A New York City unit of contractor Skanska AB has agreed to pay $19.6 million to settle a federal probe into disadvantaged-business-enterprise subcontracting practices among city contractors. Under the March 31 settlement, Skanska USA Civil Northeast will not face civil claims or criminal charges. The investigation of other firms continues.

The pact was announced concurrently with an indictment of the owners of Environmental Energy Associates (EEA), a Skanska DBE sub. Prosecutors say on one project, the Skanska unit “effectively self-performed the work … and helped create the appearance that EEA had done commercially useful work on the project.”

A grand jury indicted Balu Kamat and Carmine Desio, EEA president and vice president, respectively, in U.S. district court in Manhattan on fraud and conspiracy charges. On various city projects, they allegedly entered into subcontracts for work they knew EEA could not do. The officials also arranged to have third parties perform such work for which they received a “markup or fee” and “purported to, but did not, in fact, do work for which primary contractors claimed DBE credit,” says the indictment.

The Skanska settlement follows by three months similar actions in a case involving DBEs used on transportation and environmental projects by Secaucus, N.J.-based Schiavone Construction Co., a unit of Spanish contractor Dragados USA.

In a statement, Richard Cavallero, president of Skanska USA Civil Northeast, said it “takes pride in its industry leadership in supporting diversity, and we recognize, and regret, that we did not follow best practices with respect to our use of EEA as a [DBE] on certain projects.”