On March 30, 2021, the U.S. Attorney’s Office in the Southern District of Ohio announced a $315,252.93 settlement with Karvo Companies (“Karvo”) to settle a False Claims Act lawsuit alleging that the company violated the United States Department of Transportation’s Disadvantaged Business Enterprise (“DBE”) program rules. This program is designed to encourage and increase the participation of women- and minority-owned businesses in federally funded projects. The case was filed under seal in the United States District Court for the Southern District of Ohio at Docket Number 2:17-cv-00936. The seal has since been lifted.
The 28 page-lawsuit, filed by a former employee of Karvo, alleged that the company “engaged in a fraudulent scheme to capture additional profit on ODOT contracts by allocating work to its related entity Karvo Trucking, Ltd. … instead using and paying DBEs.” Karvo purportedly did this because it was less expensive than using DBEs as Karvo Trucking wasn’t paying its employees the prevailing wage. The Complaint also alleged that Karvo falsified trucking tickets that would have revealed that Karvo Trucking was being used instead of DBEs.
According to the Acting U.S. Attorney in the Southern District of Ohio, Vipal J. Patel, this settlement sends a message to contractors participating in the DBE program that they must follow the rules.
You can read the Department of Justice press release here: https://www.justice.gov/usao-sdoh/pr/company-agrees-pay-more-315k-resolve-allegations-false-claims-involving-us.