City Fines Contractor in DBE Fraud Case

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A legal battle has ramped up between a city and the husband-and-wife run painting company it accuses of creating a front in order to qualify as a woman-owned business. As such, the company would be eligible for contract consideration given to for DBEs – disadvantaged business entities – which include companies owned by women and minorities who have traditionally faced discrimination in the past.

The west coast city has been investigating the company since it received a tip about it in 2017. The city states that the company received over $1 million – other sources state it was over $2 million – in contracts by claiming status as a woman-owned company, and is fining the company $20,000 as well as suspending its eligibility to do business for three years. 

The city cites, among other complaints, that the address the company uses is actually a loading dock for a business owned by the husband. The city also states that its investigation found that the company depicted as woman-owned was not independent of a painting company owned by her husband, thus making it ineligible to be considered for contracts as a woman-owned company under city and state rules.

The couple is challenging the city’s findings, with their lawyer stating that the painting company is indeed woman-owned and that the wife is the company’s chief executive and majority shareholder. Earlier in the investigation, the paint company tried to quash a city subpoena, stating that the city’s actions were sexist and an abuse of power.

This was, in fact, the first instance of the city acting on a law it passed in 2015 giving it the authority to investigate as to whether a company applying for contracts as a DBE had legitimate standing as a DBE. A city audit last year stated that while it had made some progress in addressing disparities by awarding contracts to DBEs, there were still issues to be resolved.


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Sources

OregonLive.com

USNews.com

APNews.com


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