Davis-Bacon Act fraud has resulted in a criminal sentence for the owner of a now-defunct construction subcontractor.
According to a Department of Justice press release, the subcontractor’s owner has been sentenced to four years of probation (including 18 months of home confinement) and ordered to pay $164,627 in restitution, after pleading guilty to charges of conspiracy to pay employees less than prevailing wages on a federal construction project in Boston.
Isreb operated Taunton Forms, a construction company based in Massachusetts. In 2006, Suffolk Construction was awarded a GSA prime contract to renovate a federal building in Boston. Suffolk entered into a subcontract with Taunton Forms to perform certain concrete work on the project. Suffolk ultimately paid Taunton Forms more than $1 million under the subcontract.
The Davis-Bacon Act requires that prime contractors and subcontractors on federal construction projects pay covered employees no less than prevailing wages and fringe benefits. However, beginning in 2007, Isreb and others began paying Taunton Forms employees less than prevailing wages, while certifying to Suffolk and the government that Taunton Forms was paying prevailing wages. Additionally, Isreb and his co-defendants made false reports to the State of Massachusetts in an effort to avoid making certain fringe benefit payments.
In March, Isreb pleaded guilty to charges of conspiracy to commit fraud and false statements. Isreb’s guilty plea may have helped him avoid jail time, but 18 months of home confinement and $164,627 nevertheless send a signal that the government is serious about pursuing criminal penalties for Davis-Bacon Act fraud.