Tower Maintenance: Admitted False DBE Participation on Two Construction Projects

Tower Maintenance admitted false DBE participation on two construction projects and agreed to pay $150,000 in a court-approved civil settlement. On the Brooklyn Bridge and Queens Plaza projects, Tower supplied the certified disadvantaged business enterprise name while Spectrum Painting supplied management and supervision. Tower’s admissions describe a company promising to do the work itself, then agreeing to share profits with another business and presenting that business’s managers as its own employees.

The U.S. Attorney’s Office for the Southern District of New York announced Tower’s settlement on August 17, 2021. The amount reflected the office’s assessment of Tower’s ability to pay, based on financial information the company provided. The Long Island steel-painting company expressly admitted and accepted responsibility for conduct described in the government’s amended complaint.

The DBE Promise on Two New York Projects

Tower knew Ahern Painting Contractors intended to count its painting and blasting subcontracts toward disadvantaged business enterprise participation goals. The contracts required Ahern to hire disadvantaged business enterprises for a percentage of the work. The government’s account of these projects says those businesses had to manage and supervise their own work.

On the Brooklyn Bridge, Ahern entered into an agreement with Skanska Koch for industrial painting and rehabilitation work. Tower admitted knowing that Ahern expected to use it to fulfill a substantial part of Ahern’s participation goal. Tower signed documents stating that the work assigned to it as a disadvantaged business enterprise would be performed by Tower alone.

Queens Plaza followed in 2011. Ahern contracted with the Metropolitan Transportation Authority to provide overcoat painting on the elevated structure at the subway station. Tower again took a painting and blasting subcontract, knowing that Ahern intended to count its work toward the project’s disadvantaged business enterprise goal. The government alleged that Ahern and Tower told the transportation agencies Tower had hired no subcontractor to perform the work allocated to disadvantaged business enterprises on either project.

These were federally funded construction projects, with the New York City Department of Transportation and the Metropolitan Transportation Authority involved in administration. The program was meant to create opportunities for disadvantaged businesses. Tower’s participation carried a promise about who would run the work, as well as whose name appeared on the subcontract.

The Consulting Deal Behind Tower’s Subcontracts

Tower admitted agreeing to give Spectrum 50% of all its profits from the two projects in exchange for arrangements that included project-management support and equipment. The companies put their consulting agreements in writing.

Tower admitted that it did not formally disclose the key terms in writing to Ahern, or disclose them in any way to Skanska, the New York City Department of Transportation or the Metropolitan Transportation Authority. It also accepted that it should have told the program’s officers about provisions for Spectrum to finance Tower’s work.

The subcontract promised Tower’s own performance. The consulting deal gave a company without disadvantaged business enterprise certification management, equipment-supply and financial roles behind that promise.

Spectrum’s separate civil admissions explain what the management support meant at the site. Its manager set the work schedule, ordered materials, hired the foreman, inspected completed work and coordinated payment. Spectrum also supplied a superintendent and a health and safety supervisor.

We see the absurdity in calling that a consulting arrangement while representing the work as Tower’s alone. The duties described in the admissions reach the ordinary decisions that run a painting job: when people work, what they use, who supervises them and how the work gets paid for.

Tower on the Vest, Spectrum on the Payroll

Tower admitted identifying a Spectrum manager as a Tower vice president or employee in Brooklyn Bridge documents and as a Tower director in Queens Plaza documents. The same manager had helped Tower prepare its Brooklyn Bridge bid.

The presentation continued on the projects. Spectrum admitted that its manager, superintendent and safety supervisor identified themselves as Tower employees, including by wearing Tower vests and security identification. Documents submitted for security clearances also identified the manager as a Tower vice president or employee.

The payroll account in Spectrum’s admissions cuts through the clothing and credentials:

Spectrum’s civil admissions, as reported by the Justice Department, July 13, 2021

The vest said Tower. The employer was Spectrum.

What the Contractor Already Knew

Ahern admitted knowing that the person presented as Tower personnel was a Spectrum manager. Its own superintendent had attended a Brooklyn Bridge walk-through with managers from both companies and understood that Spectrum’s manager would help Tower prepare its bid.

In its civil settlement announcement, the Justice Department described documents Ahern received from Tower and passed to Skanska and the Metropolitan Transportation Authority. Those documents presented the known Spectrum manager as Tower personnel. Ahern managers also dealt directly with that manager about scheduling, inspections, materials and payment for Tower’s work. Ahern admitted that one of its executives communicated directly with Spectrum’s owner about both projects.

Ahern admitted recklessly disregarding facts showing that Spectrum managed and supervised the work. It also admitted failing to request the agreements between Tower and Spectrum or clarify their financial and working arrangements.

DBE Credit Follows the Work Behind the Name

The commercially useful function question concerns the work a disadvantaged business actually performs, manages and supervises. On these painting jobs, Spectrum’s manager set the schedule, hired the foreman and inspected the work credited to Tower. The certified company’s name on the subcontract concealed who was running the job.

Materials transactions can conceal the same split between identity and performance. In a separate civil settlement, HD Supply Waterworks acknowledged that American Indian Builders & Suppliers collected Waterworks invoices, copied their information onto its own invoices, added a markup and passed them to prime contractors. The government alleged that projects supported by the Department of Transportation and Environmental Protection Agency credited a disadvantaged business enterprise that performed no commercially useful supplying function.

The government said the price and terms in that DBE materials-credit arrangement were negotiated with Waterworks. In Tower’s admissions, Spectrum supplied management behind Tower’s project identity. Both accounts put the commercial work beside the certified name used to claim participation. Honest disadvantaged businesses lose the opportunity the program was meant to give them when somebody else’s work takes their place on paper.

What Proof Do You Need as a Whistleblower?

We work with you to establish the connection between the work promised, the company actually directing it and the representations used to obtain government money. Tower’s matter makes that connection specific: the subcontract, the bid preparation, the personnel documents, the consulting agreements and the communications about management and payment.

A project employee may recognize the supervisor and who gave the instructions. Someone in accounting may recognize who paid that supervisor or the agreement dividing the profits. Someone handling project documents may know how a Spectrum employee became Tower personnel on a form. Those are different views of the same business relationship.

Our work with government contract billing evidence connects those views to the claimed participation and the payments. You can start the conversation with the part of the job you know.

Three Companies, One DBE Fraud Arrangement

The government alleged that Ahern misrepresented Tower as solely performing millions of dollars of work on the projects. Ahern agreed to pay $3 million in its civil settlement announced November 1, 2019, and Spectrum agreed to pay $400,000 in its settlement announced July 13, 2021. Tower, whose certified status made the arrangement possible, faced the smallest settlement, based on its ability to pay. Each company expressly accepted responsibility for conduct described in its own announcement.

The cases reached different roles in the arrangement: Tower supplied the disadvantaged business enterprise identity and signed the project documents, Spectrum managed the work, and Ahern disregarded facts about who was doing it. The civil investigation involved the U.S. Department of Transportation Office of Inspector General, the New York City Department of Investigation and the Inspector General of the Metropolitan Transportation Authority.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Who Ran the Work

If the company on the DBE paperwork was different from the company directing your project, talk with our whistleblower experts about what you saw. We work beside you to connect the inside decisions to the false participation claims, and bring in government procurement fraud whistleblower lawyers who understand construction participation cases. From that first conversation through the case, we stay with you to build your strongest DBE fraud whistleblower case.