- Bribery. In one 1993 case, a county executive was convicted of conspiring to violate federal bribery and extortion statutes, as well as conspiracy to commit mail fraud for taking a bribe from an architect. Evidence showed that the county executive received a $30,000 payment shortly after he provided assistance to the architect in obtaining a $2,275,000 contract for a multi-purpose civic center and arena. He was also charged with tax evasion for not reporting payment as income. The architectural firm attempted to characterize the payment as a “loan,” and even back-dated a promissory note after the IRS began to investigate the official’s taxes. As to the architect, a jury convicted him of conspiracy and ling a false tax return, and he was sentenced to 18 months in prison, plus fined $25,000. In an older 1958 case, seven defendants were charged with conspiracy to defraud the government on a military project for the Corps of Engineers. One of the partners of the A/E firm was personally charged with accepting a $10,000 bribe from the contractor. The court said, “the clear purpose of the statute is to protect the public from the consequences of corruption in the public service.” In 1975, 18 architects and engineers were charged with bribing a public employee to award an architectural contract for work on a state medical center campus in Kansas City. More recently, in late August 2016, the Department of Justice settled with a large A/E firm to resolve bribery charges involving a former firm executive and an ex-Department of Veterans’ Affairs manager. The A/E firm agreed to pay $12 million in penalties. The VA manager was sentenced to nearly five years in prison and a former 55-year old associate principal of the A/E firm was sentenced to nearly three years for making more than a dozen cash payments in exchange for exclusive information about VA projects, contracts, and business.
Kick-backs. In a 1997 case, an architect was sentenced to two years in prison and ordered to pay restitution for conspiring with an asbestos abatement subcontractor to over-bill for work that was not performed on a school district project. The federal government then sued the architect under the False Claims Act, recovering triple damage for the kick-backs of more than $480,000, plus $20,000 in penalties. In a 2005 case, a contractor was convicted of tax fraud. Evidence in the case showed that on three occasions, the contractor gave the project architect envelopes containing $5,000 in cash bribes to secure contracts and bonuses for the construction company.
The architect testified that although he never reported the payments on his tax returns, they did not influence his handling of the project in any way. The court said: “This would make
a participant, if a minor one, in the conspiracy to avoid reporting income and paying taxes,” although it does not appear he was criminally charged for taking kick-backs.
- Racketeering laws. The Racketeer Influenced and Corrupt Organization Act was enacted in 1970 to curb organized crime. However, the law is broad enough to impose civil liability on others who have no ties to organized crime. “Racketeering activity” includes specific acts covered by federal criminal statutes, including mail fraud and wire fraud. Those who engaged in criminal schemes which use the mail, email, interstate fax, or telephone can be liable under RICO. In one such case, an engineering firm and its senior partner and principal owner who carried on a 12-year scheme of corrupt and illegal activities in a three-state region on a number of major sewer construction projects were convicted of extorting money from contractors under their control and fraudulently overstating payment claims, as well as bribing public officials. The firm’s principal was sentenced to 12 years in prison and ned $85,000.
Crimes and misdemeanors: Part two
Jan 30, 2017
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