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Feds Suspend Indicted Paving Firm; Other Alleged Fraud Cases under Investigation

Since 2008, Boggs Paving Inc. has been awarded more than $200 million in contracts for road projects in the Palmetto State, records show.

But the Monroe, N.C., company and a minority subcontractor have been temporarily suspended since Sept. 4 by the Federal Highway Administration (FHWA) from receiving any future federal contracts for South or North Carolina projects, The Nerve has confirmed.

The two firms and company executives were indicted in July by a federal grand jury in what authorities described as a 10-year scheme to fraudulently obtain more than $87 million in federal and state contracts for projects throughout the Carolinas.

In a written response last week to questions submitted by The Nerve, the S.C. Department of Transportation’s Office of Legal Services said in addition to the Boggs case, there are other cases of alleged fraud under investigation in the department’s “Disadvantaged Business Enterprise” (DBE) program, though the agency declined to discuss specifics.  

DBE programs are aimed at increasing participation of minority businesses in federally funded transportation projects. Boggs Paving is accused in the federal indictment of using minority subcontractor Styx Cuthbertson Trucking Co. Inc., also of Monroe, N.C., to illegally obtain millions in federal and state road contracts, though the Styx firm, which also was indicted, allegedly did little actual work and received kickbacks from Boggs.

Since Jan. 1, 2008, Boggs Paving has been awarded 93 contracts as the prime contractor through the state Department of Transportation , 59 of which were federally funded and totaled nearly $160.8 million, and the other 34 state or locally funded at a total cost of about $34.8 million, according to the DOT’s response last week to The Nerve. The Styx trucking firm was the designated DBE on 31 projects totaling $3 million.

Those figures don’t include a $75.7 million contract involving a joint venture with Boggs and another company, which is not a defendant in the federal case against Boggs, to widen a 10-mile section in Lexington and Calhoun counties, according to the DOT. Styx is not a subcontractor on that project.

“This project was awarded prior to the indictment; therefore there will be no change in the contract parties at this time,” according to the DOT’s statement.

The indictment, however, cost Boggs a six-mile, “preventative maintenance surface treatment” project in York County; the company was the low bidder out of four on the project, DOT confirmed last week in a written statement to The Nerve.

The agency in its response said it didn’t know how many of the awarded contracts to Boggs since 2008 are alleged to have been obtained fraudulently.

Contacted last week by The Nerve, FHWA spokesman Doug Hecox said although Boggs and Styx are temporarily suspended from receiving future federal contracts in the Carolinas, “they need to complete existing federal contracts.”

The FHWA is seeking a definite suspension, known as a “debarment,” of up to three years against the defendants, Hecox said, adding that no final decisions have been made about the proposed sanction.

Nationally, 59 individuals and 43 companies have been “debarred” by the FHWA since 2011, though no South Carolina companies were involved, Hecox said. During that period, 15 DBE cases were “resolved,” he said.

The 29-count indictment against Boggs Paving and the Styx trucking company was filed July 24 in U.S. District Court in Charlotte. A trial date has not been set.

The Nerve last month reported that the status of a number of South Carolina road projects was unclear in the wake of the indictment, which names the two firms; Boggs President Carl Andrew “Drew” Boggs III;  three other Boggs executives; and John “Styx” Cuthbertson, president of the Styx trucking company, as defendants.

Contacted this week by The Nerve, Columbia attorney Pete Strom, the lead attorney for Boggs Paving, did not have an immediate comment on his client’s suspension by the FHWA. He earlier told The Nerve in a written statement that the case centers on “whether Boggs construction used correct accounting in reporting the use of required minority participation in their construction projects,” and that his client “acted in good faith when using their accounting method.”

Strom, a former U.S. attorney for South Carolina, said then that Boggs is not accused of “doing substandard work or overcharging for their projects.”

S.C. Rep. Bakari Sellers, D-Bamberg, who works at the Strom Law Firm, also is representing Boggs Paving. He declined comment when contacted earlier by The Nerve, referring questions to Strom.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.

Accountability Ethics State Agencies Infrastructure

Rep. Bakari Sellers Styx Cuthbertson Trucking Co. Inc. Boggs Paving Inc. Pete Strom Federal Highway Adminsitration S.C. Department of Transportation