Dressed for Deceit

Women contractors are tired of being asked to front for firms owned by white males

He didn't have to use the F-word; Linda Miller knew exactly what he wanted.

Nor was he shy about asking when he called, out of the blue, a few months ago.

This guy was looking to cheat.

Geoffrey Grahn
Bernie Rivers Blackmon asked MSD auditors to be vigilant about unscrupulous contractors.
Jennifer Silverberg
Bernie Rivers Blackmon asked MSD auditors to be vigilant about unscrupulous contractors.

Here was his proposition: If Miller, the owner of a St. Louis software- and technology-testing company, would agree to allow her company's name to be used in a bid on a state contract, he'd kick her 10 percent of the contract amount.

They'd tell the state that she'd be testing software -- and she'd even sign documents telling the state that the software worked.

Here was the catch: Miller's company would sit the contract out. Her only responsibility would be to deposit a check in her bank account.

"He offered us the opportunity for 10 percent of the contract and wanted us to sign off that we tested the application and accept the funds," Miller says. "In fact, they were going to test it themselves."

What he wanted to do was borrow Miller's dress.

"I went, 'No way!' I'm not that desperate."

Miller didn't report the guy to the authorities. She threw out his name and phone number, determined not to get mixed up in his scheme. And yet she's still simmering over the guy's indecent proposal.

Why would another business hand over a piece of the action to Miller if she wasn't doing any work on the job?

The simple answer: Her firm is certified as female-owned and controlled, giving her a leg up when it comes to bidding on public projects. Teaming up with her without actually giving up any work was an easy way for a white guy to cash in. Because most government agencies set goals for female and minority participation, white-male-owned businesses constantly scramble to team up with woman- and minority-owned business enterprises, also known as WBEs and MBEs.

Most of the time, the system seems to work just fine. Goals are met. Small firms that might otherwise be shut of out of public projects get a piece of the action.

But when the stakes get high -- a multimillion-dollar bridge-construction project, the renovation of a downtown hotel -- the cheaters come out to play.

The white boys get businesses with the right certification and the wrong motivation to serve as fronts.

The evidence that it happens is more than anecdotal. Several St. Louis area businesswomen -- two of whom asked that their real names not be used because they feared retribution -- say the problem of fronting is pervasive in local publicly financed projects yet has been largely ignored.

They say it's happened on a major Highway 40 project; it's happened on the downtown convention-center hotel; it's happened on a city-funded bridge project. And the allegations of fronting have touched prominent politicians and businesspeople, including an ex-mayor, the wife of a politically influential city official and a long-time board member of a minority-business association.

Instead of aggressively policing contract compliance, the women say, government agencies have looked the other way. Politicians, who could help, do nothing. Prosecutors won't throw the book at the scammers. And companies involved in fronting aren't stopped from bidding on projects in the future.

That willful neglect carries a price. Two businesswomen who refused to play the game say their companies were crushed and their lives threatened; one was so afraid that she fled the state.

But all legitimate minority- and women-owned businesses have been stung.

"They're hurt by it, the integrity of the programs are hurt by it, but mainly it discourages participation," says Percy Green, who ran the city's certification program until last year.

And it's demeaning.

Miller recalls: "The thought that I would consider cheating my home state and jeopardize my integrity -- I was very angry and insulted."

There are at least two ways to set up a front.

A white guy or a white-owned business sets up a company and recruits women or minorities to act as figureheads. The recruits get the title, the office with the big chair and stock ownership, but they don't really control the business.

The other way occurs after a legitimate business is certified. Its solid credentials -- and certification as a qualified WBE or MBE -- make it a powerful fraud magnet. White-male-owned businesses start leaning on them, as Linda Miller was leaned on. "Lie to the government," they're told. "Tell them your company is going to perform some work." After the contract is awarded, it's "Here's a cut of the profits, but don't bother showing up on the job site."

One woman claims her concrete company was squeezed to death by both types of fronts.

Emilene Felger (a pseudonym) worked in the concrete business with her husband for several years before they divorced. In 1999, she started her own concrete company and got certified as a WBE.

Then she plunged headfirst into an all-out effort to team up with big companies on bids, but all she got in return was the proverbial smack upside the head.

She says the owner of one big concrete company asked her why in the world she thought they'd get together with her -- they had their own minority company already in place.

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