Feds seize $2.2 million in FBI minority contract fraud probe
It’s part of investigation into several businesses
The federal government has seized $2.2 million as part of an ongoing probe into a Milwaukee company and its owner suspected of defrauding the government’s minority set-aside contract program, according to court records filed in Milwaukee.
The seizure is the latest move in the ongoing criminal fraud investigation of several Milwaukee-area businesses with ties to Sonag Co., a northwest side contractor owned by Brian Ganos. The U.S. attorney’s office is asking a federal judge to order that the money — currently in custody of the U.S. Marshals Service — be forfeited.
The FBI has been investigating possible fraud by Ganos for at least five years, records show.
The firms, which have been raided twice by the FBI, are suspected of landing $268 million in government contracts by fraudulently claiming they are owned by minorities and military veterans, court records show.
No charges have been filed in the ongoing probe that involves the FBI and about a half-dozen other agencies.
Ganos is suspected of using the money from ill-gotten federal contracts to
help finance a lavish lifestyle that includes the $72,000 cash purchase of a 2014 Corvette that authorities seized after an August 2016 raid of the headquarters of Sonag and related companies, located near N. 55th St. and W. Florist Ave.
The U.S. attorney’s office is also seeking to seize a $700,000 condominium in Winter Park, Colo., though that forfeiture action has been stayed pending the completion of the criminal probe. The action effectively prevents the property from being sold or used as collateral.
The car and condo were purchased by companies with ties to Ganos or Sonag, according to records.
The seized funds were held in two accounts of Sonag Co., according to the forfeiture action filed in U.S. District Court in Milwaukee.
While Sonag is a certified minorityowned contractor for some programs, federal investigators allege Ganos, a Latino, created other companies, including Nuvo Construction Co., using minority and veteran owners as fronts to improperly win the $268 million in government contracts over several years.
An affidavit written by FBI Special Agent Jennifer Walkowski in support of the forfeiture states that Ganos was “engaged in layered financial transactions to transfer Nuvo profits to Sonag Co. bank accounts in a manner intended to conceal, among other things: the true ownership of those criminally derived profits namely; and that those profits really belonged to Ganos as the orchestrator and prime beneficiary” of the conspiracies.
The affidavit says Ganos engaged in mail and wire fraud and money laundering.
Sonag owns construction services around the Midwest and is completing portions of the new Milwaukee Bucks arena after successfully bidding on contracts worth millions that were set aside for small or disadvantaged businesses. Sonag Ready Mix worked on Northwestern Mutual’s downtown business tower and condo development, participating in a massive concrete pour at the site.
The civil asset forfeiture law allows prosecutors to take money and property they believe are the proceeds of crime, even before anyone involved in the suspected offenses has been charged, often raising the ire of defense lawyers.
Federal law enforcement can seize assets if they can show by a “preponderance of evidence” that they were purchased with money that was the result of criminal activity. The burden of proof is lower than what must be reached to convict a person.
Ganos has objected in federal court to the seizures, arguing the actions are “constitutionally excessive.”
The investigation into Ganos-related companies gained steam with a whistleblower tip in 2014 and become public in 2016 when the FBI and other agencies raided several businesses near N. 55th St. and W. Florist Ave. The FBI conducted a second raid earlier this year.
The money listed in the forfeiture motion began as payments from the U.S. government to C3T and Nuvo in 2010 and 2011, according to the affidavit, before moving through seven other Morgan Stanley and UBS Bank accounts.
More than $3 million moved from one UBS account to another UBS account in two transfers in January and February 2015. There was a total of $2.2 million left when the government moved to seize the money last month.
The FBI had interviewed Ganos and others in 2012 about a contracting firm called C3T, from which more than $2 million flowed to Sonag in 2011, but Ganos said he was only the landlord of C3T.
In an email, Ganos’ attorney, Michael Fitzgerald, declined to comment.
The FBI’s Walkowski said it remains an active criminal investigation. Documents filed in federal court also say the same.
In January, the City of Milwaukee’s Office of Small Business Development sought to bar Sonag Company Inc. from the city program, which allows companies to bid on contracts specifically set aside for small or disadvantaged businesses, city records show.
City officials cited the ongoing federal investigations. Ganos appealed. In April, a city board that reviews the appeals sided with Ganos and reinstated the certification.
The city renewed the small business certification for another Ganos company, Sonag Ready Mix, in August. The designation for both companies is good for two years.