20020672 Ver 3_Attachment 27 - 11-11-13 Contractors’ fraud trial likely to be next fall_20141126

Opposing attorneys for the U.S. government and contractors charged with defrauding the federal government out of millions of dollars have asked that the trial be scheduled for September 2014.
Contractors’ fraud trial likely to be next fall; new charges added
By: Sharon Roberts, editor November 11, 2013
CHARLOTTE –Lawyers for the federal government and for two Union
County road construction contractors indicted on 29 federal fraud counts
have jointly asked a judge to delay the trial until September 2014, citing
scheduling conflicts and the complexity of the case.
In addition, on Oct. 16, a superseding indictment was issued, adding a
new defendant and a new charge.
The trial had been schedule for a docket call in the U.S. District Court’s
Western District this month, at which Judge Max O. Cogburn would decide
whether the case was ready for trial. As of Monday, an order on the
motion had not yet been filed.
Boggs Paving Inc. of Monroe and five of its executives are charged along
with John “Styx” Cuthbertson and his Wingate trucking company of defrauding the federal government out of
millions of dollars over 10 years on road and airport runway construction projects in North and South Carolina.
According to the indictment, a federal investigation conducted over more than two years resulted in charges that
Boggs falsely claimed that Cuthbertson, a certified “disadvantaged business enterprise,” was performing some of the
work on $87.6 million in construction contracts.
“Boggs Paving is looking forward to the trial of this case so that a jury can determine its innocence in court,” said
William Terpening of Nexsen Pruet PLLC in Charlotte, one of the attorneys representing Boggs. “Given the number
of parties, amount of documents, and other compelling factors, we agree that extending the trial date until next
September is necessary. Boggs Paving makes a significant contribution to the local economy, and enjoys
tremendous support. We appreciate this support as we go through the litigation process.
“Boggs Paving has cooperated with the government in an attempt to resolve the matter since it first learned of the
issues that gave rise to the indictment. We believe Boggs Paving is not guilty of the charges made by the
government, and we expect to show that at trial. For these reasons, Boggs Paving is disappointed that the
government has opted to continue to pursue a case against it.”
Over the past decade, Boggs has been awarded contracts for numerous state and local road and runway
construction projects in North and South Carolina. The projects include the Monroe Bypass, on which work had
begun before a lawsuit forced the N.C. Department of Transportation to revise an environmental impact study. The
revised report is expected to be released for public comment soon.
Bids for projects that receive federal funding are required to include a portion of work subcontracted to
disadvantaged or small-business enterprises; if they don’t, the contractors must prove they made a good faith effort
to find such businesses. Those requirements pressure contractors to allocate certified subcontractors in their bids, o
face losing the bid to another company that does.
“Generally, the prime contractor that submits the lowest responsive bid and that also meets the specified DBE goals
will be awarded the contract,” according to the indictment.
Page 1 of 3Contractors’ fraud trial likely to be next fall; new charges added | Mecklenburg Times: N...
11/18/2013http://mecktimes.com/news/2013/11/11/contractors-fraud-trial-likely-to-be-next-fall-new-...
Attachment 27
Christopher I. McCabe, senior counsel at Jacoby Donner P.C. in Philadelphia who advises clients on highway and
airport contracts, said the paperwork and accounting required to meet the federal requirements can make it
challenging to find small and disadvantaged businesses capable of doing the work.
McCabe said there have been charges similar to those brought against the Boggs defendants in Pennsylvania, Ohio
and New York.
“Various U.S. Attorney’s offices are focusing their attention on this more than they have in the past,” he said.
The case against Boggs, he said, is one of the biggest the government has brought.
The indictment against Boggs charges that Styx Cuthbertson Trucking Co. Inc., although certified as a
disadvantaged business, was a “pass through” entity that did not perform any substantial work. While the
contractors claimed that Cuthbertson performed work valued at about $7 million, $6.3 million of that actually went
to Boggs, with $375,000 going to Cuthbertson and the remainder to other subcontractors, the indictment alleges.
The U.S DOT generally defines a DBE as a contractor who has a personal net worth of less than $1.32 million,
though in some cases other economic factors – including the ownership of expensive houses, boats and extensive
real estate holdings – can disqualify a contractor who claims a low personal net worth.
The original indictment was handed down in July, and on Oct. 16 was superseded by a new one. Arnold Mann, a
former Boggs project manager, estimator and area manager, was added to the indictment. Charged in both
indictments are Boggs president and co-owner Carl Andrew “Drew” Boggs III; CFO Kevin Hicks; Vice President and
Contract Administrator Greg Miller; and Vice President and Project Manager Greg Tucker; and John Cuthbertson and
his trucking company.
The new charge, making a false statement on a loan application, applies only to Cuthbertson and his trucking
company.
All of the defendants are charged with one count of conspiracy to defraud the federal government; three counts of
wire fraud; 11 counts of mail fraud; one count of conspiracy to launder money; and eight counts of money
laundering. Boggs Paving, Drew Boggs, Arnold Mann, Cuthbertson Trucking and John Cuthbertson are charged with
three additional counts of wire fraud, and all of the defendants accept Mann are charged with an additional two
counts of wire fraud.
On Oct. 15, attorneys for the defendants and the government filed a joint motion proposing that the trial be
scheduled for September due to its complexity and scheduling conflicts among the government’s attorneys and the
12 attorneys representing the defendants, including nationally prominent attorney Roy Black, who is based in Miami
In addition, the motion says, the trial is expected to last from three to five weeks and thus far the potential
evidence includes about 400,000 scanned images, more than 40 boxes of documents, and the testimony of more
than 50 witnesses.
Rick Baucom, the N.C. DOT’s assistant division construction engineer in the Matthews office, did not return a phone
call and an email seeking comment on the impact the indictment could have on the company’s ability to complete
Monroe Bypass, or when the revised study will be released to the public.
The Monroe Bypass would be a 20-mile route around the congested stretch of U.S. 74 between Stallings and
Marshville. Land, materials and equipment acquisition and design work had begun before the project was suspended
when a federal appeals court ruled in May 2012 that the N.C. DOT’s environmental impact study of the project
“failed to take the required ‘hard look’ at environmental consequences.”
Page 2 of 3Contractors’ fraud trial likely to be next fall; new charges added | Mecklenburg Times: N...
11/18/2013http://mecktimes.com/news/2013/11/11/contractors-fraud-trial-likely-to-be-next-fall-new-...
Since the work was suspended, Boggs and the two companies with which it formed a partnership for the project
have received about $1.6 million in payments. Baucom said recently those payments were for demobilization,
maintenance of materials and equipment necessary for the construction, and to keep employees hired by the
contractors for this project available to resume work when the construction begins again. The project is now
estimated to cost more than $800 million.
Page 3 of 3Contractors’ fraud trial likely to be next fall; new charges added | Mecklenburg Times: N...
11/18/2013http://mecktimes.com/news/2013/11/11/contractors-fraud-trial-likely-to-be-next-fall-new-...