Federal and state prosecutors have been increasing efforts throughout the U.S. to prosecute fraud in minority business enterprise programs, particularly in the construction industry. Large, well-established general contractors and specialty subcontractors have been the targets of investigations resulting in numerous substantial settlement payments and criminal penalties in some cases. U.S. attorneys are on the lookout for fraud in disadvantaged business enterprise (DBE) programs.
In November 2014, a New York grand jury completed an investigation concluding there was widespread fraud and abuse in construction contracting for minority- and women-owned business enterprises in New York City.
The grand jury found there was evidence of "systemic criminal conduct" by several individuals and corporations in the construction industry. The minority- and women-owned businesses were not performing the work or providing the materials required under their contracts and did not have the capacity to do so. Invoices and billing documents were created to make it appear the companies did the work when, in fact, money merely passed through a minority- or women-owned business to another firm not owned by a minority or woman.
The New York grand jury's findings are similar to the conclusions of other audits and investigations conducted by federal and local officials of similar programs. There is a widely held view fraud and abuse in minority- and women-owned business programs is widespread, pervasive and has gone on for many years.