Boggs Paving execs indicted

FBI alleges fraud in $87 million in contracts
Jul. 25, 2013 @ 03:49 PM

The owner and several employees of Boggs Paving were indicted on federal fraud charges Wednesday.

Employees of Boggs and Styx Cuthbertson Trucking Company, both based in Monroe, were charged with 29 counts of falsely using a small, disadvantaged business to win state and federal work contracts over the course of ten years, according to a release by the Federal Bureau of Investigation. But Boggs Paving paid itself or a different subcontractor the money to do work that was supposed to go to the small business.

The investigation was carried out by the U.S. Department of Transportation Office of the Inspector General, the Federal Bureau of Investigation and the Internal Revenue Service.

The case involves Boggs Paving; Carl Andrew “Drew” Boggs, III, 49, of Waxhaw; Kevin Hicks, 42, of Monroe; Greg Miller, 59, of Matthews; Greg Tucker, 40, of Oakboro; John Cuthbertson (a/k/a Styx Cuthbertson), 68, of Monroe and Styx Cuthbertson Trucking Company Inc., of Wingate.

They are charged with conspiracy to defraud the United States Department of Transportation (USDOT), conspiracy to commit wire fraud, conspiracy to commit mail fraud, money laundering conspiracy, money laundering, and wire fraud for a scheme that lasted more than ten years and involved more than $87 million in government contracts. All the defendants except Tucker were charged with mail fraud.

Since 2003, Boggs claimed its was using Styx Cutherberston Trucking as a subcontractor to qualify for construction contracts offered to disadvantaged business enterprise (DBE) and small business enterprise  (SBE) companies. Styx Cuthbertson Trucking is a small road-construction hauler company. The DBE and SBE programs are meant to help smaller businesses participate in large state and federal transportation projects.

But the government money that was supposed to be paid to Styx Cuthebertson Trucking for its work was kept by Boggs Paving, the indictment states. Boggs Paving used Styx Cuthbertson Trucking as a “pass through” entity to get the special contracts, the FBI states.

“To create the illusion that Styx was doing and being paid for the necessary work, the indictment alleges that, among other things, the conspirators ran payments through a nominee bank account in Styx’s name but funneled checks back to Boggs Paving and its affiliates, which were not DBEs or SBEs but were doing the actual work,” the release states.

Each time a deposit was made into the account in the trucking company’s name, a Boggs Paving employee would issue a Styx Cuthbertson Trucking check to Boggs Paving or another company that was not DBE or SBE certified.

“In return, according to allegations contained in the indictment, Styx Cuthbertson received a kickback for allowing his name and DBE status to be used by Boggs Paving,” the release states.  

To conceal the switch, the indictment states that Boggs Paving officials lied to the North Carolina and South Carolina departments of transportation, even passing off bids from Styx that were actually from Boggs Paving.

“The indictment also alleges that the defendants further tried to conceal the fraud by using magnetic decals bearing the ‘Styx’ company logo to cover the ‘Boggs’ logo on company trucks to create the appearance that Styx was the company performing the work,” the release states. “The indictment alleges that Boggs Paving also performed numerous clerical functions in Styx’s name, including creating quotes on Styx letterhead for construction contracts; drafting fraudulent contracts between Boggs Paving and Styx for subcontract work purportedly performed by Styx; creating invoices for work supposedly done by Styx; and giving Styx Cuthbertson pre-prepared documents (including quotes, contracts, and DBE reports) for his signature.”

For the past decade, Boggs Paving has been the lead contractor on 35 federally-funded contracts and subcontractor for another two. Of those, it claimed $3.7 million in DBE and SBE funds that was supposed to be paid to Styx Cuthbertson Trucking. Instead, only $$375,432 was paid to Styx.

Boggs Paving spokesman Bobby Fisher, through a Florida public relations company Sachs Media Group, issued a statement denying charges of fraud.

“We are extremely disappointed in the allegations from the U.S. Attorney’s Office for the Western District of North Carolina. Boggs Paving has been cooperating fully with officials since learning of questions about our company’s relationship with Styx Cuthbertson Trucking, Inc., which is a certified Disadvantaged Business Enterprise. Despite this cooperation, the U.S. Attorney’s Office has brought charges that we will vigorously contest.  

Fisher states the allegations will be addressed in front of a judge.

“While this unfortunate situation is most troubling, we look forward to having our day in court and an opportunity to present our side of the story. We are confident a full and complete examination of the facts will clear Boggs Paving and all its employees,” Fisher states.

The release is the only statement Boggs Paving will make publicly about the indictments, said Sachs Media associate Alia Faraj-Johnson. She said Boggs Paving contacted the firm to speak for them about the charges.

“We have actually done some work with them in the past and we’re helping them again in light of this,” Faraj-Johnson said.

Boggs Paving’s attorney Ken Bell told the Associated Press that the charges were wrong and if mistakes were made, there were unintentional and were not federal crimes.

Boggs Paving most recently won a  $3.9 million contract for repairs to the Charlotte Monroe Executive Airport, having entered bids far lower than competing companies. The final approval of the work contract will be decided by the N.C. Department of Aviation, the department providing grant funds for the repairs.

Wire and mail fraud charges carry a maximum sentence of 20 years in prison, conspiracy carries five years, money laundering conspiracy carries 20 years maximum and each of the charges can be punished with a $250,000 fine.

The men charged will next appear in federal court on Aug. 20.