Woman, 62, sentenced to a year in prison for WBE construction front scheme

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The sixty-two-year-old former owner of a suburban construction business convicted of acting as an illegal front so another company could secure a lucrative city airport contract was sentenced Thursday to 12 months in federal prison, The Chicago Tribune has reported.

Elizabeth Perino‘s lawyers had sought probation and home confinement, but U.S. District Judge Gary Feinerman said he opted for prison to send a message to “an industry that needs to clean up its act.”

Perino’s lawyer, Jacqueline Jacobson, asked the judge to take into account Perino’s age and a recent “catastrophic illness” in crafting his sentence, the Tribune reported.

“Perino, 62, of Willowbrook, walked with the aid of a cane as she stepped to the lectern to address the judge.”

The newspaper says Perino’s conviction is the latest turn in an eight-year saga sparked in 2008 when Perino’s former project manager filed a whistleblower lawsuit alleging misconduct in massive projects run by industry giant McHugh Construction, a century-old company that reported more than a half-billion dollars in revenue in 2015.

Perino’s company posed as a legitimate woman-owned business, allowing Chicago-based Diamond Coring Co. to meet its requirements for hiring disadvantaged businesses in order to win a multimillion-dollar runway repair contract at O’Hare International Airport. Perino did no work for the bills submitted by her company.

In 2011, Perino submitted fake documents to the city purporting to show her company, Perdel Contracting of Lockport, had rented to Diamond Coring $140,000 of equipment, including an air compressor, a dump truck, a trailer and a boom truck, the indictment alleged. She also had a “gentleman’s agreement” with the owner of Diamond Coring, Anthony Cappello, to hide the fact that asphalt sweeper equipment supposedly owned by Perdel actually belonged to Diamond Coring.

The indictment alleged that “Perino said that the ‘gentleman’s agreement’ had to be handwritten and not in a computer so as to avoid detection during an audit.”

Records show that Cappello cooperated with authorities and testified at Perino’s trial, pleaded guilty to mail fraud and was sentenced to two years of probation in 2012. “A federal jury convicted Perino in June on all four counts of mail and wire fraud following a weeklong trial,” the Tribune reported.

McHugh agreed to pay $12 million in 2014 to settle the whistleblower lawsuit without admitting any wrongdoing. “The company agreed to implement a compliance program and have an independent monitor oversee its subcontracting process for three years,” the Tribune story said. “McHugh also agreed to donate $2 million to the city to support government programs for disadvantaged businesses.”

The probe involved about $150 million in McHugh contracts on some of the biggest recent public works projects in the Chicago area, including the reconstruction of Kennedy Expressway ramps in 2005, the reconstruction of the North Avenue Bridge in 2006 and the 2010 Wacker Dr. viaduct reconstruction.

Under laws designed to give companies with less clout a foot in the door, McHugh was supposed to subcontract out about $40 million of the work on those projects to businesses owned by women or minorities.

Most of the subcontracts were given to Perdel and Accurate Steel Installers, another firm owned by Perino, according to the charges.

Perino’s crimes could have been punishable  by a maximum sentence of 80 years in prison, the US Attorney’s Office said in an earlier news release

A city of Chicago ordinance establishes an overall goal of awarding at least five percent of total annual funding of all city contracts to WBEs.  For contracts with values exceeding $10,000, each contractor has to commit a certain percentage of labor to WBEs, either as a joint venture or subcontractor, or by purchasing goods or services from a WBE.  In addition to being a WBE, Lockport-based Perdel, which specializes in concrete and carpentry work, also qualified to participate in city projects as a certified Disadvantaged Business Enterprise, the government news release said.

Evidence at the four-day trial revealed that Perino and a co-worker agreed to act as a “pass-through” WBE/DBE on two city projects, meaning that Perdel’s employees would perform no work and Perdel’s equipment would not be used.  For one of the projects – at O’Hare International Airport – Perino agreed to place the general contractor’s employees on Perdel’s payroll to perform the work that would be credited to Perdel.  Perino also entered into a sham contract to “purchase” street sweepers from the general contractor and title them in Perdel’s name while the general contractor’s workers performed the street sweeping as purported employees of Perdel.  Perino and the general contractor further agreed that, at the conclusion of the O’Hare project, the street sweepers would be returned to the general contractor for $1 per machine, and Perdel would receive 18% on top of the labor costs and $20 per hour for the street sweepers.

The conviction was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; Michael J. Anderson, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; Thomas Ullom, Special Agent-in-Charge of the U.S. Department of Transportation Office of Inspector General in Chicago; James Vanderberg, Special Agent-in-Charge of the Chicago Region of the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Joseph M. Ferguson, Inspector General for the City of Chicago.

The government was represented by Assistant U.S. Attorneys Megan Cunniff Church and Matthew Kutcher.

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