Five Rochester-area companies paid New York State Attorney General Eric Schneiderman’s office $825,000, following allegations the businesses falsely claimed to meet state diversity requirements in order to win and maintain contracts on the $1.2 billion Rochester Schools Modernization Program (RSMP).
Concord Electric Company; Michael A. Ferrauilo Plumbing & Heating, Inc.; Manning Squires Hennig Co., Inc.; Hewitt Young Electric, LLC; and Mark Cerrone, Inc. are the companies that have been named in the settlement.
Schneiderman’s office said the contractors engaged in “labor pass-throughs,” whereby contractors would hire non-minority and women-owned businesses to perform work, but then run the money and paperwork through MWBE’s to create the appearance that an eligible business had performed the labor.
In addition, the attorney general said the businesses also engaged in “supplies pass-throughs,” whereby the contractors would order supplies from non-MWBE manufacturers, but then run the money and paperwork through eligible businesses to create the appearance that those companies had supplied the materials.
“Women-and minority-owned businesses have historically been shut out of government contracts for all the wrong reasons,” Schneiderman stated. “That’s why our state, and localities, implement reasonable diversity standards to level the playing field. These contractors engaged in flagrant schemes that flouted the diversity rules they were required to meet, and in the process, denied minority- and women-owned businesses a fair shot at winning valuable sub-contracts. My office will continue to aggressively enforce the law against contractors who game the system.”
The monetary terms of each settlement have been agreed upon as follows:
- Concord Electric Corporation ($350,000);
- Manning Squires Hennig ($200,000);
- Hewitt Young Electric, LLC ($160,000);
- Michael A. Ferrauilo Plumbing & Heating, Inc. ($90,000); and
- Mark Cerrone, Inc. ($25,000).
As part of the agreement, all five contractors must submit to extensive, multi-year compliance, remediation, and training requirements, which Schneiderman said his office will actively monitor.
In addition, Schneiderman said Hewitt Young Electric, Manning Squires Henning, and Mark Cerrone will fund a total of $400,000 in reserves, to help MWBE’s pay their workforce, while awaiting payment for long periods of time from the developers.
The fraud allegedly took place during the first phase of the program, in which 13 city schools were being renovated at a budget of $325 million, including $278 million in state funds.
One of the firms named in the settlement, Hewitt Young, has reportedly admitted to no wrongdoing, while the other firms and business have declined to comment on the matter.
According to reports, part of the settlement funds will be paid to the RJSCB as restitution for the allegations.