Three more charged in connection with construction contract fraud scheme

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Three people have agreed to plead guilty to federal charges in connection with a Milwaukee-area contractor’s scheme that bilked the federal government of more than $200 million by exploiting a program set up to help minority- and disabled-veteran-owned contractors.

James E. Hubbell, 50, of Sussex, and Jorge Lopez, 57, of Worthington, Minn., have agreed to plead guilty to fraud charges for their roles as the false owners of companies set up by Brian Ganos, owner of Sonag Construction, to win set-aside contracts. Another false founder of a Ganos-controlled company, Telemachos Agoudemos, 43, of Big Bend, also agreed to plead guilty to a charge of lying to federal investigators. The charges carry penalties of up to five years in prison and a $250,000 fine.

An indictment filed on April 3 accuses Ganos and his accountant, Mark F. Spindler, of Menominee Falls, of founding companies and appointing minorities or veterans as owners to qualify for set-asides offered by the U.S. Department of Veterans Affairs, Milwaukee and other agencies through Disadvantaged Business Enterprise program.

U.S. Attorney Matthew D. Krueger and Assistant U.S. Attorney Zachary J. Corey are prosecuting the case.

Despite their apparent separate ownership, the companies named by federal officials were all in fact controlled by Sonag, according to the indictment.

Ganos and Spindler face a 22-count indictment on charges that they improperly won more than $200 million in contracts over 12 years. They face decades in prison and hundreds of thousands of dollars in fines. Another apparent executive of a Ganos-linked company, Nicholas Rivecca Sr., 68, of Hartland, has also agreed to plead guilty in a related case to charges of conspiring to defraud the US government.

Sonag used the DBE program to win contracts on prominent building projects like the new Milwaukee Bucks arena and Northwestern Mutual tower.  A press release from the U.S. Department of Justice Wednesday details the role of Lopez and Agoudemos in companies that Ganos controlled:

• Nuvo Construction Co. Inc. was misrepresented to be majority-owned but was in fact controlled by Lopez. This misrepresentation was carried out to make the company qualify as a Small Disadvantaged Business for the U.S. Small Business Administration and as a Disadvantaged Business Enterprise for Milwaukee County. Lopez, however, worked full time for a different company in Minnesota and did not control Nuvo.
• C3T Inc. was set up to be verified as a Service-Disabled Veteran-Owned Small Business owned by Agoudemos. But Agoudemos had no involvement in the company for “long stretches of time,” according to the indictment.