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A Rhode Island firm that bought regional construction giant W.G. Mills in 2010 agreed to pay $1.1 million over accusations Mills created a front company in order to win federal government work.
Despite the payment, the former CEO of W.G. Mills, Lem Sharp, denies any wrongdoing in the case, and says it was motivated by “greedy whistleblowers,” not anything he or his firm did. “This was a settlement decision to be able to move on,” Sharp tells the Business Observer in an interview.
Providence-based Gilbane Building Co. will pay the money to resolve the allegations in the federal false claims case, according to a release from the U.S. Attorney's office in Tampa. Gilbane bought Mills, which had $275 million in 2009 revenues, in November 2010. Sarasota businessman Walter Mills founded W.G. Mills in 1972, and at one point in the mid-2000s it had offices in Fort Myers, Clearwater, Jacksonville, Palm Beach and Orlando. Gilbane Building Co. is a subsidiary of Gilbane Inc., which had $4.1 billion in revenues in 2013 and is one of the largest real estate developers in the country.
The allegations stem from a lawsuit filed by Michael Jeske and Samuel McIntosh, according to the statement. The claims resolved by the settlement are allegations only, the U.S. Attorney's office adds, and there has been no determination of liability.
Authorities, according to the suit, contend W.G Mills violated the False Claims Act when it created a front company, Veterans Constructor Inc., in order to win a Coast Guard contract from the Service Disabled Veteran Owned Small Businesses program. In addition to the $1.1 million, the company will also owe the government $50,000 plus five annual contingency payments equal to 1% of VCI's total annual revenues, the release says. The statement doesn't indicate what year or years VCI tried to win the Coast Guard work.
Authorities say W.G. Mills created VCI merely as a contracting vehicle and that VCI's affiliation with the firm rendered it ineligible to win set-aside contracts for service-disabled veterans. The government then alleges W.G. Mills did the work VCI was required to do under the Coast Guard contract. Authorities, finally, allege that if the Coast Guard and the Small Business Administration had known VCI was nothing but a front company, the Coast Guard would not have awarded it the contract.
“Providing the government false information to gain access to set-aside contracts is unacceptable,” SBA Inspector General Peggy Gustafson says in the release. “The Office of Inspector General will aggressively investigate such misrepresentations to ensure only eligible businesses are awarded these contracts.”
But Sharp, who left Gilbane and retired a year after the acquisition, says there were no violations of the False Claims Act on his watch. “None of the allegations are true,” Sharp says. “This was vigorously denied and vigorously defended.”
Agencies that conducted the joint investigation include the Civil Division of the U.S. Justice Department, the U.S. Attorney's Office for the Middle District of Florida and the SBA's Office of Inspector General.
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