CINCINNATI - A federal grand jury has charged Evans Landscaping, Inc.; the owner of Evans Landscaping, Inc., Doug Evans, 55, of Cincinnati; and the vice president of operations for Evans Landscaping, Jim Bailey, 49, of Cincinnati, with charges related to allegedly defrauding the City of Cincinnati and other public entities through fraudulent small business and minority business contracts.
Specifically, the company and both men are charged with two counts of conspiracy to commit wire fraud and three counts of wire fraud. The two men are also charged with one count of misprision of a felony.
Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Office, and Ohio Attorney General Mike DeWine announced the indictment returned May 18 and unsealed today.
Evans Landscaping is an Ohio company headquartered in Cincinnati that performs demolition, site-work, grading, hauling, recycling and landscaping services. Given the size and ownership of the company, Evans Landscaping does not qualify as a small business enterprise (SBE), a minority business enterprise (MBE) or as economically disadvantaged under local and state government programs.
In order to qualify for the City of Cincinnati’s SBE program, a company must be independently controlled, operated and managed by a qualifying individual whose net worth does not exceed certain limits. The program also requires that the company be directly responsible for providing the supplies or services to the City without relying upon others who are not owners or employees of the company.
Similarly, the State of Ohio has established an Encouraging Diversity, Growth, and Equity program (EDGE) for economically disadvantaged businesses that are at least 51% owned and controlled by an economically disadvantaged person. The size of the business must not exceed the definition of a “small business." The State also has a program for certifying minority business enterprises (MBE) that requires the owner to have actual control of the day-to-day operations of the company.
In 2008, the defendants (along with others) allegedly established, controlled and operated a demolition company, Ergon Site Construction, LLC, for the benefit of Evans Landscaping. Ergon’s president and owner, Korey Jordan, is an African-American male who had no prior experience in the field but provided IT services for Evans Landscaping. It is alleged that Ergon (with the help of the coconspirators) fraudulently obtained certifications as an SBE, MBE and EDGE contractor while concealing Evans Landscaping’s involvement in and control over Ergon.
The indictment alleges that Evans and Evans Landscaping provided at least $85,000 in startup and early operational funds to Ergon and that Jordan did not make any capital contributions to the establishment of the company.
Evans Landscaping personnel allegedly prepared and filed the legal documentation to register Ergon as an LLC in April 2010, created the company’s name and logo, ordered Ergon apparel, and bought equipment labels with Ergon’s logo.
Jordan allegedly performed little work for Ergon and had little, if any, actual control over Ergon’s management, finances and operations. He was not permitted to make certain decisions or take certain actions without Doug Evans’ approval.
According to the indictment, Evans paid Jordan a monthly salary through the Ergon payroll and Evans Landscaping employees handled virtually all of the accounting and office management functions of Ergon. For example, it is alleged that:
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Ergon’s bookkeeping was kept on Evans Landscaping’s internal accounting database;
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Evans Landscaping personnel had Jordan sign blank Ergon checks for the employees to use;
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Evans Landscaping was a guarantor for Ergon’s line of credit and arranged for the purchase of two Mack Trucks in Ergon’s name;
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At various times, Ergon’s business office and address was located on property owned by Evans or one of his companies;
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Evans, Bailey and others controlled hiring and firing by Ergon, and at one point, Evans terminated the Ergon health care plan;
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Evans Landscaping housed, maintained and dispatched the vehicles and equipment in Ergon’s name, which was used by both companies; and
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Bailey and other Evans Landscaping officers and employees directed virtually all field and construction operations of Ergon, including on-site supervision and the managing of Ergon field workers.
From 2011 through 2014, Ergon bid on and received more than 100 residential demolition contracts, totaling approximately $1.9 million, with the City of Cincinnati by leveraging Ergon’s fraudulent SBE status.
In a similar fashion, during the same timeframe, Evans Landscaping bid on State demolition and construction projects - particularly public school, university and municipal projects - by claiming Ergon would provide a percentage of the services and receive part of the funds to be paid.
On at least one occasion, Evans Landscaping allegedly listed a different subcontractor, won the contract, and performed the work without using, paying or even notifying the EDGE subcontractor named.
In conjunction with this indictment, the government has filed Bills of Information and Plea Agreements for four former employees at Evans Landscaping and Ergon - namely, Korey Jordan (president of Ergon), Maurice Patterson (former CFO of Evans Landscaping), John Dietrich (former CFO of Evans Landscaping) and Michael Moeller (former manager at Evans Landscaping).
U.S. Attorney Glassman commended the investigation of this case by the FBI’s Southern Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation, as well as Assistant United States Attorney Timothy S. Mangan and Deputy Criminal Chief Emily N. Glatfelter, who are prosecuting the case.
An indictment merely contains allegations, and the defendants are presumed innocent unless proven guilty in a court of law.
Source: U.S. Department of Justice, Federal Bureau of Investigation (FBI)
