A Chicago construction company has reached a $12 million settlement of whistleblower charges that it used women-owned businesses to fraudulently secure multimillion-dollar public projects, Illinois and federal prosecutors said.
Illinois Attorney General Lisa Madigan and U.S. Attorney for the Northern District of Illinois Zachary T. Fardon said Thursday that James McHugh Construction Co. was charged in connection with work on Chicago area roads, highways and public transit systems, including the Wacker Drive reconstruction and the Chicago Transit Authority's Red and Brown line rehabs.
In a statement, the state and federal prosecutors said a joint investigation found McHugh falsely represented that its subcontracting companies would meet the legal requirements as certified disadvantaged business enterprises in that a portion of the work would be completed by women- or minority-owned businesses.
However, the investigation prompted by a former employee of the subcontractors found that the firms did not fulfill the requirements on seven contracts for millions of dollars of work from 2004 to 2011.
In a statement on its website, McHugh said it “recognizes the seriousness of the allegations and the need to continue improving our compliance and training programs, but we dispute any suggestions that we intentionally disregarded the requirements of (disadvantaged business enterprise) programs.
“Still, we chose to settle this matter to allow us to focus our energies and resources where they belong: on fulfilling the requirements of our existing contracts and continuing to compete for both public and private contracts.”
McHugh said also in its statement that there has not been any question the company did anything improper with any funds paid on the relevant projects and that it has designed and implemented new compliance and training polices “that are considered the best of their kind in the construction industry.”