Former Boggs Paving Co. employee Arnold Mann of Fort Mill, South Carolina, was sentenced Tuesday to two years of probation for his part in a $88 million federal road construction fraud case. He also was fined $7,500, which he must pay by year-end.
Mann was the first to plead guilty to a charge related to his role in a conspiracy to defraud state and federal transportation departments with claims that a portion of highway work contracted to Monroe-based Boggs Paving would be subcontracted to a minority-owned business. Six other defendants who have pleaded guilty in the case, including president and co-owner Carl Andrew “Drew” Boggs III, are scheduled for sentencing Nov. 23.
Mann’s sentence of probation was expected, as it was part of a plea agreement with federal prosecutors.
Assistant U.S. Attorney Jenny Grus Sugar told presiding U.S. District Judge Max O. Cogburn Jr. before he handed down the sentence that Mann had been “the first person out of the gate” to cooperate with the federal government’s case against Boggs Paving.
“It was a very tight-knit company and nobody wanted to point the finger,” she said. “We needed people to come in and tell us what happened.” Grus Sugar said Mann had no personal financial stake in the crime, and was not the ultimate decision-maker in what occurred.
The former project manager, estimator and area manager at Boggs Paving pleaded guilty in June 2014 to one count of conspiracy to defraud the U.S. Department of Transportation.
Mann, dressed in a dark blue suit, appeared contrite prior to sentencing, telling the judge that he had neglected his moral and ethical upbringing.
“I apologize to the court for an obvious lack of judgment in this matter,” he said.
Mann was not charged in the U.S. Attorney Office’s original July 2013 indictment, but was added, along with an additional charge, to a superseding indictment in October of that year. He was prosecuted, Grus Sugar said, for having lied to the grand jury investigating the crime before opting to cooperate with government prosecutors.
The indictment charged the defendants, in total, with 30 counts of wire and mail fraud, conspiracy to defraud the federal government, money laundering and money laundering conspiracy.
The charges carry maximum sentences of five to 20 years, fines ranging from $250,000 to $500,000, and possible penalties equaling the net proceeds the companies received through the fraudulent contracts.
The prosecution resulted from a federal investigation into contracts for road projects in North and South Carolina between January 2003 and December 2012 that were partially funded by the U.S. Department of Transportation. Those contracts required that Boggs Paving subcontract a portion of work to a disadvantaged business enterprise.
Boggs Paving claimed DBE credits for subcontracting $3.75 million of the work to minority-owned Cuthbertson Trucking of Wingate. In fact, according to the U.S. Attorney’s Office, Boggs performed the work and paid Cuthbertson $375,432 as a kickback.
Executives at Boggs Paving were accused of setting up bank accounts in Cuthbertson’s name that were controlled by Boggs employees, bidding on projects in Cuthbertson’s name, and placing magnetic signs on Boggs Paving trucks that bore Cuthbertson’s company name.
Those scheduled to be sentenced Nov. 23 are:
- Kevin Hicks, of Monroe, the former chief financial officer at Boggs Paving, who pleaded guilty in July 2014 to one count of conspiracy to defraud the DOT 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, of Oakboro, a former Boggs Paving vice president, project manager and estimator, pleaded guilty in July 2014 to one count of conspiracy to defraud the DOT. He had been charged with 12 counts. The U.S. Attorney’s Office recommended a sentence of one to 15 months.
- Greg Miller, of Matthews, a vice president at Boggs Paving Inc. of Monroe, pleaded guilty in August 2014 to one count of conspiracy to defraud the DOT. He had been charged with 26 counts. The U.S. Attorney’s Office recommended a reduced sentence.
- John “Styx” Cuthbertson, of Monroe, pleaded guilty in August 2014 to one count of conspiracy to defraud the DOT. 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.
- Boggs, of Waxhaw, who pleaded guilty in August 2014 to one count of conspiracy and one count of money laundering conspiracy. An additional 27 counts are expected to be dismissed when he is sentenced.
- Boggs Paving Inc. pleaded guilty in September 2014 to one count of conspiracy to defraud the DOT. The remaining 28 counts were dismissed.