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Before yesterdayOffice of Inspector General

Two Former Wastewater Company Officials Sentenced on California State Charges Related to a Hazardous Materials Fraud Scheme

By ada.valaitis
On November 22, 2019, former employees of Santa Clara Waste Water Company (SCWWC)—operations manager Gus Baker and facility manager Mark Avila—were sentenced in Superior Court of Ventura County, California. Baker and Avila were each sentenced to 36 months’ probation, 2 months’ of suspended jail time, and a $150 fine. They had been charged with circumventing hazardous materials regulations and on November 20, 2015, pleaded guilty to failing to warn of a serious concealed danger, impeding enforcement, and illegally storing and labeling hazardous materials.
 
DOT-OIG’s investigation began in 2014, after a vacuum cargo tank trailer containing hazardous waste exploded at the SCWWC facility in Santa Paula, California. The explosion caused over 1,000 gallons of chemicals to spill, resulting in a fire that set off a series of explosions involving hazardous materials. Toxic smoke blanketed the area around SCWWC. Authorities ordered mandatory evacuations for everyone within a mile of SCWWC, issued shelter-in-place orders for everyone within a 3-mile radius, and closed a local elementary school and Highway 126. Dozens of people were examined and treated at local hospitals for exposure. Two SCWWC employees and three Santa Paula firefighters who responded to the blast were hurt. The firefighters entered SCWWC without any special protection after they were told it was only a sewage explosion. All three firefighters went on disability leave, and the fire engine was destroyed.
 
The investigation revealed that SCWWC stored hazardous materials in excess of the amounts its inventory was permitted to have for the treatment process. Prior to scheduled inspections, SCWWC officials would direct the transfer of the hazardous materials to an unsecured truck lot offsite. On the morning of the explosion, a Defense Logistics Agency contractor was scheduled to inspect SCWWC, and internal clean-up efforts were underway. Hazardous materials had been sucked from approximately 20 unlabeled chemical totes into a vacuum cargo tank trailer when the explosion occurred. SCWWC also disposed of hazardous waste via a wastewater pipeline to the City of Oxnard’s sewage plant, and via trailers to the Chiquita Canyon Landfill. Neither the pipeline nor the trailers were approved for the disposal of hazardous waste.
 
DOT-OIG conducted this investigation with the Environmental Protection Agency–Criminal Investigation Division and the Ventura County District Attorney’s Office.
Date: 
Friday, November 22, 2019
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  • December 2nd 2019 at 16:09

Long Island Contracting Company Principal and Employee Indicted for Alleged Roles in Fraud Schemes

By ada.valaitis
On November 20, 2019, Frank Lizza, owner/officer of Intercounty Paving Associates, LLC (Intercounty), Westbury, New York, and Intercounty employee Ramon De Los Santos were indicted in U.S. District Court, Central Islip, New York. The two men were charged with embezzling employee benefit plans, submitting false retirement and union benefit statements, and making false statements to FAA.
 
Intercounty provided road construction and paving services to commercial and public customers throughout New York and New Jersey. Lizza was also an owner/operator of 4L Equipment Leasing (4L), a non-union company, which supplied trucks and drivers for Intercounty’s contracts. Around 2014, Lizza and others allegedly helped De Los Santos establish LR Safety Consultants and Construction Services, LLC (LR), purportedly to move construction materials and debris to and from construction sites. However, as the indictment alleges, LR did not own any trucks or equipment; instead, it used 4L trucks and employees to perform the work. De Los Santos allegedly entered his company into a collective bargaining agreement (CBA) with Teamsters Local 282, which enabled LR to obtain federally funded road construction and airport contracts with prevailing wage requirements. The CBA prohibited the owners of LR from diverting work to non-union trucking companies unless they made payments to the workers and to the union benefit funds (UBF). In addition, Lizza, De Los Santos, and others allegedly schemed to defraud Local 282’s UBF by arranging to split truck drivers’ daily driving hours between LR’s union payroll and 4L’s non-union payroll; this occurred on an FHWA-funded road repair project in Nassau County, New York. In furtherance of the scheme, Lizza and De Los Santos allegedly submitted falsified certified payrolls to FAA and the Port Authority of New York & New Jersey (PANY&NJ) in connection with a construction project at John F. Kennedy International Airport.
 
DOT-OIG is conducting this investigation with the Department of Labor OIG, and PANY&NJ-OIG. The case is being prosecuted by the United States Attorney’s Office for the Eastern District of New York.
 
Note: Indictments, informations, and complaints are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.
Date: 
Wednesday, November 20, 2019
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  • December 2nd 2019 at 14:30

FHWA Debars Former Maine Consultant Who Pleaded Guilty to Fraud Charges

By ada.valaitis
On November 1, 2019, FHWA issued a final decision to debar Sheila Curtis, a former consultant fabrication inspector for HRV Conformance Verification Associates, Inc. (HRV), from Federal contracting and other procurement and nonprocurement transactions. The debarment was for a period of 44 months and 2 weeks, retroactive to March 15, 2016, and expired on November 29, 2019.
 
In November 2016, Curtis pleaded guilty to theft by deception and forgery after an investigation revealed that, while working on a federally funded bridge project, she sought reimbursement for lodging expenses she had not incurred. The Maine Department of Transportation hired HRV to inspect the federally funded Lisbon/Durham bridge project, and HRV assigned Curtis to inspect materials at a plant in Kingfield, Maine. From June to October 2015, Curtis intentionally deceived HRV and the State of Maine by creating the impression that she was staying at two different hotels while working on the project. She admitted to seeking reimbursement for lodging expenses that she had not incurred by falsifying or altering hotel bills.
 
This case was prosecuted by the Maine Attorney General’s Office.
 
Note: Exclusion actions (suspensions and debarments) are typically for a specific period of time, and the General Service Administration’s System for Award Management should be consulted to find out whether a company or individual is currently excluded.
Date: 
Friday, November 1, 2019
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  • November 29th 2019 at 15:33

Rec Maint Rpt (148)_2019.11.14-2019.11.29_CSV.csv

By ada.valaitis
Author: 
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Friday, November 29, 2019 - 09:16
  • November 29th 2019 at 14:16

QC2020010-3

By admin

LSC recommends STB reject financial statements and related supporting documentation when the accounting service provider submits incomplete or inaccurate data.

Recommendation number: 
3
Top Recommendation: 
No
Sensitive: 
Closed: 
Open
Project ID: 
Quality Control Review of the Independent Auditor’s Report on the Surface Transportation Board’s Audited Financial Statements for Fiscal Years 2019 and 2018
DOT Unique ID: 
4935
Opened Date: 
Friday, November 15, 2019
Questioned Cost: 
$0.00
Unsupported Cost: 
$0.00
Funds Put to Better Use: 
$0.00
  • November 29th 2019 at 14:16

QC2020010-2

By admin

LSC recommends STB require the accounting service provider to provide to STB evidence of quality control reviews signed and approved by supervisory personnel prior to accepting receipt of these documents.

Recommendation number: 
2
Top Recommendation: 
No
Sensitive: 
Closed: 
Open
Project ID: 
Quality Control Review of the Independent Auditor’s Report on the Surface Transportation Board’s Audited Financial Statements for Fiscal Years 2019 and 2018
DOT Unique ID: 
4934
Opened Date: 
Friday, November 15, 2019
Questioned Cost: 
$0.00
Unsupported Cost: 
$0.00
Funds Put to Better Use: 
$0.00
  • November 29th 2019 at 14:16

QC2020010-1

By admin

LSC recommends STB ensure that year-end schedules are updated to allow sufficient timeframes to accomplish STB established internal control processes in an effective manner.

Recommendation number: 
1
Top Recommendation: 
No
Sensitive: 
Closed: 
Open
Project ID: 
Quality Control Review of the Independent Auditor’s Report on the Surface Transportation Board’s Audited Financial Statements for Fiscal Years 2019 and 2018
DOT Unique ID: 
4933
Opened Date: 
Friday, November 15, 2019
Questioned Cost: 
$0.00
Unsupported Cost: 
$0.00
Funds Put to Better Use: 
$0.00
  • November 29th 2019 at 14:16

Audit Initiated of DOT's Oversight of Federal Funds Received by the City of Seattle Department Transportation

By Eric.Weems
Every year, the Department of Transportation (DOT) invests over $80 billion to build, maintain, and enhance the Nation’s transportation system. DOT’s Operating Administrations (OA) are charged with overseeing the expenditure of these funds for projects across the country and preventing fraud, waste, and abuse of taxpayer dollars. Recently, the Office of Inspector General received several complaints concerning federally funded projects for the City of Seattle Department of Transportation (SDOT) that are subject to DOT’s oversight. SDOT receives Federal funding as either (1) direct financial assistance awards from a DOT OA or (2) pass-through financial assistance awards, wherein an OA obligates funds to the Washington State DOT (WSDOT), which then sends the money to SDOT.
 
Given the significant amount of departmental funds allocated to State and local governments for transportation-related projects and that we have not conducted an audit of the flow of DOT funds to SDOT or WSDOT, we are initiating this review. Our objective for this self-initiated audit is to assess the Department’s oversight of Federal funds received by SDOT. Once we review Federal funding data from the Department’s OAs, we may reduce our audit scope to focus on either a specific OA and/or select SDOT projects.
Requested By: 
Self-Initiated
Project ID: 
19Z30002Z000
Date: 
Monday, November 25, 2019
Yes
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  • November 25th 2019 at 20:00

Pennsylvania Bus Company Operator Sentenced

By Eric.Weems
On November 19, 2019, Pau Hua Yu, a former president and/or shareholder of multiple commercial passenger bus companies, was sentenced in U.S. District Court, Harrisburg, Pennsylvania, to 24 months’ probation, a $10,000 fine, a $100 assessment, and a forfeiture of $150,000. In February 2019, Yu pleaded guilty to conspiracy charges and admitted she made materially false statements on commercial motor carrier forms regulated by the Federal Motor Carrier Safety Administration (FMCSA).
 
The investigation revealed that Yu and her co-defendants formed, controlled, managed, and operated numerous bus companies and routinely falsified FMCSA Motor Carrier Identification Reports and applications for operating authority. They concealed both the identities of the people who operated the companies and the unsafe condition of the buses. Additionally, the defendants falsified FMCSA-regulated records related to bus safety, maintenance, and driver qualifications to impede FMCSA inspections and reviews.
 
DOT-OIG conducted this investigation with HSI and the Pennsylvania Attorney General’s Office. FMCSA provided substantial assistance.
Date: 
Tuesday, November 19, 2019
Yes
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  • November 25th 2019 at 15:33

New Jersey Moving Company Officials Involved in Household Goods Moving Fraud Scheme Plead Guilty

By Eric.Weems
On November 12 and November 14, 2019, Rami Zubidat and Richard Bishara, respectively, pleaded guilty to separate informations charging them with conspiracy related to a household goods moving fraud scheme.
 
Zubidat, Bishara, and their co-conspirators controlled and operated a number of New Jersey-based moving companies. Although the companies were established as separate legal entities, they shared bank accounts, post office boxes, employees, and an office space. Customers were quoted “low ball” price estimates for moving household goods. Then—once the goods were loaded on the trucks—the prices were raised, putting the customers in vulnerable positions. Between 2013 and 2015, these companies handled hundreds of moves, increasing their final prices above the amount allowed by Federal regulations. To avoid detection by law enforcement, Zubidat, Bishara, and their co-conspirators created fictitious moving companies and registered them with fictitious owners and addresses. When customers made complaints against one company, the co-conspirators would shut it down and create a new one.
 
DOT-OIG conducted this investigation with Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service.
Date: 
Tuesday, November 12, 2019
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  • November 25th 2019 at 14:54

Semiannual Report to Congress: April 1, 2019 - September 30, 2019

By ada.valaitis

As required by the Inspector General Act of 1978 (as amended), this Semiannual Report summarizes the activities of the Office of Inspector General for the preceding 6-month period.

Requested By: 
Required by the Inspector General Act of 1978 (as amended)
Date: 
Tuesday, October 1, 2019
No
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  • November 21st 2019 at 14:42

Review Initiated of NHTSA’s Fiscal Year 2019 Drug Control Obligation and Performance Summary Reports

By Eric.Weems

The Office of Inspector General is initiating a review of the National Highway Traffic Safety Administration’s (NHTSA) fiscal year 2019 Drug Control Obligation and Performance Summary reports. The Office of National Drug Control Policy’s Accounting of Drug Control Funding and Performance Summary Circular requires agencies to submit annual drug control obligations and performance reports, and inspectors general to review these reports. Our objective is to provide negative assurance as to whether any information came to our attention based on the work performed to indicate that management’s assertions are not fairly presented, in all material respects, in conformity with the Circular’s requirements.

Requested By: 
Required by the Office of National Drug Control Policy, Accounting of Drug Control Funding and Performance Summary Circular
Project ID: 
20F3009F000
Date: 
Wednesday, November 20, 2019
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  • November 20th 2019 at 19:06

Review Initiated of FAA’s Fiscal Year 2019 Drug Control Obligation and Performance Summary Reports

By Eric.Weems

The Office of Inspector General is initiating a review of the Federal Aviation Administration’s (FAA) fiscal year 2019 Drug Control Obligation and Performance Summary reports. The Office of National Drug Control Policy’s Accounting of Drug Control Funding and Performance Summary Circular requires agencies to submit annual drug control obligations and performance reports, and inspectors general to review these reports. Our objective is to provide negative assurance as to whether any information came to our attention based on the work performed to indicate that management’s assertions are not fairly presented, in all material respects, in conformity with the Circular’s requirements.

Requested By: 
Required by the Office of National Drug Control Policy, Accounting of Drug Control Funding and Performance Summary Circular
Project ID: 
20F3008F000
Date: 
Wednesday, November 20, 2019
No
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  • November 20th 2019 at 19:03

Quality Control Review of the Independent Auditor’s Report on the Department of Transportation’s Audited Consolidated Financial Statements for Fiscal Years 2019 and 2018

By ada.valaitis
What We Looked At
We contracted with the independent public accounting firm KPMG LLP to audit the Department of Transportation’s (DOT) financial statements as of and for the fiscal years ended September 30, 2019, and September 30, 2018, and to report on internal control over financial reporting and compliance with laws and other matters. The contract requires the audit to be performed in accordance with U.S. generally accepted Government auditing standards, Office of Management and Budget audit guidance, and the Governmental Accountability Office’s and Council of the Inspectors General on Integrity and Efficiency’s Financial Audit Manual. In connection with the contract, we performed a quality control review of KPMG’s report dated November 13, 2019, and related documentation, and inquired of its representatives.
 
What We Found
Our quality control review disclosed no instances in which KPMG did not comply, in all material respects, with U.S. generally accepted Government auditing standards.
 
Recommendations
DOT concurred with KPMG’s eight recommendations. We agree with KPMG’s recommendations and are not making any additional recommendations.
Requested By: 
Required by the Chief Financial Officers Act of 1990
Project ID: 
QC2020011
Date: 
Monday, November 18, 2019
No
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  • November 20th 2019 at 15:30

Michigan Airport Contractor Sentenced in Federal Program Bribery Scheme

By ada.valaitis
On November 6, 2019, William Pritula, owner of Pritula & Sons Construction, LLC, was sentenced in U.S. District Court, Detroit, Michigan, to 24 months’ probation, including 6 months’ home confinement; and a $100 special assessment. He was also ordered to pay $11 million in restitution, an amount owed jointly and severally with co-conspirators Gary Tenaglia, James Warner, Angelo D’Alessandro, Paul Hurley, and Douglas Earles. A forfeiture judgment for $5,474,132.48, previously entered against Pritula and Warner, will be applied to the total restitution amount.
 
On May 22, 2018, a superseding information charged Pritula with bribery. On May 23, 2018, a second superseding information charged James Warner, a department manager in utilities and infrastructure at the Wayne County Airport Authority (WCAA), with conspiracy, theft from a federally funded program, Federal program bribery, money laundering, and obstruction of justice. The Federal Aviation Administration (FAA) provides funding for airport improvement projects to WCAA, which operates and manages the Detroit Metropolitan Airport (DTW).
 
From 2010 through 2014, Warner’s duties included field inspection and supervision of maintenance and repair projects at DTW. He also had authority to recommend and approve renewals of maintenance and repair contracts at WCAA. From 2003 through 2014, Pritula held contracts for pavement repair and replacement and similar work at DTW. With Pritula’s knowledge and permission, Warner created and submitted fraudulent invoices on behalf of Pritula’s company that indicated work had been performed at DTW. In return, Pritula provided kickbacks to Warner. From September 2010 through October 2014, Pritula’s company received over $18 million from WCAA, and Warner received over $5 million of that amount.
 
DOT-OIG conducted this investigation with the FBI.
Date: 
Wednesday, November 6, 2019
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  • November 19th 2019 at 18:00

Pennsylvania Man Sentenced to Prison for DBE Fraud Scheme

By ada.valaitis
On November 6, Stamatios “Tom” Kousisis was sentenced in U.S. District Court, Philadelphia, Pennsylvania, to 70 months' imprisonment, 36 months' supervised release, and ordered to pay $18,600 in fines and fees for his role in a multi-million dollar Disadvantaged Business Enterprise (DBE) fraud scheme. In August 2018, Kousisis, and his employer, Alpha Painting and Construction, Inc. (Alpha), were found guilty of wire fraud and related charges after a 19-day jury trial.
 
Kousisis and Alpha created a scheme to defraud the Pennsylvania Department of Transportation (PennDOT) DBE Program. The scheme related to the federally funded Girard Point Bridge and 30th Street Station projects in Philadelphia and involved an Alpha-Liberty joint venture between Alpha of Baltimore, Maryland, and Liberty of Youngstown, Ohio, two bridge-painting contractors, as well as Markias, Inc., a now-defunct DBE based in New Jersey, owned by Joyce Abrams.
 
Kousisis concocted a scheme to obtain and keep these two lucrative federally funded contracts, which totaled over $120 million. The contracts required a qualified DBE to provide painting supplies. Kousisis and Alpha had used Markias as a pass-through and that Markias did not perform a commercially useful function as required by DOT regulations. Instead, Kousisis and Alpha ordered materials from non-DBE suppliers and paid Markias a small fee to provide phony invoices that falsely represented it had provided the materials.
 
Kousisis and Alpha also illicitly funneled, through the Philadelphia projects, millions of dollars in materials ordered for several out-of-state projects, including the Tobin Bridge in Boston, Massachusetts, Amtrak Thames River Bridge in Groton, Connecticut, and Mississippi River Bridge in East Baton Rouge, Louisiana. Kousisis instructed Markias to issue fraudulent invoices that falsely made it appear that supplies delivered to and used on these out-of-state projects had gone to the Philadelphia bridges. The scheme caused PennDOT to credit the contractors more than $4.5 million in fraudulent DBE work.
 
DOT-OIG conducted this investigation with the FBI, DOL-OIG, and Amtrak-OIG with substantial assistance from FHWA and PennDOT.
Date: 
Wednesday, November 6, 2019
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  • November 19th 2019 at 14:30

Audit Initiated of MARAD’s U.S. Merchant Marine Academy Acquisitions

By ada.valaitis

The Maritime Administration (MARAD) operates the United States Merchant Marine Academy (USMMA), a Federal service academy whose students become licensed Merchant Marine officers and commissioned officers in the Armed Forces. Previous audits by the Government Accountability Office (GAO) and Department of Transportation Office of Inspector General (OIG) have identified weaknesses in MARAD’s and USMMA’s acquisition policies and practices. Furthermore, in 2017, two USMMA employees were found guilty of steering contracts to preferred vendors in exchange for kickbacks. Due to concerns highlighted by the past criminal activity, and GAO and OIG reports, we are initiating an audit of USMMA’s acquisition function. Our objective will be to assess contract award and administration policies, procedures, and practices for MARAD’s USMMA acquisitions.

Requested By: 
Self-Initiated
Project ID: 
19Z3003Z000
Date: 
Monday, November 18, 2019
No
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  • November 18th 2019 at 21:48

Rec Maint Rpt (147)_2019.11.07-2019.11.14_CSV.csv

By nathan.richmond
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  • November 14th 2019 at 14:21

New York Painting Contractor Settles DBE Fraud Allegations

By Eric.Weems
On October 31, 2019, Ahern Paining Contractors, Inc. (Ahern), of Woodside, New York, entered into a civil settlement agreement with the U.S. Attorney’s Office, Southern District of New York. Ahern agreed to pay $3 million to resolve allegations of fraud connected to contracted work on two DOT-funded public works projects: the Federal Highway Administration–funded Brooklyn Bridge Rehabilitation Project and the Federal Transit Administration–funded Queens Plaza subway station painting project for the New York Metropolitan Transportation Authority (MTA and New York City Transit Authority.
 
From 2010 to 2015, Ahern engaged Tower Maintenance Corp. (Tower), a Disadvantaged Business Enterprise (DBE), to perform required DBE work on both the Brooklyn Bridge and Queens Plaza projects. As a DBE, Tower was required to perform a commercially useful function, including managing and supervising the work. However, DOT-OIG’s investigation found that Spectrum Painting Corp., a non-DBE, managed and supervised the work assigned to Tower. Ahern also presented false claims for payment for the DBE work to the New York City DOT and MTA.
Date: 
Thursday, October 31, 2019
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  • November 12th 2019 at 15:30

New York Man Pleads Guilty to Amtrak Ticketing Fraud Scheme

By Eric.Weems
On October 24, 2019, Andre Wilburn pleaded guilty in U.S. District Court, Eastern District of New York, to access device fraud and aggravated identity theft. The investigation revealed that from about April 2016 through July 2018, Wilburn and others engaged in a scheme to defraud Amtrak and consumers by using unauthorized or stolen credit card account numbers—obtained from the “dark web”—to make reservations on Amtrak’s ticketing system. They then canceled the reservations, and as a result, Amtrak issued eVouchers, which the defendants sold online at a discount. Amtrak refunded approximately $450,000 in unauthorized purchases to victimized consumers. Federal Railroad Administration grant monies were used for the upgrade to Amtrak’s computer ticketing system, which includes the eVoucher system.
 
DOT-OIG is conducting this investigation with the Department of Homeland Security–Homeland Security Investigations and Amtrak-OIG.
Date: 
Thursday, October 24, 2019
No
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  • November 12th 2019 at 14:21
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