Caddell Construction Company, a major commercial and industrial federal government construction contractor based in Montgomery, Alabama, has entered into a non prosecution agreement with the Department of Justice to resolve criminal fraud violations.
Federal officials alleged that Caddell intentionally overstated developmental assistance provided to a disadvantaged small business as part of a Department of Defense program.
The company will pay $2 million criminal penalty.
The criminal penalty is not tax deductible.
The company was represented by Stephen Spivack of Bradley Arant in Washington, D.C.
Federal officials alleged that Caddell entered into an agreement with Mountain Chief – which is certified as a Native American, woman-owned and economically-disadvantaged small business – to participate in the Defense Department’s Mentor-Protégé Program, in which major Defense Department contractors contract with and provide developmental assistance to disadvantaged small businesses and are reimbursed by the Defense Department for related costs.
Around the same time, Caddell began participating with Mountain Chief in Defense Department’s Indian Incentive Program, which provides incentives – in the form of a rebate of 5 percent of the total dollar amount of work – for major Defense Department contractors to engage Native-American-owned businesses as subcontractors and suppliers.
Caddell and Mountain Chief participated in these programs in connection with two Defense Department construction contracts at Fort Bragg, North Carolina, each worth approximately $65 million and a Defense Department construction project at Fort Campbell, Kentucky worth approximately $34 million.
From February 2004 to March 2005, Caddell submitted more than 20 requests for payment to the Defense Department in connection with the Mentor-Protégé Program that significantly overstated the amount of developmental assistance Caddell had provided Mountain Chief.
In addition, Caddell filed documents falsely stating Mountain Chief’s size and income, as well as the status of Mountain Chief’s technical capabilities and business infrastructure.
From April 2003 to October 2004, Caddell also submitted at least eight requests to the Defense Department for the Indian Incentive Program, for rebates based on services purportedly performed on subcontracts Caddell gave to Mountain Chief. Mountain Chief performed few, if any of these services, and the invoices were created solely to support Caddell’s applications for payment.
Caddell will pay a $2 million criminal penalty, and must cooperate with the Department of Justice for the two-year term of the agreement.
The agreement recognizes Caddell’s voluntary disclosure, thorough self-investigation of the underlying conduct, and full cooperation with the department and remedial measures already undertaken and to be undertaken, including employment actions and improving reporting systems, corporate governance, and compliance training and oversight.
The Department said that as a result of these factors, among others, it agreed not to prosecute Caddell for the improper pay requests, provided Caddell satisfies its ongoing obligations under the agreement.
In January 2012, Daniel W. Chattin, 50, of Granite Bay, Calif., the son of Mountain Chief’s owner and a project manager and consultant for Mountain Chief, and Mark L. Hill, 57, of Montgomery, Alabama, the Mentor-Protégé Program Coordinator and a director of business development at Caddell, were indicted on three counts of major fraud against the United States stemming from the same scheme.
In addition, Hill was charged with one count of making a false statement to the Defense Department.
Chattin and Hill await trial, which is scheduled to begin on April 22, 2013.