Dishonesty, Misrepresentations On Minority Recruitment Basis of Conviction
A U.S. District Judge sentenced Douglas E. Ritter, the former president of an Illinois refuse disposal container repair company, to serve 16 months in prison and to pay $35,303 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. The Justice Department had charged Ritter, along with his business partner Steven Fenzl, in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Ritter pleaded guilty to the conspiracy on June 3, 2010. Fenzl, a California resident, was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Fenzl is scheduled to be sentenced on June 15, 2011.
According to the indictment, Ritter, Fenzl and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, the Justice Department charged that Ritter and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Ritter and his co-conspirators and greater than the price for which Ritter's company had submitted a bid. The Justice Department also charged that the submitted bids included fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to buy goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Ritter and his co-conspirators also fraudulently certified to the city on Ritter's company's bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.
While the opportunity to do business with government agencies or their subcontractors can offer valuable business opportunities for many businesses, dealing with government agencies directly or as a subcontractor comes with special obligations and exposures.
Government contractors and subcontractors generally face special bidding and contracting, pricing, employment, subcontracting, purchasing, reporting, audit, attestation and certification and other obligations. While many of these requirements are long-standing, businesses contracting for many projects funded by Stimulus Bill or other legislation passed as part of efforts to stimulate the economic recovery since 2008 often apply to a broader range of businesses, apply stiffer nondiscrimination, audit and other requirements or carry other special obligations beyond those that may have historially applied to similar contracts. Violation of these responsibilities can result in contract termination or penalties, program disqualification, administrative or civil penalties and in some instance criminal prosecution. Since the Obama Administration has identified enforcement of Stimulus Bill and certain other government contracting requirements as a priority, businesses also should be prepared to deal with potentially heightened scrutiny of their conduct. Accordingly, businesses doing business directly or indirectly with federal, state or local governments should take steps to manage their compliance and associate risks.
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