United States District Court, M.D. Pennsylvania
UNITED STATES OF AMERICA, ex rel. ROBERT GREEN, Plaintiff
SCHUYKILL PRODUCTS, INC.; JOSEPH W. NAGLE; ERNEST G. FINK, JR.; CDS ENGINEERS; MARIKINA CONSTRUCTION COMPANY Defendants.
SYLVIA H. RAMBO, District Judge.
Relator-Plaintiff brought this qui tam action against Defendants, his former employers, pursuant to the provisions of the False Claims Act, 31 U.S.C. §§ 3729-3733. The United States convicted the two individual defendants on the basis of the same fraudulent conduct alleged in this action. Presently before the court is Plaintiff's motion for summary judgment. (Doc. 33.) At issue is whether Relator-Plaintiff is entitled to judgment as a matter of law against the sole remaining defendant in this civil action. For the following reasons, the court finds that there is no genuine dispute as to any material fact and concludes that Relator-Plaintiff is entitled to judgment as a matter of law as to liability. Accordingly, Relator-Plaintiff's motion for summary judgment will be granted.
The facts submitted in support of the instant motion for summary judgment are entirely undisputed and are based largely on the remaining defendant's failure to respond to Relator-Plaintiff's requests for admissions. ( See Docs. 38 & 39.) Those operative facts are summarized as follows.
Relator-Plaintiff was the original source of information that led to the investigation into and prosecution of Defendant Ernest G. Fink ("Defendant Fink") and the other co-conspirators. At the trial of Defendant Fink's criminal co-defendant, Joseph W. Nagle ("Nagle"), Agent Thomas Marakovits testified that Relator-Plaintiff contacted the FBI to report, what Relator-Plaintiff characterized as, DBE fraud. See United States v. Nagle, Crim. No. 1:09-cr-0384-01, 2013 WL 3894841, *7 (M.D. Pa. Jul. 26, 2013). Relator-Plaintiff provided information as a confidential informant and was compensated roughly $5, 300.00 for his assistance in Agent Marakovits's investigation, during which Relator-Plaintiff made numerous recordings. See id. at *59.
Relator-Plaintiff was an employee of Schuykill Products Inc. ("SPI"), a company engaged in the business of manufacturing concrete products to be used on highway construction projects. (Doc. 33-7, ¶¶ 1, 14-17.) CDS Engineers ("CDS") was a wholly owned subsidiary that operated as the engineering and erection division of SPI. ( Id. at ¶¶ 7, 22-23.) Marikina Construction Company ("Marikina") was PennDOT's largest recipient of DBE-designated funds ( id. at ¶ 37) and was certified as a disadvantaged business enterprise that subcontracted for work from general contracts on numerous federally funded highway construction projects ( see id. at ¶¶ 35, 38). Defendant Fink was a director, officer, and shareholder of both CDS and SPI and held the titles of Vice President and Chief Operating Officer of SPI. ( Id. at ¶¶ 3-6, 8-13.) Nagle was the President and Chief Executive Officer of SPI. ( Id. at ¶ 28.)
Between 1993 and 2008, Defendant Fink, along with other co-conspirators, used SPI, CDS, and Marikina to obtain approximately 336 federally funded subcontracts worth approximately $119.4 million, despite SPI being ineligible for the contracts as a non-DBE. ( See id. at ¶ 36.) By way of explanation, general contractors that were awarded federally funded contracts subject to DBE requirements subcontracted with Marikina to furnish and install bridge beams. ( Id. at ¶¶ 38-39.) Marikina frequently subcontracted with SPI to obtain the bridge beams ( see id. at ¶ 40), and CDS erected the purchased beams pursuant to the Marikina-general contractor contracts ( see id. at ¶ 42). Marikina, through CDS, performed the work pursuant to the subcontracts, whereby it commonly installed the beams purchased from SPI. Indeed, the subcontracts into which Marikina entered with the general contractors were found, negotiated, coordinated, performed, managed, and supervised by SPI and CDS personnel. ( Id. at ¶ 42.) This relationship permitted the general contractor to obtain DBE credits for both the beams and erection. Marikina did not perform a commercially useful function. ( Id. at ¶ 41.)
Profits for the work performed on the subcontracts flowed through Marikina to CDS and SPI, less a fixed fee that was paid to Marikina. ( Id. at ¶¶ 43-45.) Through this scheme, federal funds, that were intended to go to legitimate disadvantaged business enterprises, flowed through Marikina to SPI, resulting in SPI obtaining government benefits to which it was not entitled. As part of his plea agreement, Defendant Fink admitted to "conspir[ing] with the upper management of SPI, CDS[, ] and Marikina to defraud the USDOT in its implementation, execution, and administration of its DBE program" for the purpose of "(1) unjustly enrich[ing] themselves by using Marikina as a front company to obtain for SPI and CDS the profits on the DBE subcontracts... that were slotted for legitimate DBE's; and (2)... increas[ing] SPI['s] profits by marketing itself to [general contractors] as a one-stop shop' which could not only supply the beam, but also erect the beam and provide the [general contractor] with valuable DBE credits." United States v. Fink, Crim. No. 1:09-cr-384-02, Statement of Facts, Dkt. No. 77-2 (M.D. Pa. July 30, 2010).
B. Procedural History
As stated, underlying this civil action is the criminal prosecution of the two natural persons named as defendants herein, i.e., Defendant Fink and Nagle. On November 19, 2009, Defendant Fink and Nagle were indicted by a federal grand jury sitting in the middle district of Pennsylvania of 32 counts related to their participation in the aforementioned fraudulent scheme to obtain federally funded highway construction contracts set aside for socially and economically disadvantaged business enterprises. See United States v. Nagle, Crim. No. 1:09-cr-0384, Indictment, Dkt. No. 1 (M.D. Pa. Nov. 19, 2009). On January 8, 2010, Relator-Plaintiff, Robert Green, on behalf of the United States, filed a False Claims Act ("FCA") lawsuit, under seal, against defendants Schuykill Products Inc., Nagle, Defendant Fink, CDS Engineers, and Marikina Construction Company. (Doc. 1.) The Department of Justice declined to intervene in the civil lawsuit on November 21, 2011. (Doc. 17.)
On August 16, 2010, Defendant Fink pleaded guilty to Count 1 of the indictment, which charged him with engaging in a conspiracy to commit wire and mail fraud and to defraud the United States by impeding, impairing, obstructing, and defeating the lawful governmental functions of the United States Department of Transportation in the implementation, execution, and administration of its Disadvantaged Business Enterprises program. See Fink, Crim. No. 1:09-cr-0384-02, Order Accepting Guilty Plea, Dkt. No. 87 (M.D. Pa. Aug. 16, 2010). The agreement to which Defendant Fink pleaded contained a statement of facts that included acknowledgment that Defendant Fink and the other co-conspirators, all of whom were upper-level management for SPI and CDS, used Marikina as a pass-through and that Marikina did not perform a commercially useful function. See Fink, Crim. No. 1:09-cr-0384-02, Statement of Facts, Dkt. No. 77-2 (M.D. Pa. July 30, 2010). Following a jury trial, Nagle was convicted on April 5, 2012. See Nagle, Crim. No. 1:09-cr-0384-01, Jury Verdict, Dkt. No. 197 (M.D. Pa. Apr. 5, 2012). The court determined the amount of loss attributable to Defendant Fink's and Nagle's conduct to be $135.8 million and $53.9 million respectively. See Fink, Crim. No. 1:09-cr-0384-02, Opinion, Dkt. No. 282 (M.D. Pa. May 16, 2014); Nagle, Crim. No. 1:09-cr-0384-01, Opinion, Dkt. No. 281 (M.D. Pa. May 7, 2014). Defendant Fink and Nagle are awaiting sentencing, which is scheduled for July 14, 2014, and June 30, 2014, respectively. See Fink, Crim. No. 1:09-cr-0384-02, Notice of Hearing, Dkt. No. 283 (M.D. Pa. May 20, 2014); Nagle, Crim. No. 1:09-cr-0384-01, Notice of Hearing, Dkt. No. 284 (M.D. Pa. May 20, 2014). Relator-Plaintiff filed an amended complaint on January 26, 2012, (Doc. 18), which was served upon Defendant Fink, Nagle, SPI, and CDS on or about March 8, 2012 (Doc. 22). Nagle, SPI, and CDS never responded to the complaint, and default judgment was entered against them on June 5, 2012. (Doc. 30.) Defendant Fink filed his answer to the amended complaint on June 18, 2012. (Doc. 31.)
On April 1, 2013, Relator-Plaintiff served Defendant Fink with requests for admission. (Doc. 33-2.) Due to Defendant Fink's failure to respond within thirty days, Relator-Plaintiff sent a letter on May 9, 2013, advising Defendant Fink that the requests for admission were deemed admitted pursuant to Federal Rule of Civil Procedure 36. (Doc. 33-3.) On July 18, 2013, Relator-Plaintiff filed the instant motion for summary judgment, statement of material facts, and brief in support. (Doc. 33.) On August 8, 2013, the parties stipulated to extend the deadline by which Defendant Fink was to respond to the pending motion until September 3, 2013. (Doc. 35.) On February 4, 2014, this case was reassigned to the undersigned judge. (Doc. 36.) On April 8, 2014, the court, after noticing that Relator-Plaintiff's statement of material facts failed to cite to the record for support of the averments contained therein despite the statement corresponding nearly paragraph-by-paragraph to the requests for admission, issued a rule directing Defendant Fink to show cause why the noncompliance with Middle District of Pennsylvania Local Rule 56.1, see M.D. Pa. L.R. 56.1 (requiring statements of material facts in support of a motion for summary judgment to include reference to the parts of the record that support the ...