Painting Contractor to Pay $400,000.00 to Settle Violation of DBE Program Rules

July 14, 2021
By Danielle Dietrich
Posted in Women and Diverse-Owned Businesses

On July 13, 2021, the U.S. Attorney’s Office in the Southern District of New York announced a $400,000.00 settlement with Spectrum Painting Corp. (“Spectrum”) to settle civil fraud claims. The U.S. Attorney alleged that Spectrum “fraudulently obtained payments on two federally funded construction projects by causing misrepresentations of compliance with Disadvantaged Business Enterprise (“DBE”) rules.” This program is designed to encourage and increase the participation of women- and minority-owned businesses in federally funded projects.

Spectrum is a New York-area painting contractor and is alleged to have caused the prime contractors on two projects to “misrepresent that Tower Maintenance Corp. (“Tower”), a certified DBE, was solely performing work on the two projects.” Spectrum, a non-DBE, performed much of that work, not Tower.

According to the press release, Manhattan U.S. Attorney, Audrey Straus stated, “This settlement reflects this Office’s commitment to root out DBE fraud in federally funded contracts so that legitimate DBEs can compete fairly for public construction projects.” The United States Department of Transportation Office of Inspector General Special Agent-in-Charge Brian Gallagher vowed, “We will hold accountable those who conspire to misrepresent their compliance with program requirements to obtain taxpayer supported contracts, thereby undermining the DBE program’s goal of expanding opportunities for small business.”

You can read more details in the Department of Justice press release here: https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-settles-fraud-suit-against-spectrum-painting-false-statements.

If your company needs advice regarding use of DBE companies in your projects, please contact Danielle Dietrich at 412-227-0284 or ddietrich@smgglaw.com.