Oglesby Construction, Inc. agrees to pay $942K

CLEVELAND — A Norwalk company paid a fine of close to $1 million to the U.S. government to settle fraud allegations. Rebecca C. Lutzko, United States Attorney for the Northern District of Ohio, announced Monday that Oglesby Construction, Inc., headquartered in Norwalk, has agreed to pay the United States $942,146.40 to resolve allegations that it falsified material usage records while performing on federally subsidized contracts to apply paint striping to Ohio roadways between 2012 and 2018. The allegations arise under the False Claims Act from a whistleblower complaint unsealed on July 19, 2023, and in which the United States intervened on July 14, 2023. The claims asserted against Oglesby are allegations only and there has been no determination of liability. "The Justice Department is committed to eradicating fraud in all its forms to protect taxpayer dollars," Lutzko said. "We cannot tolerate conduct that bilks the government of funds to support vital government programs." The complaint alleges that Oglesby saved money on highway-striping contracts by failing to use sufficient marking material, including paint, to meet state or contractual minimum standards. Oglesby allegedly use different methods to hide its conduct. One alleged method involved the manipulation of daily reports, which are required by the State of Ohio to monitor compliance with material usage standards. Contractors like Oglesby must assemble their reports using a tracking software application that obtains usage data from electronic devices on highway marking trucks. Oglesby allegedly embedded a hidden formula in a spreadsheet used by the tracking software, thereby altering data to conceal underapplication of material. In another alleged scheme, Oglesby engineered a return pipe and pump system that redirected paint disbursed from a truck's paint gun back to its load of unused paint. According to the complaint, this would trick the truck's monitoring device into recording application of paint when, in fact, the return pipe and pump system would intercept and recirculate it. "This settlement with Oglesby ends a successful, years-long criminal and civil investigation into the company's practices and sends a powerful message to those who wish to do the same," Lutzko said. "We need to have trust that companies or individuals that receive compensation under federally subsidized contracts do the work required." On Oct. 7, 2022, Gerald E. Reichert and his son, Adam Reichert, two former part-owners of Oglesby, pleaded guilty for their involvement in falsifying paint-striping reports. The court sentenced each to a term of imprisonment and ordered them to pay a combined $579,014.00 in restitution, along with fines. The amount obtained in the civil settlement is in addition to criminal restitution and fines.