This Notice was canceled June 7, 2002.

U.S. Department of Transportation Federal Highway Administration	Notice Subject
	SUSPENSION AND PROPOSED DEBARMENT FROM FEDERAL NONPROCUREMENT PROGRAMS
	Classification Code	Date	OPI
	N 2000.497	April 12, 2002	HCC-30

1. PURPOSE
   
   
   1. This Notice advises that actions have been taken by the Federal Highway Administration (FHWA) for the suspension and proposed debarment of the individuals and companies named below in paragraph 2a. These actions are taken pursuant to Executive Order 12549, the U.S. Department of Transportation's (USDOT) implementing regulations in 49 CFR, Part 29, and FHWA Order 2000.2A, Nonprocurement Suspension and Debarment Process.
   
   
   
   2. The suspensions and proposed debarments are consistent with the Federal government's policy to use the discretionary action of suspension and debarment to conduct business only with responsible persons and to protect the public interest, the Federal Government, and the integrity of Federal programs (49 CFR, Section 29.115).
      
      
2. ACTIONS TAKEN AND THEIR SCOPE
   
   
   1. The individuals and companies cited below have been sent written notice of the suspensions and proposed debarments.

      Fortunato "Fred" Scalamandre
      157 Albany Ave.
      Freeport, New York 11520

      Guisseppe "Joe" Scalamandre
      157 Albany Ave.
      Freeport, New York 11520

      Peter Scalamandre & Sons, Inc.
      157 Albany Ave.
      Freeport, New York 11520

      Scalco Construction Corp.
      157 Albany Ave.
      Freeport, New York 11520

      Sea Crest Construction Corp.
      157 Albany Ave.
      Freeport, New York 11520

   2. The suspensions are effective upon signature of this Notice by the Suspending Official. The determination regarding the proposed debarments shall be made after completion of the debarment proceedings.
   
   
   
   3. Under the suspensions, and if debarred, the companies and individuals listed in paragraph 2a are prohibited from being a participant or principal in any primary or lower-tier "covered transaction," as defined in 49 CFR, Sections 29.105 and 29.110. Generally, the companies and individuals are prohibited from submitting a proposal or entering, or participating as an officer, director, owner, partner, key employee, or other person with primary management or supervisory responsibilities, or one who has critical influence on or substantive control over any "covered transaction," whether employed by a person who submits a proposal for, or enters into a "covered transaction," including any nonprocurement transaction between an agency and a person. The suspensions, and debarment, if enacted, shall have government-wide effect applying to all Federally-assisted programs and projects. Their scopes are defined in 49 CFR Part 29.
      
      
3. CAUSE FOR SUSPENSION AND PROPOSED DEBARMENT
   
   
   1. On or about November 14, 2001, Fortunato and Guisseppe Scalamandre, pled guilty to two counts of conspiracy to defraud the United States under 18 U.S.C. § 371. Count one of the plea agreement involves a conspiracy to defraud the United States, through impairing and impeding the functions of the Internal Revenue Service, and count two involves a conspiracy to make unlawful labor payments. In pleading guilty, Fortunato and Guisseppe Scalamandre waived their right to an indictment by a grand jury and pled guilty to an "information."
   
   
   
   2. According to the information, Fortunato and Guisseppe Scalamandre are the principals of Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp. (hereafter collectively referred to as "companies"). Through these companies, they engage in the business of construction contracting. Between 1991 and 1995, these companies, through various partnership arrangements, were awarded five contracts: (1) Long Island Railroad Ronkonkoma Station project (LIRR project) in 1991; (2) Northern State-Meadowbrook Parkway project in 1992; (3) Brighton Beach Line project in 1993; (4) One Penn Plaza project in 1995; and (5) Long Island Expressway and Seaford Oyster Bay Expressway project (LIE project) in 1995. Of these five construction contracts, four involved funding from the USDOT: Brighton Beach project, Meadowbrook Parkway project, LIRR project, and the LIE project.
   
   
   
   3. For the performance of the above contracts, Fortunato and Guisseppe Scalamandre signed collective bargaining agreements with various labor organizations. These collective bargaining agreements set forth the terms by which they were to select, assign, and pay their employees as well as contribute to benefit funds. However, instead of abiding by the terms of the collective bargaining agreements, Fortunato and Guisseppe Scalamandre paid the Lucchese Family of the La Costa Nostra nationwide criminal organization to illegally influence these labor organizations through bribes, extortion, threats of force, and violence. Specifically, they paid members of the Lucchese Family $40,000 each year, with the understanding that over $1,000 of these payments would be given to various officers and employees of the labor organizations. In return for the money, the labor organizations would not enforce certain provisions of the collective bargaining agreements, and would allow Fortunato and Guisseppe Scalamandre to dictate the selection and assignment of union personnel on their construction projects.
   
   
   
   4. Also, in the performance of the above contracts, Fortunato and Guisseppe Scalamandre developed and participated in a tax fraud scheme in which they issued corporate checks to their subcontractors for payment of fraudulent invoices. The subcontractors converted the corporate checks to cash and then returned the money to Fortunato and Guisseppe Scalamandre. Then, in turn, the fraudulent invoices were charged to the above listed contracts. Fortunato and Guisseppe Scalamandre would use portions of the money generated by this fraudulent scheme to pay the members of the Lucchese Family to deal with the labor organizations. As part of their plea agreements, Fortunato and Guisseppe Scalamandre agreed to forfeit $5 million to the U.S. Government as property constituting, or derived from, proceeds traceable to their labor violations. Also, in addition to their $5 million forfeiture, they agreed to pay the sum total of all back taxes, interest, and penalties.
   
   
   
   5. Additionally, in the performance of these contracts, Fortunato and Guisseppe Scalamandre were required to comply with all applicable Federal laws and regulations, including, but not limited to, the Disadvantaged Business Enterprise (DBE) Program, 49 C.F.R. Part 26. However, the DBEs who worked as subcontractors on their contracts operated as fronts whereby they performed all essential work functions for the DBEs and, in turn, their DBEs would receive 5% of the subcontract amount.
   
   
   
   6. Pursuant to 49 C.F.R. Part 29, Fortunato and Guisseppe Scalamandre and their companies have committed acts that are cause for suspension and debarment. In particular, the FHWA believes that the above listed convictions are cause for debarment and constitute adequate evidence for immediate suspension. Additionally, the FHWA believes that the above described DBE violations also constitute cause for debarment because they were a violation of the terms of a public agreement or transaction that seriously affect the integrity of an agency program.
   
   
   
   7. Due to the nature of this conduct and the FHWA's obligation to protect the public interest and to conduct business only with responsible persons, the FHWA is proposing to debar the individuals and companies listed in paragraph 2a for a period of three (3) years and finds it necessary to immediately suspend them from participating in Federal nonprocurement programs. The suspension shall be for a temporary period imposed only for the duration of the debarment proceedings.
   
   
   
   8. These suspension and proposed debarment actions are taken in accordance with 49 C.F.R. Part 29.

King W. Gee Suspending & Debarring Official

Related Sites:

Executive Order 12549
FHWA Order 2000.2A