Fraud And False Statements Scheme Charged on Big Dig Contract

BOSTON, MA - Boston, MA. A major contractor and one of its managers were charged today in federal court with submitting false claims on a Big Dig contract. The scheme involved the systematic, fraudulent billing of apprentice workers at the higher rate of pay for journeymen, resulting in continuing overpayments by the Central Artery/Tunnel project to the contractor.

United States Attorney Michael J. Sullivan, Theodore L. Doherty III, Special Agent in Charge of the Department of Transportation Inspector General’s Office in New England, and Marjorie Franzman, United States Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations and Warren T. Bamford, Special Agent-in- Charge of the Federal Bureau of Investigation, New England Field Division announced today that MCCOURT CONSTRUCTION COMPANY, INC. d/b/a McCourt/Obayashi Joint Venture (“MCCOURT CONSTRUCTION”) was charged in a single-count Information with conspiracy to defraud the United States with respect to claims on a federal highway project. RYAN MCCOURT, of Quincy, MA has also been charged in a single-count Information with conspiracy to submit false statements regarding the cost of work performed on a federal highway project.

The Information alleges that, beginning in 2002 through December 2005, MCCOURT CONSTRUCTION, the main contractor on the I-93 tunnel finshes contract, engaged in a scheme to over-bill the Central Artery/Tunnel Project by falsely categorizing apprentice ironworkers, among other trades persons, as journeymen on work it performed. MCCOURT CONSTRUCTION also failed in its responsibility to verify that subcontractor bills were submitted correctly. The work, which was overbilled, was performed on a time and materials basis, which meant the contractor, MCCOURT CONSTRUCTION, was paid for the time worked by each employee, as opposed to a fixed price for the work under contract. MCCOURT CONSTRUCTION was also paid 10% of its total time and materials billings to cover overhead, plus an additional 10% of that total for a profit margin. Thus, MCCOURT CONSTRUCTION's profit was also increased by its subcontractors' overbilling. The scheme involved more than 1,500 instances of over-billing during the course of the conspiracy and resulted in false claims, including subcontractor claims, for more than $300,000. A separate Information alleges that RYAN MCCOURT, who supervised MCCOURT CONSTRUCTION'S Claims and Changes Department, which handled the preparation and submission of time and materials bills to the Central Artery/Tunnel Project, participated in the same overbilling scheme.

If convicted on these charges, MCCOURT CONSTRUCTION faces a fine of over $600,000 and RYAN MCCOURT faces up to five years imprisonment to be followed by three years of supervised release and a $250,000 fine.

Three individuals employed by Massachusetts Electric Construction Company, a MCCOURT CONSTRUCTION subcontractor on the tunnel finishes contract, have previously been convicted in federal court for submitting false claims in connection with overbilling apprentice labor at journeyman rates.

The case was investigated by the Department of Transportation, Inspector General’s Office, the Department of Labor/Office of Labor Racketeering, and , the Federal Bureau of Investigation, New England Field Division. It is being prosecuted by Assistant U.S. Attorneys Fred M. Wyshak, Jr., Eugenia M. Carris, Jeffrey M. Cohen and Anthony E. Fuller of Sullivan’s Public Corruption Unit.

The details contained in the Informations are allegations. Defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.