BUFFALO, N.Y.
A federal grand jury indicted David Pfeiffer, 64, of Killbuck, NY, and Thomas Colton, 53, of Salamanca, NY, for illegally getting construction projects earmarked to help minority businesses.
The two were charged with conspiracy to commit mail fraud and mail fraud. Pfeiffer was also charged with making a false statement to a financial institution.
Both men are each facing up to 30 years in prison and a $1 million fine.
Assistant U.S. Attorney Russell T. Ippolito, Jr., who is handling the prosecution, stated that according to the indictment, Pfeiffer and Colton conspired to defraud government agencies and the Disadvantaged Business Enterprise or DBE Program.
A business can be designated a DBE program if at least 51% of the business is owned and controlled by economically disadvantaged individuals.
Since 1980, the U.S. the Department of Transportation used the DBE Program to increase the participation of minority businesses in construction projects that receive federal funding.
As set forth in the indictment, between May 2009 and 2013, Pfeiffer and Colton are accused of defrauding among others:
• the U.S. Department of Transportation;
• the New York State Department of Transportation;
• the City of Niagara Falls, NY;
• the Buffalo Urban Development Corporation (BUDC); and
• the Niagara Frontier Transportation Authority (NFTA).
Pfeiffer and Colton used Colton’s business, Sue-Perior Concrete and Paving, Inc., as a subcontractor on federal government contracts.
Sue-Perior was used to allow Pfeiffer’s construction company Man O’ Trees to get government contracts that they would have not been able to receive.
Sue-Perior was qualified as a minority business by the Niagara Frontier Transportation Authority based upon a fraudulent application submitted by Pfeiffer and Colton.
As a result of the alleged fraud, Pfeiffer and Colton illegally got government construction contracts involving at least three projects:
• the New York State Route 104 Project;
• the Union Ship Canal Project; and
• the Gallagher Beach Project.
In total, the value of the three projects was about $15,500,000.
General contractors are only permitted to count funds paid to DBE’s that performed a “commercially useful function.”
The indictment alleges that Sue-Perior did not serve a commercially useful function in relation to these construction projects.
In addition, the indictment alleges that Pfeiffer also submitted false personal financial statements to Five Star bank to obtain credit extensions for his businesses.
The defendants are presumed innocent unless proven guilty.