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Granite joint venture settles US fraud case for $4.6M

Santa Cruz Sentinel

WASHINGTON — Watsonville-based Granite Construction and a number of other construction partners have agreed to pay $4.6 million to settle allegations that they didn’t hire as many disadvantaged business enterprises on a light rail project in Minnesota than they said they had, according to the Justice Department.

“The Disadvantaged Business Enterprises program helps businesses owned by minorities and women work on federal construction projects,” said Tony West, assistant attorney for the U.S. Justice Department’s Civil Division. “Those who make misrepresentations in order to participate in this program and obtain federal funds take advantage both of the taxpayers and the businesses that the program is designed to assist.”

Granite has denied all allegations, saying it agreed to a settlement to avoid costly litigation.

“We categorically deny any wrongdoing,” said Jacque Fourchy, company spokeswoman. Fourchy called the DOJ allegations of impropriety “incorrect and irresponsible.”

The government claims were based on an investigation into the handling of the $330 million Hiawatha Corridor Light Rail project, an 11.6-mile light rail linking downtown Minneapolis to the Mall of America in Bloomington. It was conducted by the Minnesota Transit Constructors Inc., a joint venture that included Granite as lead, and C.S. McCrossan, and a number of subcontractors. Granite had about 56.5 percent interest in the project.

It was unclear how much of the settlement was Granite’s responsibility.

According to the Justice Department, the venture claimed “that materials and services for the project were provided by [Disadvantaged Business Enterprises], when in fact they were provided by non-DBE subcontractors and the DBEs were merely extra participants used to make it appear as if a DBE had performed the work.”

“We’ve incurred over a million dollars in legal fees over these six years, so it was time to put it to bed,” Fourchy said. “We did not violate the law in the construction of this project and we take great pride in our commitment to ethics and compliance in the way we conduct our business.”

Granite received commendations for its Disadvantaged Business Enterprises efforts on the project by both the National Association of Minority Contractors and the Minnesota Department of Transportation, Fourchy said.

B. Todd Jones, U.S. attorney for the Minnesota district, said the settlement helps to correct an injustice.

“This violation of law is not acceptable and the Federal Transit Administration will remain vigilant in cracking down on unscrupulous behavior wherever it occurs,” said Peter Rogoff of the Federal Transit Administration.

He said the law is meant to “help level the playing field for small and disadvantaged businesses so they may continue to achieve success while strengthening our economy and our transit systems.”

Since January 2009, the Justice Department has recovered more than $7.5 billion in enforcing the False Claims Act.

Granite shares closed Wednesday up 39 cents at $18.22. Last week, shares dropped to a new 52-week low of $16.92.

Editor’s note: The following corrections was made to this article:

It was erroneously reported that Parsons Transportation Group was part of the joint venture under investigation. Parsons was not part of the investigation or settlement as announced by the DOJ and subsequently reported by the Sentinel.

 

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This entry was posted on August 24, 2011 by in Business, Law-Related Articles.

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