CHICAGO (CN) - A Chicago-based construction company will pay $12 million to settle a whistleblower complaint, Illinois Attorney General Lisa Madigan said.
The settlement resolves allegations that the James McHugh Construction Company used women-owned businesses to fraudulently secure multimillion-dollar public transportation projects in the Chicago area funded by state and federal governments.
A joint investigation by Madigan's office and the U.S. Attorney's Office found that McHugh Construction falsely represented that its subcontracting companies - Perdel Contracting and Accurate Steel Installers (ASI) - qualified as certified disadvantaged business enterprises (DBE) that meet legal requirements for work done by minority-owned businesses.
"Our investigation revealed that McHugh Construction falsely used subcontractors to help secure bids for major construction projects funded by and for Illinois taxpayers," Madigan said in a statement. "The company used women-owned businesses to submit false claims to the state and federal governments for millions of dollars when in fact, those businesses never completed the level of work required by law."
Ryan Keiser, a former Perdel and ASI employee, filed a whistleblower complaint that started the investigation. The U.S. Attorney's Office previously charged Perdel and ASI owner Elizabeth Perino.
A separate administrative and compliance agreement was reached between McHugh and various governmental transportation authorities. Under that agreement, McHugh agreed to hire and retain an independent monitor who will regularly report on McHugh's efforts to comply with DBE requirements; create and publicize a dedicated, independently administered private hotline through which anonymous complaints of improper conduct may be reported; establish a separate, independent position at McHugh for a corporate compliance officer; initiate a corporate compliance program to train and educate McHugh employees about DBE rules and regulations; and present information about DBE requirements at informational events to promote DBE compliance by construction companies around the state.
McHugh also fired two employees as a result of the allegations.