Inspector: 10 more firms used sham subcontractor
An I.G. investigation reveals how companies used a pass-through scheme to meet contracting requirements.
AN OFFICE OF the Inspector General investigation found that 10 more companies working with the Philadelphia Housing Development Corp. had been using a sham subcontractor to meet minority-participation requirements.
The prime contractors made it appear as if JHS and Sons Supply Co., a minority-owned firm, was getting a substantial portion of the business. In fact JHS was just acting as a "pass-through" for the money to get to another company, William Betz Jr. Inc., that was actually doing the subcontracted work. In all, Betz received $640,000 intended for minority-owned businesses. JHS was paid at least $70,000 for the use of its name.
Contract-fraud probes have been a hallmark of Inspector General Amy Kurland's tenure. These investigations spawned from a recent case involving JHS, Betz and the prime contractor, UGI HVAC Inc. In settlements, Betz paid the city $128,000, UGI paid $100,000 and JHS lost certification as a designated minority-owned business enterprise.
The 10 new firms cited do not have to pay a penalty, but eight of them have signed new compliance agreements so far. Most are "small businesses that did not fully understand the city's antidiscrimination requirements," according to a city news release.
Those firms are: Burke Plumbing & Heating Inc.; Clements Brothers and Sister Inc.; DMC Environmental Group Inc.; Buzz Duzz Plumbing, Heating & Air Conditioning Inc.; Edward Hughes and Sons Inc.; Martin Johnson Plumbing and Heating Inc.; Paragon Contracting; J.J. Magnatta Inc.; John Stevenson Inc.; and S. Murawski & Sons.