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FHWA Permanently Excludes Convicted Illinois Firms, Individuals From Federally Funded Highway Projects

American Government Special Collections Reference Desk

American Government

FHWA Permanently Excludes Convicted Illinois Firms, Individuals From Federally Funded Highway Projects

Federal Highway Administration
August 20, 1999

Friday, August 20, 1999
Contact: Jim Pinkelman
Tel.: 202-366-0660
FHWA 57-99

Federal Highway Administrator Kenneth R. Wykle announced today agreements that permanently exclude six Illinois companies and individuals, including two of the state’s largest road construction firms, from federally funded highway construction projects.

The agreements mark the first use by the Federal Highway Administration (FHWA) of the voluntary exclusion mechanism and the first time a company or an individual has been permanently barred from participating in federally funded highway projects.

The exclusions follow the signing of voluntary exclusion agreements by which Palumbo Bros, Inc. (PBI); Monarch Asphalt Co., Inc.; Orange Crush Recycle Company, Inc.; and Peter, Joseph and Sebastian Palumbo are permanently excluded from participating in any manner in federally funded highway projects, including construction, maintenance, oversight, and provision of materials.

In addition, the defendants as a group will pay more than $15 million in restitution, fines and other payments, and the three Palumbo defendants will serve terms of imprisonment ranging from 15 to 21 months.

"Most contractors are honest, hard-working people who share our commitment to protecting the public interest," U.S. Transportation Rodney E. Slater 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 abuse."

The voluntary exclusions followed entry of plea agreements by PBI, Monarch, and the three Palumbo defendants. The companies were convicted in U.S. District Court for the Northern District of Illinois of racketeering and mail fraud through their falsification of weight tickets for materials never used during highway construction. Peter Palumbo and sons, Joseph and Sebastian Palumbo, were convicted of filing false documents under the Employee Retirement Security Act (ERISA), which contained falsely understated hours worked by employees and of submitting reduced payments on behalf of the employees to union health and pension funds.

"The voluntary exclusions protect the public’s interest and the integrity of the federal aid highway program," Wykle said. "These defendants were convicted of defrauding not only the Illinois Department of Transportation and the city of Chicago, but in addition almost three dozen Chicago-area counties and suburbs and about 900 union employees."

Orange Crush was not a defendant in the U.S. attorney’s prosecution but entered into the same voluntary exclusion agreement because of its close relationship to the corporate defendants and its control by the individual Palumbos.

The FHWA is an agency of the U.S. Department of Transportation, 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, to enforce motor carrier safety, and to ensure a strong intermodal transportation system.


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