Summary

On August 11, 2015, Georgia-based HD Supply Waterworks, Ltd. (Waterworks) agreed to pay $4,945,000 to the United States under the civil False Claims Act. Waterworks is the nation's largest supplier of water, sewer, fire protection, and storm drain products.  The settlement resolves allegations that Waterworks participated in a scheme to defraud the federal Disadvantaged Business Enterprise (DBE) program.

Specifically, it was alleged that various prime contractors falsely represented to contracting authorities that they were utilizing American Indian Builders & Suppliers, Inc. (AIB), a now-defunct DBE, as a subcontractor on federally-funded projects. In reality, these primes were negotiating with and obtaining supplies from Waterworks. Waterworks invoices were passed through AIB, with a mark-up, to the prime contractors to make it appear AIB had completed the work. One of the impacted projects was the $6.38 million NYS-DOT Bridge Avenue Bridge Replacement Project in Cohoes, New York, funded by the American Recovery and Reinvestment Act (ARRA).

In May 2011, Waterworks acquired the assets of Rexford Albany Municipal Supply Company (RAMSCO). Their payment covers fraudulent conduct between RAMSCO and AIB prior to their acquisition. According to the USAO, this civil settlement is the largest of its kind involving a third-party supplier in a DBE fraud case.

We conducted this investigation with the Environmental Protection Agency – Office of Inspector General and the Federal Bureau of Investigation.