U.S. District Court Judge Thomas M. Rose did not sentence the company to probation or restitution but levied a $400 mandatory assessment in addition to the fine.
The maximum penalty the company faced was one to five years of probation and a fine of not more than $500,000.
Company attorney, Chad Ziepfel, argued against probation, saying the federal government had already put Steve Rauch Inc. on its suspension list for federally funded contracts and is expected to begin debarment proceedings now that the case has concluded.
Ziepfel said if the company were on probation during those proceedings it could be more likely that it would be debarred and prohibited from working on projects that get federal funding.
“Debarment would be virtually catastrophic,” Ziepfel said, and likely result in lost jobs at the company.
The company has made multiple reforms, including assigning staff to be in charge of compliance and ethics, Ziepfel said, and requiring that staff and management get comprehensive ethics training.
He also said Rauch has been a major benefactor to the community, including contributing $1.5 million to the Kettering Health Network’s cancer center. The criminal investigation and subsequent media coverage had severely impacted the company’s reputation, Ziepfel said, and “the company has already paid a steep price here.”
“Steve Rauch Inc. is happy to put this matter in the past, and Mr. Rauch is pleased that the charges against him will be dismissed,” Ziepfel said via email after sentencing. “With a renewed focus on ethics and compliance, the Rauch Companies will continue to provide honest and reliable demolition, excavation and trucking services in the Dayton area, and will continue contributing to local charitable organizations and events, which it has done for over 40 years.”
The case is part of the federal investigation of public corruption in the Dayton region, dubbed Operation Demolished Integrity, announced in 2019. Rauch, who also owns SRI and Rauch Trucking, was one of seven people and two companies charged. Three have been sentenced to prison.
In December Rauch and former Trotwood Mayor Joyce Sutton Cameron, 72, owner of Green Star Trucking, each agreed that their companies would plead guilty to single counts of conspiracy to engage in mail fraud in exchange for charges being dismissed against Rauch, Cameron and her husband and Green Star employee, James Cameron, 82.
The three had faced prison sentences if they had been convicted of the original charges of one of count of conspiracy to commit mail fraud and six counts of mail fraud. Rauch and Sutton Cameron had pleaded not guilty to those charges but James Cameron never entered a plea.
Sentencing for Green Star is scheduled for April 14.
The conspiracy charge the two companies pleaded guilty to involves a demolition contract Steve Rauch Inc. completed for the city of Dayton in 2014, according to the bill of information attorneys for the two companies agreed was true.
Green Star Trucking worked on the project but Rauch and Cameron’s companies falsely claimed that Green Star did work that it did not perform, allowing Steve Rauch Inc. to fulfill the city’s requirement that disadvantaged small or women-owned businesses participate in city demolition contracts.
Rose said he was not sentencing Rauch Inc. to pay restitution because the work was completed so the city of Dayton did not lose money.
Steve Rauch Inc. failed to meet the required disadvantaged business participation goal and asked Green Star Trucking to “falsely certify that it had completed and been paid for several thousand dollars’ worth of additional work on the project,” according to the bill of information.
“Green Star agreed and signed the false paperwork. Steve Rauch Inc. then mailed this document to Dayton during June 2014, hoping that the city would release payments on the contract,” according to the bill of information, which does not include the amount of money involved.
A Dayton Daily News investigation found that Rauch used Green Star to meet minority contracting goals for nearly $4.7 million in city of Dayton demolition contracts between 2008 and 2016. The investigation also found that that Green Star won work as a subcontractor on at least 34 public contracts since 2008.
Three other cases that were part of that federal investigation also related to city contracts, including ones that involved awarding a portion of the work to disadvantaged, minority and other small businesses.
Former Dayton City Commissioner Joey D. Williams, former state Rep. Clayton Luckie and former Dayton city employee RoShawn Winburn, accepted plea deals and were sentenced to prison. Luckie completed his sentence, Williams was released early on home confinement due to the COVID-19 pandemic and Winburn is scheduled to report to prison later this year.
Credit: Lynn Hulsey
Credit: Lynn Hulsey
Dayton businessman Brian Higgins originally pleaded not guilty to three counts of mail fraud and one count of wire fraud but in December federal prosecutors added an additional wire fraud count and two counts of tampering with a witness. His trial is scheduled for March 29.
In an unrelated case, Rauch’s company SRI was convicted in Montgomery County Common Pleas Court in 2019 of illegal open dumping of solid waste and violating demolition and debris rules. Court sanctions required the company to develop employee training programs, increase financial assurance for solid waste facility post-closure care for 15 years and comply with all construction and demolition landfill rules. Rauch was found not guilty in that case and the company was released from community control in December.
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