Notice N 2000.500 - DEBARMENT FROM FEDERAL NONPROCUREMENT PROGRAMS

U.S. Department of Transportation Federal Highway Administration	Notice Subject
	DEBARMENT FROM FEDERAL NONPROCUREMENT PROGRAMS
	Classification Code	Date	OPI
	N 2000.500	June 7, 2002	HCC-30

What is the purpose of this Notice? On April 12, 2002, the Federal Highway Administration (FHWA) issued FHWA Notice N2000.497 suspending and proposing to debar the individuals and companies named and cited in this paragraph below. This notice cancels FHWA Notice N2000.497 and serves to advise that the FHWA has made decisions concerning their proposed debarments as stated in paragraphs 2a.
1. On April 12, 2002, the Federal Highway Administration (FHWA) issued FHWA Notice N2000.497 suspending and proposing to debar the individuals and companies named and cited in this paragraph below. This notice cancels FHWA Notice N2000.497 and serves to advise that the FHWA has made decisions concerning their proposed debarments as stated in paragraphs 2a.
  
  Peter Scalamandre & Sons, Inc.
  157 Albany Ave.
  Freeport, New York 11520
  
  Sea Crest Construction Corp.
  157 Albany Ave.
  Freeport, New York 11520
  
  Scalco Construction Corp.
  157 Albany Ave.
  Freeport, New York 11520
  
  Fortunato "Fred" Scalamandre
  157 Albany Ave.
  Freeport, New York 11520
  
  Guisseppe "Joe" Scalamandre
  157 Albany Ave.
  Freeport, New York 11520

What actions have been taken?
1. The FHWA has decided to debar the following companies and individuals for a period of three (3) years:
2. The individuals and companies cited above have been notified in writing of these decisions. Upon the signature of this Notice by the debarring official, the suspensions of all the individuals and companies cited in paragraph 1a shall be terminated, and the debarments of the individuals and companies cited in paragraph 2a shall become effective.
What is the scope of these actions?
1. The individuals and companies cited 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, these two individuals and company 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 supervisor responsibilities, or one who has critical influence on or substantive control over a covered transaction, whether employed by a person who submits a proposal for, or enters into a covered transaction, including any procurement and nonprocurement transaction between an agency and a person. The debarments shall be effective throughout the Executive Branch of the Federal Government. The scope of a debarment is defined in 49 CFR Part 29.
2. Also, the Department's regulations for suspensions and debarments at 49 CFR, Section 29.325(b)(1) provides that the fraudulent, criminal, or other seriously improper conduct of any officer may be imputed to the participant when the conduct occurred in connection with the individual's performance of duties, or with the participant's knowledge, approval, or acquiescence.
3. As stated in 49 CFR, Section 29.115, the debarments are consistent with the Federal Government's policy of using the discretionary action of debarment to conduct business only with responsible persons and companies, and to protect the public interest, the Federal Government, and the integrity of Federal programs.

What is the cause for debarment?
1. On 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. Specifically, Fortunato and Guisseppe Scalamandre pled guilty to: (1) conspiracy to defraud the United States, through impairing and impeding the functions of the Internal Revenue Service, and (2) conspiracy to make unlawful labor payments.
2. Fortunato and Guisseppe Scalamandre were the principal officers and owners of Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp.
3. Between 1991 and 1995, Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp., through various joint ventures, 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 United States Department of Transportation (hereinafter "USDOT"): Brighton Beach project, Meadowbrook Parkway project, LIRR project, and the LIE project.
4. 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 Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp. were to select, assign, and pay their employees as well as contribute to their benefit funds.
5. Instead of abiding by the terms of the collective bargaining agreements, Fortunato and Guisseppe Scalamandre, on behalf of Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp., paid the Luchese Family of the La Costa Nostra nationwide criminal organization to illegally influence these labor organizations through bribes, extortion, threats of force, and violence. Specifically, Fortunato and Guisseppe Scalamandre 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 these labor organizations. In return for the money, these labor organizations agreed not to enforce certain provisions of the collective bargaining agreements, and to allow Fortunato and Guisseppe Scalamandre to dictate the selection and assignment of union personnel on their construction projects.
6. 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 and change orders. The subcontractors converted the corporate checks to cash and then returned the money to Fortunato and Guisseppe Scalamandre. Fortunato and Guisseppe Scalamandre used portions of the money generated by this fraudulent scheme to pay the members of the Luchese Family to deal with the labor organizations.
7. Additionally, in the performance of the contracts, Fortunato Scalamandre, Guisseppe Scalamandre, Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., and Scalco Construction Corp. 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. The DBE firms that worked as subcontractors on these contracts operated as "fronts," whereby they performed all essential work functions for the DBE firms and, in return for using the DBE firm to meet their contracts' DBE requirements, they gave the DBE firms 5% of the subcontract price.
8. Fortunato and Guisseppe Scalamandre have committed acts which are sufficient cause for debarment under 49 CFR, Sections 29.305(a)(1) and 305(b): conviction of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction, and violation of the terms of a public agreement or transaction so serious as to affect the integrity of an agency program, such as a willful violation of a statutory or regulatory provision or requirement applicable to a public agreement or transaction. Additionally, under 49 CFR, Section 29.325(b)(1), Fortunato and Guisseppe Scalamandres' conduct may be imputed to their companies, Peter Scalamandre & Sons, Inc., Sea Crest Construction Corp., and Scalco Construction Corp.
9. On April 29, 2002, FHWA officials, including the debarring official, met with representatives of the individuals and companies cited in paragraph 1a. Mitigating information has been presented to the FHWA and considered in this action. After considering the mitigating factors and the seriousness of the causes for debarment, the FHWA has decided that all individuals and companies identified in paragraph 2a continue to pose a risk to the Federal Government and that it is in the best interests of the Government that they be debarred for a period of three (3) years.
10. These debarments are taken in accordance with 49 CFR Part 29.
What actions have been taken? Division Administrators should ensure that copies of this Notice are provided to State departments of transportation.

King W. Gee
Debarring Official

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