NEW DETAILS
For two years, the Dayton Daily News has been investigating the relationships between Washington Twp. developers David and Shery Oakes and a business called TesTech, which gained entry into a federal program that gives government contracting preference to companies owned by members of disadvantaged minority groups.
TesTech Inc., the Washington Twp. engineering company that last month settled civil federal contracting fraud charges, now faces expulsion from two Ohio programs that give it special preference in obtaining lucrative taxpayer-funded state contracts, an Ohio official said Thursday.
The Ohio Department of Administrative Services notified TesTech President Sherif Aziz that it intends to revoke the company’s certifications to participate in the Minority Business Enterprise and Encouraging Diversity, Growth & Equity (EDGE) programs, said ODAS spokeswoman Beth Gianforcaro.
In letters to Aziz dated Monday, Richard M. Scott of the department’s equal opportunity division said TesTech “misrepresented material facts regarding control and ownership” of the company, which provides engineering and technical services at construction sites.
In his letters to Aziz, Scott said TesTech first misrepresented its ownership in a 1998 MBE application and continued to misrepresent itself to MBE and EDGE officials through 2009.
TesTech has 30 days to appeal. If it doesn’t appeal, it will be decertified, Scott wrote.
Aziz did not return a request for comment. Anna Wright, spokeswoman for Dinsmore and Shohl LLP of Cincinnati, which represented Aziz in the civil settlement, declined to comment.
TesTech has obtained publicly funded contracts in Montgomery, Greene, Butler and Clark counties, as well as in other Ohio cities and Kentucky, Indiana and Michigan.
In 2012, the Ohio Department of Transportation revoked TesTech’s Disadvantaged Business Enterprise certification because of questions of ownership and control. ODOT administers the federal program in Ohio.
Stephanie McCloud, the hearing officer who considered TesTech’s appeal of DBE decertification, found that Aziz was an employee of the Oakeses “willing to put his family and his own reputation at risk to help the Oakeses achieve an advantage by engaging in a high stakes game of deceiving” the federal and state transportation departments.
Last month, Aziz, TesTech, the Oakeses, David Oakes’ CESO Inc., and two related companies agreed to pay the U.S. government and whistleblower Ryan Parker nearly $2.9 million to settle civil False Claims Act allegations filed in 2010.
The Oakeses and their companies were accused of using Aziz as a front man to acquire more than $5 million in minority set-aside contracts through the U.S. Department of Transportation’s DBE program. Aziz said he founded and was sole owner of the company since 1997, but the complaint alleged that the Oakeses owned and controlled TesTech at least until 2009.
In the settlement reached with Southern District of Ohio U.S. Attorney Carter M. Stewart, the parties admitted no wrongdoing. No criminal charges have been filed.
The Oakeses’ attorney, David Reed, said the couple is maintaining its position of declining to comment on the TesTech matter.
The federal DBE program and the state MBE program require that participating companies be majority-owned and controlled by members of certain minority groups and other disadvantaged people. The EDGE program targets socially and economically disadvantaged businesses. The designations are coveted because many public contracts require that a percentage of the work be performed by certified companies, making such companies sought after as subcontractors.
Fraud can occur in set-aside programs when purportedly disadvantaged small businesses are actually owned and controlled by people who are not members of a protected minority group, or whose personal net worth exceeds program limits, or when minority owners simply “pass through” their work to a non-minority company.
TesTech has been the target of a federal probe since at least 2008, documents show. In July 2011, federal transportation agents accompanied by the FBI raided the Washington Twp. headquarters of TesTech and the Oakes companies — including Design Homes and Development Co. and the civil engineering firm CESO Inc.
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