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FHWA Applauds Successful Prosecution Of Major Construction Firm Engaged in Fraud

American Government Special Collections Reference Desk

American Government

FHWA Applauds Successful Prosecution Of Major Construction Firm Engaged in Fraud

Federal Highway Administration
April 16, 1999

FOR IMMEDIATE RELEASE
Friday, April 16, 1999
Contact: Karen Whitney
Tel.: 202-366-0660
FHWA 26-99

Federal Highway Administrator Kenneth R. Wykle today called the prosecution of Redondo Construction Company (RCC), a major contractor in Puerto Rico which pleaded guilty to various crimes in connection with federal-aid highway work it performed, both a signal that the federal-aid highway program remains fully committed to integrity and a strong warning to other contractors who might attempt to violate the law.

"Most contractors are honest, hard-working people who share our commitment to protecting the public’s interest," Wykle said. "But we cannot and will not tolerate even one firm that violates the integrity of our program. That is why we are pleased that the U.S. Attorney’s office was able to successfully prosecute the case and help us to stop this kind of abuse."

The RCC and its principal, Jorge Redondo, an owner and president of the firm, were indicted in 1996 on charges of fraud and of conspiracy to defraud the U.S. government by submitting false reports through the Puerto Rico Highway and Transportation Authority. The company claimed excavation work on the Jesus T. Pineiro Expressway project had been completed when it had not been.

The indictment also charged that RCC used false reports showing that RCC was entitled to money for work performed to secure additional lines of credit from local banks. In addition, employees of RCC and former employees of the commonwealth were charged with perjury in connection with false testimony given to the grand jury that was investigating the matter.

Under an agreement accepted by the U.S. Attorney’s office in San Juan (which was preapproved by the Federal Highway Administration (FHWA)), RCC will be debarred for three years with the exception of present contracts. Under debarment, a firm or an organization is prevented from bidding on or being awarded any federal-aid contracts and direct federal contracts throughout the federal government. In effect, during the debarment the contractor is precluded (with few exceptions) from working on any such contracts, except those awarded before the debarment.

Two years of RCC’s debarment were suspended based on the company being monitored by a monitor appointed by the FHWA and the U.S. Attorney. The monitor will work to ensure that RCC acts responsibly on FHWA projects after the one-year debarment. If RCC fails to cooperate or evidence arises of further illegal activity, the remaining period of the debarment will be reinstituted. RCC will pay all costs associated with the monitor through a third-party escrow arrangement.

RCC has instituted a compliance plan that requires all its employees to receive training in ethics and has designated a corporate compliance officer to ensure that the company acts in a responsible manner.

Jorge Redondo also pleaded guilty to submitting false statements to the U.S. DOT. He will be sentenced to six months home confinement and six months confinement in a halfway house. In addition, RCC will pay $1 million in fines and restitution.

The FHWA will implement a debarment action based upon the plea agreement and the entry of an official court judgment in this case.

The FHWA is an agency of the U.S. Department of Transportation with headquarters in Washington, D.C. It has 3,550 employees, a field office in every state, and an annual budget of more than $25 billion. The agency works with the states and with communities across the nation to build and maintain America’s roads and bridges and to ensure a strong intermodal transportation system.

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