By: Cole Waterman
Source: mlive.com (TNS)
BAY CITY, MI—Five Michigan businessmen are accused of carrying out a conspiracy to defraud the government of millions by falsely claiming their construction and surveying company was minority-owned. The federal judge presiding over their case recently ruled that when their case proceeds to trial, jurors will get to hear some of the defendants’ alleged confessions to FBI agents.
The ruling came despite one defendant’s attorney arguing the agents failed to read his client his Miranda rights during an interrogation that ran more than two hours.
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A federal grand jury in December 2023 indicted Adam Ball, Jeffrey Bartlett, and Andrew W. Semenchuk on charges of wire fraud, conspiracy to commit wire fraud, and conspiracy to defraud the U.S government. Prosecutors described Ball and Semenchuk as the former owners and executives of Surveying Solutions Inc. and Bartlett as the firm’s current owner and executive.
Superseding indictments charged Bartlett’s brother Brian Bartlett and former executive Anthony Thelen, bringing the quintet’s total charges to 15 charges. SSI itself is not charged with a crime.
SSI was incorporated in 2001 and has locations in Saginaw Township, Standish, and St. Johns.
Prosecutors allege the five men equally controlled SSI and used it and three shell corporations to skim millions from federally funded contracts with the Michigan Department of Transportation from early 2011 through mid-2019. Specifically, prosecutors contend they obtained and maintained SSI’s certification as a Disadvantaged Business Enterprise (DBE) to obtain preferential status when bidding on MDOT contracts. Between 80-90% of the contracts were funded by the U.S. Department of Transportation.
Only small businesses owned by socially or economically disadvantaged people can be certified as DBEs. While Semenchuk is Asian Pacific Islander, the other four defendants are white.
Prosecutors claim the five men in 2011 signed a secret agreement indicating they each owned a 20% share of SSI and three related entities. The group then falsely represented Semenchuk as SSI’s sole owner to receive more contracts and have opportunities to overbill MDOT for bogus expenses, prosecutors allege.
In support of this, prosecutors referred to an August 2014 email Jeffrey Bartlett allegedly sent his brother, Ball, and Semenchuk. “Not bad for a bunch of white guys trying to be a minority-owned business…And we will be billing the F*** out of August thru November for sure,” the email reads.
Once SSI completed a contract, MDOT would pay the firm an 11% profit margin and reimburse it for direct labor costs and other reasonably incurred expenses. Prosecutors allege the group artificially created and inflated both kinds of reimbursement expenses.
The group did this, in part, by billing MDOT for work performed by their wives or romantic partners, despite them not actually working for the companies. Semenchuck in May 2016 emailed his codefendants, suggesting they tell MDOT their wives performed marketing duties to justify them receiving large bonuses.
From 2016 to 2018, the group billed MDOT more than $800,000 for work their spouses never performed, the prosecution contends.
The defendants also allegedly increased SSI’s reimbursable overhead rate by charging MDOT rental expenses the company never incurred. If a contractor rents property from a commonly controlled entity, federal regulations prohibit the contractor from including those costs. Such contractors can only include the normal costs of ownership for the specific rented property.
Prosecutors allege the group concealed their written agreement to equally own SSI and three other entities, 2SI, 3SI, and Southfield IT. Brian Bartlett organized 2SI in 2004 to rent company cars and surveying equipment to SSI. MDOT auditors estimate that between 2016 and 2018, SSI overbilled $6 million for rentals from 2SI, court records show.
Thelen and the Bartlett brothers founded 3SI in 2009 to function as SSI’s landlord, leasing it offices in St. John’s and Standish. 3SI had no other clients and received 99% of its funding from SSI from 2016 to 2018, court records show. If the defendants had disclosed this, SSI would only have been reimbursed for normal ownership costs. By concealing this, the defendants allegedly overbilled MDOT more than $500,000.
The last entity, Southfield IT, was SSI’s IT provider. The defendants allegedly told MDOT the entity was independent from SSI and created fake contracts and invoices between the two companies to inflate their overhead costs. MDOT overpaid SSI nearly $2 million for alleged IT services between 2016 and 2019, prosecutors allege.
The five men allegedly divided their spurious proceeds equally among them, prosecutors contend.
However, an FBI agent wrote an official with MDOT’s Office of Commission Audits told him in June 2022 “SSI is cheap, they are the best at what they do, and there is a lot of work on the horizon,” court records show.
Ball’s attorney, Mark A. Satawa, in December 2024 filed a motion to suppress admissions his client allegedly made to FBI agents when they executed nine search warrants in July 2019.
For more than two hours, agents questioned Ball about his involvement in SSI and Southfield IT without reading him his Miranda rights, Satawa alleged. As such, his statements to them should be barred from trial, Satawa argued.
Prosecutors responded that Ball’s statements should be admitted as he was not in custody, voluntarily agreed to answer agents’ questions, and could have left at any point. Their motion contained a 106-page typed transcript of Ball’s interview with the agents.
Click here to read the prosecution’s motion with Ball’s alleged confession.
During the interview, Ball described the scheme as “a five-headed monster,” adding he had “been ashamed for the whole five years.” He also said his wife worked “zero hours” for the companies, that Southfield IT was created as a shell company, and that he and his codefendants knew they were overbilling MDOT for bogus expenses.
The Bartletts also allegedly made incriminating statements to the FBI in July 2019. Prosecutors claim Brian Bartlett told agents his wife was not a “real employee” and agreed 2SI, 3SI, and Southfield IT were shell companies created to “line [their] pockets” but that they “got carried away with how much extra money they were getting.”
Jeffrey Bartlett also allegedly told the agents his wife didn’t work for the companies despite receiving handsome paychecks and that 2SI, 3SI, and Southfield IT received money they should not have.
U.S. District Judge Thomas L. Ludington on June 10 issued an opinion denying Satawa’s motion to strike Ball’s statements to FBI agents. Ball was not under arrest and could have ended the interview, therefore the agents weren’t required to read him his Miranda rights, the judge wrote.
Click here to read Ludington’s ruling.
Ludington further wrote Ball’s and the Bartletts’ statements have been sufficiently redacted and can be presented to jurors with the proposed instruction they can only be used against the person who made them and not their codefendants.
Ludington scheduled an evidentiary hearing in the case for July 11. A jury trial is tentatively scheduled for Sept. 15.
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