by the Federal Bureau of Investigation, Rochester Office, under the direction of Special Agent-in-Charge Gary Loeffert.
“Disadvantaged Business Enterprise programs such as this are intended to helps businesses owned by minorities obtain work on federally funded construction projects,” Kennedy said. “Those who defraud the program in order to obtain federal funds take advantage both of the taxpayers and the businesses that the program is designed to assist. This Office remains committed to exposing and holding accountable who pervert these programs to serve their own self-interests.”