Pennsylvania Fuel Distributor to Pay $692,000.00 to Settle Violation of DBE Program Rules

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

In early June, the U.S. Attorney’s Office in the Southern District of New York announced a $692,000.00 settlement with Naughton Energy Corporation (“Naughton Energy”) and its owners Mariette Naughton and Joseph Naughton 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.

Naughton Energy is a Pennsylvania company that supplied diesel fuel to vehicles and equipment on a construction project at New York’s Governor Malcolm Wilson Tappan Zee Bridge.  Naughton Energy and its owners misrepresented that they were solely performing the work, when, much of the work was being performed by non-DBE subcontractors. Naughton Energy failed to disclose this subcontracting arrangement to the prime contractor, even after the prime inquired as to the subcontractor, and continued to represent that Naughton Energy was performing all the work. The settlement is the result of a False Claims Act lawsuit filed against the company and its owners alleging that Naughton Energy fraudulently caused the submission of false claims due to this misrepresentation.

According to the press release, Manhattan U.S. Attorney, Audrey Straus stated, “When DBEs fail to disclose the involvement of non-DBEs in their work, they effectively diverse resources to ineligible firms and undermine the DBE program’s goal of creating an environment in which businesses owned by women and minorities can compete fairly for United States Department of Transportation-assisted contracts.”

You can read the Department of Justice press release here: https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-692000-settlement-resolving-fraud-claims-against

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.