20020672 Ver 3_Attachment 18 - 08-28-14 Boggs paving ceo pleads guilty to fraud_20141124

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Printed from the Charlotte Observer - www.CharlotteObserver.com
Posted: Thursday, Aug. 28, 2014
Boggs Paving CEO pleads guilty in minority contractor fraud
By Michael Gordon and Steve Harrison
PUBLISHEDIN: CRIME & JUSTICE
The head of a prominent Charlotte-area road-building company on Thursday became the sixth defendant to plead
guilty to defrauding the state and federal government out of $87 million in highway work.
Carl “Drew” Boggs, president and CEO of Boggs Paving Inc. of Monroe, entered his plea before U.S. Magistrate
Judge David Cayer shortly after 10 a.m. at the federal courthouse in Charlotte.
That leaves one of the original targets left: Boggs Paving itself.
Drew Boggs, 50, and four of his executives were charged with receiving millions in federal and state highway
contracts over the past decade by exaggerating the role played by a minority-owned contractor – known in
government parlance as “disadvantaged business enterprises” or DBEs.
The company would have been disqualified from bidding on the jobs without promising that a DBE would get a
share of the work.
All of the five Boggs employees have now pleaded guilty to lesser charges in hopes of receiving lesser punishment.
So has John “Styx” Cuthbertson, the CEO of a minority-owned trucking firm in Wingate who prosecutors say
joined the scheme to serve as a DBE. All await sentencing.
“It’s disheartening to think anyone would defraud government programs designed to help hardworking Americans,
essentially robbing worthy businessmen and women of the chance to achieve their dreams,” said John Strong,
special agent in charge of the FBI in North Carolina.
Boggs’ plea came about two weeks before his case was to go to trial. He stands to become the second generation of
his family to be imprisoned on corruption charges related to road building.
His father, Andy Boggs, served a 60-day federal sentence in the early 1980s for rigging bids on North Carolina
highway projects while working for another company.
In a sweeping indictment released in July 2013, Drew Boggs and the five other defendants were accused of 29
counts of conspiracy to defraud the federal government, money laundering, mail fraud and other charges.
The investigation involved the U.S. Attorney’s Office, the FBI, the Internal Revenue Services and the federal
highway department.
All the defendants were part of what prosecutors described as a 10-year scheme to win government highway
contracts in the Carolinas by using Cuthbertson’s Styx Trucking Co. as the necessary DBE.
Prosecutors say Boggs paid Cuthbertson a bribe to take part in name only. In some cases, company workers put
Styx logos on Boggs’ trucks at the work sites. To mislead the government, Boggs paid millions to Styx that it
secretly funneled back to Boggs’ accounts.
With defense attorney and former federal prosecutor Ken Bell at his side, the towering Boggs pleaded guilty to two
conspiracy counts: to defraud the federal Department of Transportation and to commit money laundering.
Together, the charges carry a maximum penalty of 25 years in prison and $750,000 in fines. Restitution, as of yet
not determined, is also likely.
Assistant U.S. Attorney Jenny Sugar told the judge that if Boggs cooperates, prosecutors will recommend a maximum sentence of five years in prison. All the other
charges would be dropped.
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Now the government’s attention turns to Boggs Paving, a prominent builder of area roads for two decades. Complete lists of company projects in the Carolinas were not
immediately available Thursday. Media reports say that since 2008, South Carolina alone awarded the company at least $200 million in bids.
Since the indictment, both it and Styx Trucking have been banned from bidding on federal projects. Highway officials in the Carolinas say they haven’t awarded any
work to the company since the suspensions took place.
However, North Carolina has continued to pay Boggs Paving millions of dollars for work not being done.
The company has 20 percent of a $308.3 million contract awarded in 2011 to a group of firms to build the Monroe Bypass. Work has been blocked by an environmental
lawsuit since 2012.
However, the state has continued to pay – $46.6 million as of this week. That means some $11.6 million has gone to Boggs Paving.
Thursday, after Drew Boggs’ guilty plea, state highway officials said they continue to monitor the case “to determine what actions are in the best interest of the public.”
Styx Trucking, originally listed as a DBE for the bypass, has been removed from the project.
Kym Hunter, staff attorney for the Southern Environmental Law Center in Chapel Hill, which sued to stop the bypass, said Thursday that she’s surprised the state has
not fired Boggs Paving.
“They should be looking for a noncriminal group to take on hundreds of millions of dollars,” Hunter said.
It’s unclear who’s running the company. A phone call to its headquarters was not returned Thursday afternoon.
Drew Boggs’ attorneys declined to comment after the hearing.
The road-builder appeared relaxed Thursday morning as he talked and occasionally laughed with Bell. But after his case was called and he stood before Cayer, Boggs
gave somber “yes, sir” and “no, sir” replies as the judge questioned him about his plea.
At 10:22 a.m., Cayer arrived at a key point in his interrogation.
“Are you guilty of these charges?” he asked.
“Yes,” Boggs said.
Gordon: 704-358-5095
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9/2/2014http://www.charlotteobserver.com/2014/08/28/v-print/5134655/boggs-paving-ceo-pleads-guilty.html