FOR IMMEDIATE RELEASE                                         CIV
TUESDAY, AUGUST 8, 1995                            (202) 514-2008
                                               TDD (202) 514-1888

                                 
   U.S. INTERVENES IN LAWSUIT AGAINST VIRGIN ISLANDS CONTRACTOR

     WASHINGTON, D.C. -- The Department of Justice announced today
that it has intervened in a qui tam lawsuit originally filed by the
Virgin Islands Housing Authority alleging a construction company
and several of its officers defrauded the U.S. Department of
Housing and Urban Development of $800,000 by submitting false
claims for the renovation and rehabilitation of two public housing
projects in the Virgin Islands.

     A second claim against HUD for more than $1 million is
pending.

     Assistant Attorney General Frank Hunger of the Civil Division
said the suit was filed in the District Court of the Virgin
Islands, Division of St. Thomas and St. John, against Coastal
General Construction Services Corp., Coastal Fabrication
Corporation, William Koenig, Esther Koenig, Leonard Childs, Carl
Kruse, Advanced International Inc., Gregory C. Budnick, Cornistone 
                              (MORE)
Inc. and Peter Firestone.
     Hunger said the government contends that Coastal,
headquartered in St. Thomas, violated the provisions of the False
Claims Act, 31 U.S.C. Section 3729, by causing the housing
authority to submit false claims to HUD.

     According to the government, Coastal, its president, William
Koenig; his wife, Esther Koenig; Leonard Childs; and Carl Kruse
fabricated documents and information they knew were false and
submitted the documents to the housing authority to support
fraudulent and inflated claims generated from their construction
and rehabilitation work at the Donoe and Bovini public housing
projects in St. Thomas. 

     To date, HUD, through the housing authority, has paid out more
than $800,000 in losses attributed to the defendants' conduct.  A
second potential claim for $1.2 million currently is pending in the
Virgin Islands Territorial Court.

     According to the suit, Coastal and the housing authority
entered into a $2.2 million contract on September 29, 1988, to
repair 86 buildings at the Donoe Housing Community.  The housing
authority later terminated the contract and never authorized
Coastal to begin the work.  Nevertheless, Coastal, on November 16,
1992, presented $2.2 million in claims to the housing authority for
work the suit says was never performed.

     On December 7, 1988, the suit says, Coastal entered into an
$8.6 million contract to rehabilitate the Bovoni Housing Community. 
The housing authority issued a notice to proceed and Coastal began
the work, but the housing authority later terminated the contract. 
On January 31, 1992, Coastal presented construction claims of $4.8
million when in fact no work was done, according to the suit.

     The suit said the housing authority, relying on the accuracy
of Coastal's information, paid the claims, then ultimately received
reimbursement from HUD.

     Under the qui tam provisions of the False Claim Act, a person
can file a suit on behalf of the United States and receive up to 25
percent of the damages if the government takes over the suit and
prosecutes it successfully.

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95-435