Fraud
Wisconsin Concrete Contractor Illegally Received $260M Using Federal DBE Program Front
Sonag Ready Mix of Milwaukee fraudulently used a front company to net federal DBE contracts
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A Wisconsin concrete contractor that worked on high-profile Milwaukee projects such as the Fiserv Forum and Northwestern Mutual Tower illegally used a federal program to help disadvantaged, small businesses compete for federally funded transportation contracts, according to a five-year federal investigation that wrapped up last month.
Over a dozen years, executives at Sonag Ready Mix of Milwaukee fraudulently reaped more than $260 million in government contracts intended to benefit minority and veteran-owned businesses, according to the government.
Nicholas Rivecca, who owned Sonag, was the last of five individuals to be sentenced in relation to the crime. Another of the owners, Brian Ganos, was convicted and sentenced in December 2019.
Rivecca was convicted on one count of conspiracy to defraud the U.S. government and was sentenced Sept. 15 for violating the False Claims Act and defrauding the U.S. Department of Transportation’s Disadvantaged Business Enterprise program.
Rivecca was sentenced in U.S. District Court for the Eastern District of Wisconsin to three years probation; 1,200 hours of community service to assist disadvantaged individuals, groups, and disabled veterans; and a $100 special assessment.
According to the government, the scheme began in approximately 2005 when Sonag lost certification with the DBE program.
Rivecca and Ganos proceeded to use minorities and disabled veteran contractors as fronts to fraudulently obtain DBE certification and win ready-mix contracts for another company, Nuvo Construction Company, Inc.
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While Ganos was the organizer of the scheme, Rivecca operated Sonag on a daily basis, including running projects that were awarded to Nuvo. Rivecca, along the Ganos, received the largest share of the profits from the Nuvo jobs, the government states.
Ganos was sentenced to almost 6 1/2 years in federal prison for leading the scheme. He pleaded guilty to one count of wire fraud and one count of mail fraud.
Ganos’s sentence also includes 2 years of supervised release, a $5,000 fine and forfeiture of assets worth nearly $4 million. Some of Ganos’s assets included a condominium in Winter Park, Colo., two Disney time shares, an office building and five vehicles including a Corvette Stingray convertible and other classic cars.
“Driven by greed, Brian Ganos exploited federal programs that Congress intended to help disadvantage individuals and veterans who were injured while serving our country,” said U.S. Attorney Matthew D. Krueger in a statement.
In a March 2018 plea agreement recently made public, Rivecca pleaded guilty to one count of conspiracy to defraud the federal government. He agreed in September 2018 to pay $629,732, including $319,343 in restitution.
“This settlement reflects our commitment to protecting federally funded programs from fraud. Firms that seek public funds must understand that cheating and lying to win government-funded contracts will not be tolerated,” Kreuger said. Kenneth B. Gales, public information officer for the U.S. Attorney of Eastern Wisconsin’s Office declined to comment further on Rivecca’s conviction except to say “the investigation is done and that there were six other defendants convicted.”
The other defendants were Brian Ganos, Mark Spindler, James Hubbell, Jorge Lopez, Telemachos Agoudemos, and Nuvo Construction Company, Inc.
According to the government, Ganos and Rivecca consulted with Spindler to establish accounting procedures to ensure all revenue from any Nuvo ready-mix concrete sales passed to Sonag and onto Rivecca’s and Ganos’s bank accounts.
The Milwaukee Journal Sentinel reports that Sonag worked on such high-profile projects as the Fiserv Forum, Northwestern Mutual’s downtown business tower and Lorenz Hall at the Mendota Mental Health Institute in Madison.
The scheme was investigated by several federal agencies including the Small Business Administration. Rachel Apple, a public affair specialist for the SBA's Wisconsin District Office, declined to comment.
Sonag ceased operations in 2019, according the Milwaukee Journal Sentinel.
