One of the construction industry’s worst-kept secrets – the illegal practice of minority contractors fronting for white contractors – is at the heart of a new settlement between local prosecutors and one of the nation’s largest building supply companies.
Lafarge North America Inc. has agreed to pay $950,000 to the federal government to resolve allegations that it used a minority-owned company in Buffalo as a front in local construction projects.
The settlement came just a year after Oscar Rayford, one of Buffalo’s most prominent African-American contractors, admitted taking part in the scheme with Lafarge.
“A case that began with allegations of fraud by a local business is now fully resolved to the benefit of all involved,” U.S. Attorney William J. Hochul Jr. said in statement.
The allegation that Rayford Enterprises acted as a front for Lafarge stemmed from its designation as a Disadvantaged Business Enterprise, a program created in the 1980s to help minority- and women-owned businesses.
As part of the program, the federal government requires a certain percentage of work on federally funded highway projects be set aside for those types of companies.
Lafarge, a Washington, D.C., area company, did not admit any guilt as part of the settlement and claims its relationship with Rayford was inherited as part of a company acquisition in 2001.
“Lafarge expressly denies that it violated any laws,” the company said in a statement. “However, because the costs of protracted litigation over this legacy issue would likely have exceeded the costs of settlement, the company decided it was best to move forward and finalize the matter.”
Rayford was awarded concrete manufacturing contracts on local construction projects, but, in fact, most of the work was done by Lafarge, a national supplier of building materials, according to Assistant U.S. Attorney MaryEllen Kresse.
Rayford was able to conceal his fraud by supplying false affidavits, letters, work sheets and other forms to the state Department of Transportation, prosecutors said. The projects, which took place between 2001 and 2007, were funded by the Federal Highway Administration.
Rayford’s defense lawyer said his client was supposed to keep about 1 to 2 percent of the government funding paid out to his company while turning the rest over to Lafarge.
Rayford received a year of probation for his role in the scheme. The judge who sentenced him credited him with helping with the investigation of Lafarge and his willingness to give back $1.8 million taken in by his company.
Chief U.S. District Judge William M. Skretny also pointed to the defendant’s positive reputation and long history of activism on Buffalo’s East Side.