2016-08-10 DOJ SDNY press_release 121 KB 7,128 chars

CEO Of Steel Contractor On World Trade Center Site Convicted At Trial Of Fraud In Connection With Program Designed To Encourage Participation Of Minority And Women-Owned Businesses

Caption: United States v. Dcm Erectors, et al.

summary

Larry Davis, CEO of DCM Erectors, was convicted of wire fraud and conspiracy for orchestrating a scheme to fraudulently claim over $100 million in Minority and Women-Owned Business Enterprise (M/WBE) credits on the $586 million World Trade Center projects by falsely attributing work to shell entities Solera/DCM and GLS Enterprises while DCM performed the work itself.

paragraph

Larry Davis and his company, DCM Erectors, were convicted of wire fraud and conspiracy for defrauding the Port Authority’s M/WBE Program on the World Trade Center construction projects, which totaled approximately $586 million in contracts. Davis falsely claimed that minority-owned Solera/DCM and woman-owned GLS Enterprises performed steel erection and surveying work, when in fact DCM performed the work or used non-certified contractors, fraudulently securing over $100 million in M/WBE credits. To conceal the fraud, Davis paid Solera’s owner at least $2 million and GLS’s owner hundreds of thousands of dollars for falsified invoices and payroll records, violating the program’s requirement that 17% of contract value go to certified businesses.

narrative

Larry Davis, CEO of DCM Erectors, and his company were convicted of wire fraud and conspiracy after a jury found they orchestrated a fraudulent scheme to circumvent the Port Authority’s Minority and Women-Owned Business Enterprise (M/WBE) Program on the $586 million World Trade Center construction projects. DCM was awarded contracts totaling $256 million for One World Trade Center and $330 million for the PATH Transportation Hub, with obligations to allocate 17% of work—12% to minority-owned and 5% to women-owned businesses—to certified subcontractors. Davis created the sham joint venture Solera/DCM with minority-owned Solera Construction, falsely claiming it performed steel procurement and metal decking, while DCM actually did the work and paid Solera’s owner Johnny Garcia over $2 million to maintain the facade. Similarly, Davis used GLS Enterprises, owned by former DCM payroll manager Gale D’Aloia, to fraudulently claim woman-owned business credit for surveying work that DCM performed internally, paying D’Aloia hundreds of thousands of dollars for falsified invoices and payroll records. The scheme allowed DCM to falsely report over $100 million in M/WBE spending, violating the Port Authority’s program goals and undermining public trust in a project of national significance. Davis was found guilty on two counts, each carrying a maximum 20-year sentence, and was scheduled for sentencing on November 15, 2016. The case was prosecuted by the U.S. Attorney’s Office for the Southern District of New York following a multi-agency investigation.

Enriched metadata

Scheme: public-corruption (90%)
Court: Southern District of New York
Outcome: convicted
Victim loss: $330,000,000

Classified public-corruption(confidence 90%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →

Extracted insights

Dollar amounts 4

$330.00M $330 million $100M–$1B
$256.00M $256 million $100M–$1B
$2.00M $2 million $1M–$10M
$150K $150,000 $100K–$1M

Entities 8

person dcm erectors
company dcm erectors, inc.
person johnny garcia
person larry davis
person Preet Bharara
company president and chief executive officer of dcm erectors, inc.
company solera construction, inc.
company work performed by solera/dcm joint venture llc and gls enterprises, inc.

Triples 12

Larry Davis convicted of fraud in connection with M/WBE Program
DCM Erectors, Inc. found guilty of fraud
Larry Davis is President and Chief Executive Officer of DCM Erectors, Inc.
DCM Erectors awarded $256 million contract for One World Trade Center in 2007
DCM Erectors awarded $330 million contract for PATH Transportation Hub in 2009
Larry Davis owned DCM since at least March 1999
Larry Davis engaged in fraudulent scheme to violate M/WBE Program
DCM falsely claimed work performed by Solera/DCM Joint Venture LLC and GLS Enterprises, Inc.
Preet Bharara is United States Attorney for Southern District of New York
Loretta A. Preska is U.S. District Judge
Johnny Garcia owns Solera Construction, Inc.
Port Authority M/WBE Program required 17 percent of contract amount to M/WBEs

View original DOJ press releasejustice.gov

Extracted body text (7,128c)

Press Release CEO Of Steel Contractor On World Trade Center Site Convicted At Trial Of Fraud In Connection With Program Designed To Encourage Participation Of Minority And Women-Owned Businesses Wednesday, August 10, 2016 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York CEO’s company, DCM Erectors, also found guilty of fraud Preet Bharara, the United States Attorney for the Southern District of New York, announced today that LARRY DAVIS, President and Chief Executive Officer of DCM Erectors, Inc. (“DCM”), and DCM itself, were convicted of engaging in a fraudulent scheme to violate the Port Authority’s Minority and Women-Owned Business Enterprise Program (“M/WBE Program”), which is designed to increase the role of minority and women-owned businesses working on its projects. DAVIS was convicted after an eight-day jury trial before U.S. District Judge Loretta A. Preska. Manhattan U.S. Attorney Preet Bharara said: “As the jury found in its guilty verdict today, Larry Davis, the CEO of DCM Erectors, used fraud in connection with nearly a billion dollars of construction contracts on One World Trade Center. The construction work awarded to Davis came with the obligation to employ minority and women-owned businesses, an obligation that Davis shirked and then lied about. We cannot allow major public projects – particularly ones on the sacred World Trade Center site – to be built on a foundation of fraud. By its verdict today, the jury of New Yorkers made clear that it will not.” According to the Complaint, Indictment and evidence presented at trial: DCM specialized in steel erection for large construction projects. Since at least March 1999, DAVIS has owned DCM and served as its President and Chief Executive Officer. In 2007, DCM was awarded an approximately $256 million contract for work to be performed on One World Trade Center and in 2009, DCM was awarded an approximately $330 million trade contract for work to be performed on the World Trade Center Port Authority Trans-Hudson (PATH) Transportation Hub (collectively, the “World Trade Center Project”). The work to be performed by DCM for the World Trade Center Project included, but was not limited to, structural steel supply and erection, supply and installation of metal decking, drafting and engineering, and surveying. The Port Authority’s M/WBE Program is designed to ensure that M/WBEs receive work on its projects and applied to the World Trade Center Project. Pursuant to the M/WBE Program, all contractors, including contractors such as DCM, were obligated to make good faith efforts to enter into subcontracts with M/WBEs, with a goal of 17 percent of the overall contract amount to be given to M/WBEs (12 percent for MBEs and five percent for WBEs). In order to satisfy the M/WBE Program, DAVIS engaged in a fraudulent scheme in which he caused DCM to claim that certain work was performed by a minority-owned business, Solera/DCM Joint Venture LLC (“Solera/DCM,” and a woman-owned business, GLS Enterprises, Inc. (“GLS”), when, in truth and in fact, DCM itself performed such work or arranged for such work to be performed by other non-M/WBE contractors. Solera/DCM was a joint venture between DCM and a minority owned business, Solera Construction, Inc. (“Solera”), which was owned by Johnny Garcia, a qualified minority business owner who previously pled guilty for his role in the fraudulent scheme. Solera/DCM was purportedly owned 60 percent by Solera and 40 percent by DCM. DCM and DAVIS established Solera/DCM as a joint venture majority owned by Solera with the express purpose of using it to satisfy MBE requirements on public construction projects. From 2009 through 2012, DAVIS caused DCM to misrepresent to the Port Authority that Solera/DCM performed certain work on the World Trade Center Project when, in truth and in fact, the work, including metal decking and steel procurement, was performed by a non-minority contractor or by DCM itself. To facilitate the fraud, DAVIS directed Solera/DCM to place laborers who worked for a non-minority contractor performing metal decking on Solera/DCM’s payroll and then invoice DCM for such laborers’ time and also created certain invoices and directed Garcia to sign them to make it appear as if Solera/DCM procured steel, when, in truth and in fact, DCM did so. DCM claimed MBE credit for work purportedly performed by Solera/DCM on the World Trade Center Project. As part of the fraudulent scheme, DCM paid Garcia a total of at least $2 million ($150,000 in annual salary and additional monthly payments). The owner of GLS was Gale D’Aloia, who served as GLS’s President and previously pled guilty for her role in the fraudulent scheme. D’Aloia had been a long-time employee of DCM performing payroll management services for DCM and DAVIS’s related companies (the “Davis Group”). In 2004, D’Aloia left DCM and began performing the same payroll management services for DCM and the Davis Group through her company, GLS, which she registered as a WBE with the Port Authority. From 2009 through 2012, DAVIS and DCM misrepresented to the Port Authority that GLS performed surveying work, and fraudulently claimed WBE credit for GLS’s purported surveying work, on the World Trade Center Project when, in truth and in fact, the surveying work was performed by DCM itself. To facilitate the fraud, DAVIS directed D’Aloia to place unionized surveyors on GLS’s payroll who had been on DCM’s payroll and then to certify such payroll and also to invoice DCM for the workers even though DCM continued to actually supervise them. As compensation for engaging in the fraudulent scheme, DAVIS paid GLS up to 10 percent of each week’s total gross payroll for the surveyors, which totaled hundreds of thousands of dollars. * * * DAVIS, 65, of Mississauga, Ontario, Canada, was convicted of one count of wire fraud and one count of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison. He is scheduled to be sentenced November 15, 2016. Mr. Bharara praised the investigative work of the Port Authority’s Office of Inspector General; U.S. Department of Labor, Office of Inspector General; IRS-Criminal Investigation; and DOT-OIG. This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorneys Robert L. Boone and Kan M. Nawaday are in charge of the prosecution. Updated August 10, 2016 Topic Financial Fraud Component USAO - New York, Southern Press Release Number: 16-221

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