June 13th, 2012
Weeding out construction corruption in Indiana
The times were tense as my office of Minority Business Development for the state of Indiana proceeded to weed out the corruption and deceit in the contracting arenas. The worst sector was construction and I knew the office needed more muscle and expertise to recognize the fraud as it occurred. I proposed a new position slot, Construction Specialist. This person would have an expertise in the intricacies of construction management, engineering and general/sub contracting.
Almost immediately after the budget office approved the addition, Gary Gibson, a family friend, came to visit me. He informed me that he was moving back to Indianapolis from Detroit as he had just lost his wife to sickle cell anemia. He was seeking tips for employment. I looked at his resume and shouted “You have a Construction Management degree from Notre Dame and experience with a major construction firm?” God is indeed great! Gary started working for me within a few weeks.
Within his first week on the job he detected something “fishy”. The plum job in the city was the massive new State Office Building. The construction management firm was Huber, Hunt and Nichols, the largest such firm in the state with offices throughout the nation. There was a company listed on the Minority Business Report by the name of Thomas Construction and they were reportedly doing more than $2 million. Gary stated that it had to be impossible as his research said no such firm by that name had the capability to do such a thing. He drove by the listed address of the firm and saw nothing that would indicate any type of construction expertise.
To do more than $100,000 in work for the state of Indiana you must first be pre-qualified for what you are capable of doing. Gary and I strolled over to the Dept. of Public Works to look at the file on Thomas Construction. We pulled it out and found that it was empty, blank, and void of content! It became clear - this is fraud and Huber, Hunt and Nichols and the State are scheming together. My problem was how do I prove it. I told Gary to let me think on a plan of action. About two nights later I saw an IRS ad on TV. It asked potential whistle blowers to dial a particular 800 telephone number and report tax cheats.
I called the IRS and reported Thomas Construction as doing $2 million in construction and not reporting it. An agent from the IRS soon visited my office. She said, “I visited Mr. Thomas and he confessed to a paper sham. He is waiting for you to visit him so he can inform you of the mess. I guess my badge and pistol on my hip intimidated him. He told it all.”
Our visit to Mr. Thomas was revealing. He explained how Huber, Hunt and Nichols recruited him. He thought he was going to make a lot of money but pretty soon they had him doing a lot of stupid things. The flaming evidence was that Huber, Hunt and Nichols actually had a written blueprint for fronting on the project and Mr. Thomas turned a copy of it over to us. The written agreement had things like “For assignment of material purchase orders to you, HH&N will reimburse Thomas Construction Company a fee of 3% over and above the total cost of the purchase order. Joint checks will be issued to Thomas Construction Company in the name of Thomas and the named recipient of the purchase order.” Wow! They actually set up a special bank account where they would jointly go to the bank and make the deposits, but only HH&N had signing authority on the account. In total it was a nine point agreement full of sinister schemes.
I reported our findings to the state Department of Administration. The General Counsel asked us, “Where are you guys going with this?” I responded, “To Hell and back if that is what it takes.” I was about to leave my position to start a local Black chamber so I had no fear.
At an event for the Indiana Black Expo, I stood on a stage with Rev. Jesse Jackson and took the microphone. I shouted, “Huber, Hunt and No Negroes has been busted for fronting on the State Office Building and the State must punish them!” The newspapers, television stations and radio channels blew it up.
Huber, Hunt and Nichols was banned from state projects for five years. They eventually changed their name to Hunt Construction. The US Attorney wanted to go after seventy-two year old Mr. Thomas. We persuaded them to leave him alone. They wouldn’t pursue HH&N.
Mr. Alford is the co-founder, President and CEO of the National Black Chamber of Commerce.