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Boggs Paving Inc. enters guilty plea in road construction fraud case

Boggs Paving Inc. has pleaded guilty to one count of conspiracy to defraud the U.S. government, just six days before the Monroe-based road construction company was scheduled to go to trial.

Federal fraud case defendant Carl Andrew “Drew” Boggs III walks down Trade Street in this Aug. 28 photo. Photo by Tony Brown

Federal fraud case defendant Carl Andrew “Drew” Boggs III walks down Trade Street in this Aug. 28 photo. Photo by Tony Brown

The plea, which was not part of an agreement, was signed by company president and co-owner Carl Andrew “Drew” Boggs III and his attorney, Kenneth D. Bell, a partner at McGuire Woods and a former first assistant U.S. Attorney for the Western District of North Carolina in Charlotte.

The plea hearing was held Wednesday before U.S. District Court Magistrate Judge David Keesler.

Court records did not indicate when the company, Boggs, four current or former employees, and John “Styx” Cuthbertson, owner of Cuthbertson Trucking Co. Inc. in Wingate, will be sentenced. All have pleaded guilty to charges stemming from an investigation into 10 years of federal and North and South Carolina road contracts, in which Boggs fraudulently claimed that Cuthbertson was performing work as a disadvantaged business enterprise, when in reality, Boggs performed the work and paid Cuthbertson about 10 percent of the money Boggs claimed he received for work performed.

Emails to Bell and the U.S. Attorney’s Office were not immediately returned, and the office of U.S. District Judge Max O. Cogburn Jr., who has handled much of the case, declined to comment other than to say the sentencing has not yet been scheduled.

Also unknown is how the case’s outcome will effect Boggs Paving contracts, especially for work on the proposed Monroe Bypass, a 19.7-mile toll road that would circumvent traffic congestion and stop lights along U.S. 74. Boggs is one of three companies that formed a limited liability company, Monroe Bypass Constructors LLC, in order to bid on the project. The others are United Infrastructure Group Inc. of Great Falls, S.C., and Anderson Columbia Co. Inc. of Lake City, Fla.

Jen Thompson, a N.C. Department of Transportation communications officer, did not immediately have answers to questions about how the guilty pleas will affect the company’s standing on the project.

The project has been stalled since a November 2010 law suit filed by the Southern Environmental Law Center on behalf of conservation groups, which argued that the state and federal transportation departments used faulty data in a report determining the extent of possible environmental impacts of the project.

In May 2012, the U.S. 4th Circuit Court of Appeals agreed and suspended the project, ordering the agencies to revisit their Environmental Impact Statement, which is required through the National Environmental Policy Act of any large federally funded projects that could cause environmental damage.

The N.C. Department of Transportation released a draft revised report in December, and in May, the Federal Highway Administration announced that revisions did not alter the conclusion that building the bypass was the preferred alternative for providing a high-speed southeast corridor from Charlotte and alleviating traffic congestion along U.S. 74.

In June, the SELC filed another suit, calling the revised report “the latest inadequate review” of the project’s potential impacts.

Last week, Gov. Pat McCrory’s campaign announced that it would donate to charity more than $10,000 in political donations made by the company and its employees. Boggs had hosted a March 2012 fundraiser for McCrory at his Waxhaw home, which according to Union County records, is valued at $2.2 million.

Boggs’ Monroe-based company was incorporated in 1994 by Drew Boggs and his brother, David Christopher Boggs, and has worked extensively in the Carolinas on road and airport runway projects.  His brother was not charged in the case.

The U.S. DOT’s Office of the Inspector General, the FBI and the IRS investigated 10 years’ worth of road construction contracts in the Carolinas that totaled $87 million. The U.S. Attorney’s Office charged that Boggs Paving claimed it had paid Cuthbertson $3.7 million for the trucking company’s portion of work, when in fact Cuthbertson received $375,432 as a kickback for his part in the scheme.

When awarding such contracts, the government often requires bids to show that a portion of the work is subcontracted to small businesses owned by women, minorities or other disadvantaged groups – or at least proof of a good-faith effort to find such companies.

The indictment charged Cuthbertson did not perform the amount of work indicated by the contract; that a bank account was set up in Cuthbertson’s name but actually controlled by Boggs Paving; that Boggs Paving bid on projects under Cuthbertson’s name; and that Boggs Paving at times attached magnetic signs to its trucks that indicated they were owned by Cuthbertson.

The companies, Cuthbertson, Boggs, and four Boggs employees were collectively charged with 30 counts of wire and mail fraud; conspiracy to defraud the federal government; money laundering; money laundering conspiracy; and making a false statement on a loan application.

Since late June, they have all pleaded guilty to at least one count in the October 2013 indictment, which superseded a July 2013 indictment and added one defendant and one count.

* Drew Boggs, 50, of Waxhaw, pleaded guilty Aug. 28 to one count of conspiracy and one count of money laundering conspiracy. An additional 27 counts will be dismissed.

* Arnold Mann, 55, of Fort Mill, S.C., pleaded guilty to one count of conspiracy. He was originally charged with 27 counts. Under the plea agreement, he is likely to receive probation when sentenced.

* Kevin Hicks, 43, of Monroe, the former chief financial officer at Boggs Paving Inc., pleaded guilty to one count of conspiracy to defraud the U.S. Department of Transportation and one count of money laundering conspiracy. He was originally charged with 26 counts. The U.S. Attorney’s Office recommended a sentence of up to 15 months.

*Greg Tucker, 41, of Oakboro, a former Boggs Paving vice president, project manager and estimator, pleaded guilty to one count of conspiracy to defraud the U.S. DOT. He had been charged with 12 counts. The U.S. Attorney’s Office recommended a sentence of one to 15 months.

*Greg Miller, 60, of Matthews, a vice president at Boggs Paving Inc. of Monroe, pleaded guilty to one count of conspiracy. He had been charged with 26 counts. The U.S. Attorney’s Office recommended a reduced sentence.

*Cuthbertson, 69, of Monroe, pleaded guilty to one count of conspiracy to commit wire fraud and mail fraud.  He had been charged with 30 counts. The U.S. Attorney’s Office said it would recommend a reduced sentence. The charges against his company were dismissed.

The charges carry maximum sentences of five to 20 years and fines of $250,000 to $500,000. The defendants could also be ordered to pay restitution.

 

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