Sonag Construction and another firm linked to its founder are still certified in programs that give minority-, women- and veteran-owned businesses a bidding edge, despite an indictment that accuses them of exploiting those programs.
Brian Ganos and his company, Sonag Construction, are accused of fleecing the government of more than $200 million over 12 years by setting up companies with false owners to qualify for set-aside contracts that give firms owned by women, minorities and veterans a leg up in the bidding process.
Despite the accusations, Sonag remains listed by the city of Milwaukee as a qualified Small Business Enterprise. The designation expires in April 2020, according to city records, which state the company performs masonry, concrete work, carpentry and demolition work, among other things.
Separately, another Ganos-linked company, Pagasa Construction, is registered with Milwaukee County as a Disadvantaged Business Enterprise, according to Wisconsin Department of Transportation records.
The government’s indictment of Ganos, Sonag and the Menominee Falls-based accountant Mark F. Spindler, accuses Ganos of putting minorities or veterans nominally in charge of companies like Pagasa in order to gain an advantage when bidding on contracts. The allegations state that although the companies were apparently owned by someone else, they were in fact controlled by Ganos.
Milwaukee Alderman Bob Bauman said city officials shouldn’t wait for the case against Ganos to wind its way through the courts before responding.
“Should they have their certification yanked? Absolutely,” he said.
Nikki Purvis, director of Milwaukee’s Office of Small Business Development, which administers the SBE program, did not immediately respond to a message for comment Friday. Nor did Rick Norris, director of Milwaukee County’s Community Business Development Partners, which oversees the DBE program.
Sonag and its related companies have worked on various prominent building projects in recent years, including a massive concrete pour at the Northwestern Mutual tower. Meanwhile, Nuvo Construction, a Ganos-linked company, is expected to complete work this fall on a pair of projects at Fort McCoy, near Sparta, worth about $1.5 million.
Brian Mitchell, president of the National Association of Minority Contractors-Wisconsin, said his organization recently sent a letter to Purvis, asking why Sonag has been allowed to maintain its SBE certification in light of the legal case against it. NAMC has yet to receive a response, he said.
Since Mitchell’s letter was sent, three more people have been netted in the investigation into Sonag.
On Wednesday, James E. Hubbell, 50, of Sussex and Jorge Lopez, 57, of Worthington, Minnesota, agreed to plead guilty to fraud charges for their roles as the false owners of companies set up by Ganos. Telemachos Agoudemos, 43, of Big Bend, also agreed to plead guilty to a charge of lying to federal investigators.
Nicholas Rivecca Sr., 68, of Hartland, who is alleged to be another false executive at a Ganos-controlled company, also agreed to plead guilty, in a related case, to charges of conspiring in early April to defraud the US government.
The rash of charges this spring weren’t the first sign that something was awry at Sonag.
Local and federal officials scrutinized Ganos and his companies four separate times between 2006 and 2012, according to the indictment. Later, in August 2016, federal agents raided the companies’ Milwaukee offices and the home office of an accountant who had worked with the companies involved in the investigation.
Mitchell said he wishes city and county officials had intervened sooner. Sonag, despite its SBE designation, operated like a large contractor, he said. Some of the assets seized from Ganos as part of the investigation suggest how lucrative his business had been; they include a Colorado condo, a Chevy Corvette convertible and $2.2 million in cash.
“A contractor of such size, when they are unfairly selected for these projects, it leaves little room for legitimate participants in these programs when the lions’ share of the contracts have been swallowed up by these criminals,” Mitchell said.
“They have admitted to fraud,” he added. “They have gone in federal court and admitted to it. I take them at their word that they are criminals.”Follow @natebeck9