In an agreement with the Justice Dept., Caddell Construction Co. has paid a $2-million penalty to settle criminal fraud charges that the company intentionally made false statements to the Dept. of Defense concerning a small firm with which Caddell worked on three military construction projects.
Under the agreement, announced on Dec. 27, Justice will not prosecute Montgomery, Ala.-based Caddell for its allegedly improper pay requests to DOD that included the false information. Justice noted Caddell’s “substantial cooperation,” voluntary disclosures and improvements in its reporting systems and in compliance training and oversight. The agreement extends for two years.
The company made the payment to the Justice Dept. on Jan. 7.
According to the non-prosecution agreement, from 2003 to 2005 Caddell obtained about $1.2 million from DOD under the department’s mentor-protégé and Indian incentive programs, although some company officials knew that statements included in the funding requests were false.
Caddell said in a statement: “This settlement follows a thorough internal investigation by outside counsel for Caddell into its payments from these two programs. Caddell also made a series of voluntary disclosures to the Dept. of Justice and fully cooperated with the department’s own investigation. The company is pleased to resolve these past issues and move forward with the business of providing high-quality construction services to its customers, including the federal government.”
DOD’s mentor-protégé program provides incentives for large contractors to help small disadvantaged firms develop as businesses. The incentives include DOD reimbursement for costs the mentor incurs for help it provides to the protégé. Under the Indian incentive program, DOD pays a prime contractor 5% of the sums the prime pays to a Native American-owned subcontractor on a project.
In 2003, Caddell entered an agreement with Mountain Chief Management Services Inc. under the mentor-protégé program for two construction projects at Fort Bragg, N.C., that DOD had awarded to Caddell.
Mountain Chief, headquartered in Babb, Mont., is certified as a Native American, woman-owned and economically disadvantaged small business. Caddell’s two Fort Bragg contracts totaled more than $130 million.
According to the Caddell-Justice Dept. agreement, from about February 2004 through March 2005, Caddell submitted more than 20 requests to DOD seeking payments for the Fort Bragg contracts, claiming the company had incurred reimbursable costs for help it provided to Mountain Chief.
The requests included time sheets listing hours some Caddell employees purportedly spent providing help to Mountain Chief. But the agreement says Mark L. Hill, Caddell’s former mentor-protégé coordinator, and another company official, identified in the agreement as “Company Executive A,” knew that “the payment requests significantly overstated the amount of developmental assistance that [Caddell] had provided to Mountain Chief.”