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Feds Had No Idea Magnetic Signs Covered Up $88M Fraud

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Ethan Barton Editor in Chief
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Paving company executives used a magnetic sticker to trick federal procurement officials into awarding their firm nearly $88 million worth of contracts.

Boggs Paving Inc. took advantage of Styx Cuthbertson Trucking Company Inc.’s status as a “Disadvantaged Business Enterprise” to receive nearly $88 million of government-funded construction contracts, according to the Department of Transportation Inspector General.

Such firms are required to be majority-owned by officially-recognized minorities in order to receive special consideration in government contracting.

Boggs used magnetic decals with Styx’s name to conceal its own logo to further fool federal officials.

“Records indicate from June 2004 to July 2013, Boggs Paving was the prime contractor on 35 federally funded contracts, and was a subcontractor for two additional contracts, worth $87.6 million” the statement said. Boggs also claimed $3.7 million in disadvantaged business credits for these contracts for payments the company claimed were made to Styx.

“Styx only received payments of approximately $378,000 for actual work on these contracts and the majority of the money was funneled back to Boggs Paving and its affiliates,” the statement said. “John Cuthbertson, owner of Styx, received kickbacks for allowing his company’s name and [disadvantaged business] status to be used by Boggs Paving.”

Charges were dismissed against Styx in 2014.

The U.S. District Judge Max O. Cogburn Jr. ordered Boggs to pay a $500,000 fine. Boggs President Carl “Drew” Boggs was sentenced on Nov. 23 to 30 months in prison and a $15,000 fine.

Other Boggs executives were also penalized:

Chief Financial Officer Kevin Hicks was sentenced to two years of probation and a $2,000 fine; Vice President Greg Miller was sentenced to 15 months in prison; Vice President Greg Tucker was sentenced to two years of probation and a $1,000 fine; Cuthbertson was sentenced to three months of house arrest, 21 months of probation and a $2,000 fine; and Boggs Project Manager Arnold Mann was sentenced on Nov. 10 to two years probation and a $7,500 fine.

The investigation was a joint effort between the DOT IG, the FBI and the Internal Revenue Service.

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