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WASHINGTON (AP) — A Maryland construction company has admitted to orchestrating phony partnerships to get millions in District of Columbia government contracts and agreed to pay a $2 million fine, ending a two-year fraud investigation.
The U.S. Attorney's Office for the District announced the agreement with Forrester Construction Corp. of Rockville, Maryland, on Monday. The company had been under investigation for fraud in the procurement of $145 million in government contracts. The Associated Press was first to report the existence of the investigation.
Forrester teamed up with small District firms to win the contracts by promising that the local firms would do 51 percent of the work. But instead, prosecutors say the companies entered into side agreements that called for the local firms to do far less — about 5 percent of the contract value in one such deal.
Critics say that kind of arrangement undercuts the purpose of a city government program that gives advantages to local companies seeking contracts and makes it difficult if not impossible for law-abiding firms to submit winning bids.
As part of the agreement, Forrester acknowledged that it entered into fraudulent partnerships that helped it win three high-profile District government contracts: $64 million to build a city agency headquarters; $56 million to modernize a high school; and $5.4 million to build a senior wellness center.
Forrester also partnered with another firm to win $20 million in additional contracts over a three-year period, prosecutors said.
The company's founder, John Richard "Rick" Forrester, committed suicide over Labor Day weekend. The AP reported in July that Forrester was among the firms being investigated for contracting fraud.
Under the agreement, Forrester will pay $2.15 million in fines, acknowledge its wrongdoing and undertake numerous remedial measures to ensure that it complies in the future with city contracting laws. The company also agreed to cooperate in any ongoing investigations.
On the high school project, Forrester's side agreement called for it to do $46 million worth of work, with only $2.75 million going to the local firm, EEC of DC Inc., according to court documents. The rest of the money went directly to vendors and toward other costs.
Forrester's attorneys did not immediately return messages seeking comment.
U.S. Attorney Ronald Machen has made prosecuting local government corruption a top priority, including a long-running probe of the 2010 campaign of Mayor Vincent Gray. Six people who helped Gray get elected have pleaded guilty to felonies, and while the mayor has not been charged, the case helped sink Gray's bid for re-election.
In another case related to contracting, former D.C. Councilmember Michael A. Brown admitted to taking $55,000 in bribes from undercover agents and is serving a three-year prison term. The agents posed as businessmen who wanted help getting their company a certification that would give it contracting preferences.
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