Three Rochester Area Businesses To Pay Financial Penalties For Defrauding The Rochester Schools Moderinization Program

ROCHESTER, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that the United States Attorney’s Office has filed charges against Journee Construction Inc., Bell Mechanical Contractors, and Kaplan Schmidt Electric in connection with the Government’s ongoing investigation into the improper use of “pass through” minority contractors on the Rochester Schools Modernization Program.

Assistant U.S. Attorney John J. Field, who is handling the case, stated that according to the felony information filed against each of the three defendants, between April 2013 and November 2013, the defendants conspired with contractors to defraud the Rochester Schools Modernization Program, a public-works project to renovate and improve school facilities in the City of Rochester. The defendants created and submitted required documentation that falsely and fraudulently represented that contractors hired for program projects had complied with the Diversity Plan established for the program. In truth and fact, the contractors had not complied, and did not intend to comply.

In addition to filing the charges, the government also entered into a deferred prosecution agreement (DPA) with each of the defendants. Pursuant to the DPAs, the government has requested that its prosecution of the charges against each defendant be stayed in order to afford each defendant the opportunity to comply with the terms and conditions of such DPA. Under the terms of their DPAs, each defendant must:

o Fully cooperate with the government’s investigation going forward;

o Conduct its operations with respect to any disadvantaged business programs in compliance with all applicable laws and requirements for such programs; and

o Pay a financial penalty: Journee Construction Inc. will pay $70,000; Bell Mechanical Contractors will pay $50,000; and Kaplan Schmidt Electric will pay $25,000.

Should the defendants successfully fulfill all of the terms and conditions of their DPAs with the government, the charges against them will be dismissed.

“Disadvantaged Business Enterprise programs such as this are intended to helps businesses owned by minorities obtain work on federally funded construction projects,” said U.S Attorney Kennedy. “Those who defraud the program in order to obtain federal funds take advantage both of the taxpayers and the businesses that the program is designed to assist. This Office remains committed to exposing and holding accountable who pervert these programs to serve their own self-interests.” 

The charges are the result of an investigation by the Federal Bureau of Investigation, Rochester Office, under the direction of Special Agent-in-Charge Gary Loeffert.

The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.