CINCINNATI – Since FBI agents raided Evans Landscaping facilities in Newtown, Anderson Township and Mount Carmel last summer, officials have remained mostly quiet about their investigation.
However, documents filed by government attorneys in U.S. District Court last month shed light on the FBI’s investigation. A complaint seeking the forfeiture of two trucks states that Evans Landscaping and another company, Ergon Site Construction, used the trucks in transactions violating money laundering, mail fraud, wire fraud and/or conspiracy laws.
According to the complaint filed by Assistant U.S. Attorney Matthew Horwitz and verified by Cincinnati FBI Special Agent Matthew DeBlauw, Evans Landscaping and owner Doug Evans helped Korey Jordan launch Ergon in 2008, funding the operation and providing a guarantee on a $500,000 line of credit from PNC Bank.
Ergon used a $172,000 advance on the credit to repay Evans Landscaping for the trucks, the complaint states. Payments back to PNC were made with “proceeds of the fraudulent and otherwise criminal acts” related to public demolition contracts from Ohio and the city of Cincinnati.
Ergon was granted Small Business Enterprise (SBE) status by Cincinnati after they listed only two employees – both previous employees of Evans Landscaping or related companies – and claimed to have no outstanding loans on the business “despite having a significant outstanding line of credit balance,” according to the government’s complaint.
With the SBE status that the much larger Evans Landscaping didn’t have, Ergon was awarded more than $2 million worth of demolition contracts from the city, according to the complaint. Many of the contracts were for amounts less than $50,000, requiring that they be awarded to a SBE.
Since the FBI's raid, city officials have worked to change the requirements for SBE qualification in an effort to weed out "front companies."
After Ergon began receiving the city contracts, more than $2 million was transferred from Ergon’s bank account to Evans Landscaping, the government alleges.
“It is believed that Evans Landscaping orchestrated the Ergon bids and performed nearly all of the work obtained by Ergon under the City of Cincinnati contracts in an attempt to fraudulently obtain, among other funds, the funds from SBE contracts…” officials wrote.
“It is also believed that Ergon and Evans Landscaping conspired to fabricate a false list of equipment in an attempt to induct the city’s business and obscure the true nature of their financial arrangement,” officials continued in the complaint.
However, Evans denied many of the government’s allegations in an answer to the complaint filed Friday. The company agreed to guarantee the loan on the advice of their accountant, Tony Schweier, their attorney, Zach Peterson, wrote in the response.
“Evans Landscaping is committed to doing business the right way and the company reaffirms that commitment,” Peterson wrote in a statement to the media Friday. “Today’s legal filing in the forfeiture case outlines certain facts in relation to the government’s investigation that, we believe, demonstrate that our company and its employees have acted honorably.”
Schweier said they should not require Evans’ approval on Ergon’s finances “to keep appropriate distance between” the companies, though government officials alleged the two companies had a close relationship.
Jordan “maxed out” the line of credit and defaulted, according to Evans’ response. PNC collected from Evans Landscaping, costing them more than $200,000.
Jordan’s attorney wasn’t immediately available for comment.
Evans Landscaping is also owed more than $270,000 from Ergon for work they subcontracted, according to their response. They called the government’s claim about the $2 million payment from Ergon following the Cincinnati contracts "fantastically misleading” and “objectively wrong.”
Evans Landscaping did receive $1.35 million from Ergon for various products and services they provided, they said.
In addition to the city contracts, Ergon was certified through Ohio’s Encouraging Diversity, Growth and Equity program (EDGE), which provides advantages on some public contracts for minority business enterprises owned by an individual who is economically or socially disadvantaged.
On Ergon’s application, they failed to disclose their relationship with Evans Landscaping, officials said.
“Based on the close affiliation of the two companies, it is believed that Evans Landscaping continued to utilize Ergon in name as a subcontractor on large school demolitions knowing that Ergon did not have the resources to perform the required functions,” the complaint states. “This allowed Evans Landscaping to avoid the cost of a legitimate EDGE subcontractor, potentially created higher profit margins and/or allowed Evans Landscaping to bid more competitively.”
On multiple occasions, Evans Landscaping employees were seen performing work with Ergon equipment when the work was believed to be for projects that were assigned to Ergon as an EDGE subcontractor, officials claimed.
The two companies were so closely intertwined that Evans Landscaping employees managed transfers of funds into and out of Ergon’s bank accounts, according to the complaint. The government also alleged that Evans Lanscaping employees did Ergon’s bookkeeping on their computer, had blank Ergon checks signed by Jordan and at times even had hiring and firing power for Ergon personnel.
However, the attorney for Evans’ denied that the companies were so close. After meeting through sponsorship of sports programs for disadvantaged youth, Evans approved only “arms-length interaction” with Jordan’s company after his accountant and CFO suggested they help Jordan as a potential “reliable minority business enterprise with whom Evans could partner.”
“Doug Evans had no direct involvement in the founding or creation of Ergon,” their answer states.
They offered additional support to Ergon only because Jordan “found himself ‘in over his head’” and requested it, the answer states.
Jordan was “fiercely defensive of Ergon’s autonomy and strongly committed to Ergon’s independence,” they said.
There was also no way for Evans Landscaping employees to know what Jordan was telling to the city or the state on his applications, they said. Jordan even went so far as to hide that he had been paid by the city when Ergon owed Evans Landscaping for subcontracting, they claimed.
“Evans was in fact a victim both of Ergon’s fraud… and its poor business practices,” the answer states.