FRA Suspends Former Executives at Delaware Manufacturing Company

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On March 22, 2019, the Federal Railroad Administration (FRA) suspended Donald Scott Crothers, former vice president for sales and marketing at First State Manufacturing, Inc. (FSM), and John Gonzales, the former executive vice president and chief financial officer at FSM, from participation in Federal procurement and nonprocurement programs. In February 2019, Crothers and Gonzales pleaded guilty in U.S. District Court, Philadelphia, Pennsylvania, to one count of Federal program bribery and aiding and abetting. Both were charged in January 2019 for their roles in a bribery and kickback scheme involving $7.6 million in federally funded Amtrak contracts.

Crothers and Gonzales admitted they corruptly gave, offered, and agreed to give things of value to Timothy Miller, a former lead contract administrator at Amtrak, to influence and reward Miller in connection with a series of contractual transactions. From approximately August 2015 through July 2017, through Miller’s efforts, Amtrak awarded FSM four federally funded fleet maintenance contracts worth over $7.6 million. In return for steering the contracts and providing pricing information, Crothers and Gonzales provided Miller with approximately $20,000 and other things of value, including trips to Rehoboth Beach, Delaware. To conceal the scheme, Miller created a sham company called Miller Consulting to make it appear that the bribes paid by Crothers and Gonzales were for legitimate consulting services. Miller pleaded guilty and was sentenced for his role in the scheme on January 18, 2019.

FRA executes and oversees grant agreements that provide Amtrak with Federal funds appropriated by Congress. Amtrak uses Federal funds for a wide range of its operating and capital activities, including a portion of its operating expenses, capital maintenance of fleet and infrastructure, capital expansion and investment programs, and capital debt repayment. The four fleet maintenance contracts related to this scheme involved approximately $6.5 million in FRA grants.

DOT-OIG is conducting this investigation with the Amtrak-OIG, Federal Bureau of Investigation (FBI), and Internal Revenue Service–Criminal Investigation Division (CID).

Note: Exclusion actions (suspensions and debarments) are frequently for a specific period of time, and the System for Award Management should be consulted to find out whether a company is currently excluded.

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