Campbell painting contractor cleared of federal charges
A bridge painting contractor from Campbell has been cleared of allegations that he took part in a scheme to exploit a federal program designed to benefit disadvantaged businesses.
PHILADELPHIA - A bridge painting contractor from Campbell has been cleared of allegations that he took part in a scheme to exploit a federal program designed to benefit disadvantaged businesses.
Federal authorities say a jury has acquitted 41-year-old Emanouel “Manny” Frangos of five counts of wire fraud.
The same jury was unable to reach a verdict on the remaining 11 counts against Frangos regarding conspiracy to commit wire fraud and making false statements, according to the U.S. Attorney.
Frangos was a co-defendant along with Stamatios "Tom" Kousisis, 60, of Downingtown, PA, and his employer Alpha Painting and Construction, Inc.
The jury found Stamatios and Alpha Painting guilty of one count of conspiracy to commit wire fraud, three counts of wire fraud, and ten counts of making false statements.
Authorities say the illegal scheme involved exploiting the U.S. Department of Transportation Disadvantaged Business Enterprise Program, which is a program designed to provide small businesses owned and controlled by economically disadvantaged individuals with a fair opportunity to compete for federally funded transportation contracts.
Kousisis was the Project Manager of Alpha Painting of Baltimore MD, and Frangos was an owner of Liberty Maintenance, Inc., of Youngstown, OH, which were both bridge painting contractors.
Neither was a certified Disadvantaged Business Enterprise in Pennsylvania.
The scheme involved a joint venture between Liberty Maintenance and Alpha Painting, and Markias, Inc., a now-defunct certified Disadvantaged Business Enterprise.
Kousisis concocted a scheme to obtain and keep two Pennsylvania Department of Transportation contracts to rehabilitate two bridges in the Philadelphia area, which required Kousisis to use a qualified Disadvantaged Business Enterprise to provide supplies for those projects.
Operating through a joint venture between Liberty Maintenance and Alpha Painting, Kousisis employed a pass-through company, Markias, to give the appearance that they had contracted with a legitimate minority "regular dealer" when, in reality, Markias performed no legitimate or economically useful function, according to authorities.
Without any involvement from the purported Disadvantaged Business Enterprise "regular dealer," Kousisis and his employees directly ordered supplies from third-party vendors, arranged for those vendors to deliver those supplies to the defendant's job-sites, and directly negotiated the prices and other terms of those supplies with the third-party vendors.
To falsely give the appearance that Markias was performing an economically useful function, Kousisis arranged for the true suppliers to send invoices to Markias, which marked the invoices up by 2.25% and forwarded them to the Kousisis.
In turn, Kousisis issued two sets of checks to Markias: one to pay Markias' fee for acting as a bogus pass-through, and the other for Markias to forward to the true suppliers to pay for the goods.
Kousisis also used Markias as a vehicle through which to funnel out-of-state expenses to give the appearance that those expenses had been incurred in connection with the two Philadelphia-area bridge projects.
Kousisis caused a total of approximately $4.5 million of false claims for DBE credits to be submitted to PennDOT, based on Markias' fraudulent invoices.
Joyce Abrams, the owner of Markias, has previously pleaded guilty to conspiring to defraud PennDOT and the U.S. Department of Transportation with respect to this scheme.
"The purpose of the DBE program is noted in its title: to help disadvantaged businesses in Pennsylvania," said U.S. Attorney McSwain. "When people like Kousisis undermine the DBE rules by cheating the system, not only is it a crime but also it serves to harm certified DBE owners who are playing by the rules and who should be benefitting from the program. Our Office will continue to hold individuals and businesses accountable when they choose to circumvent the law for their own gain."
"Today's convictions demonstrate how DBE fraud harms the integrity of the DBE program and law-abiding contractors, including many small businesses, by defeating efforts to ensure a level playing field in which all firms can compete fairly for contracts," said Douglas Shoemaker, Regional Special Agent-in-Charge of the U.S. Department of Transportation Office of Inspector General.
Kousisis faces a statutory maximum sentence of 130 years in prison, a possible fine, supervised release, and a $1,400 special assessment. Sentencing has not yet been scheduled.
