U.S. Attorney James Santelle announced Monday that Stephen VanderBloemen, managing partner of Waukesha-based The VanderBloemen Group, has been selected as the independent monitor to oversee Neenah-based Miron Construction Company Inc.
The arrangement is part of a non-prosecution agreement between the company and the U.S. government. Earlier this year Miron agreed to pay a $4 million fine to the federal government, promised to change its accounting practices and to operate under the oversight of an independent monitor to resolve an FBI investigation into allegations of obtaining funds from school districts by intentionally inflating the wages the company had paid its employees.
In a news release, Santelle said an in-depth analysis of five particular school district projects and a random sampling from a pool of approximately 150 total school projects “showed clearly that, when Miron billed school districts for ‘actual wages paid,’ contrary to the express language and terms of its contracts, Miron systematically and intentionally added not only overhead costs but also a hidden profit ‘multiplier’ totaling up to an additional 45 percent.”
Santelle said that VanderBloemen’s work will ensure that Miron ceases its practice of intentionally overbilling school districts in this manner.
Santelle said VanderBloemen would also be responsible for helping to ensure that Miron would no longer engage in “cost smoothing.” In the news release, he said the criminal investigation “revealed that Miron routinely transferred costs from less profitable projects to unrelated projects that could absorb the additional costs and still appear to be profitable. The result of this conduct was that all of Miron’s projects appeared profitable to outsiders. As revealed by the investigation, this ‘cost smoothing’ also allowed Miron to close the discrepancies in its accounting records that were caused by Miron’s inflation of labor costs in its bills to public school districts. Without ‘cost smoothing,’ Miron’s financial statements on the school projects could not be reconciled with its inflated school district billings.”
In its own statement Miron said it was “surprised” by the contents of the U.S. Attorney’s Office announcement about VanderBloemen.
“Miron Construction Co., Inc. was surprised at, and disappointed by, the content
of the press release issued by the United States Attorney’s Office in which it
announced the appointment of a monitor per the agreement that was reached between Miron and the government. Miron and the government agreed on a Statement of Facts. Nowhere within it is there mention of a hidden profit multiplier let alone one of 45 percent. Nor does it state that school districts were intentionally and systematically overbilled hidden profits. In 2008, Miron began implementation of a series of ‘best practices’ to provide transparency to its customers. The government has acknowledged to Miron that the alleged conduct which originally led to an investigation ceased many years ago. Miron suggested to the government that a monitor be appointed as part of settling its dispute. We welcome the appointment of Mr. VanderBloemen who is well qualified and distinguished in his profession. We look forward to working with him and are certain that, once engaged, he will verify the transparency and best practices adopted by Miron.”
VanderBloemen has more than 43 years of experience in public accounting, including 41 years serving primarily construction contractors, construction suppliers, credit grantors to contractors, and construction industry associations.
