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Felon who defrauded USDOT out of millions makes maximum campaign donation to Rep. Charlie Miller

Carl Andrew Boggs III and his paving company were indicted for defrauding the U.S. Department of Transportation.
Carl Andrew Boggs III and his paving company were indicted for defrauding the U.S. Department of Transportation.

Drew Boggs was banned from doing government contract work and went to prison for money laundering and defrauding the U.S. Department of Transportation out of millions of dollars. Recently, Boggs and his brother donated $11,200 to Charlie Miller, a member of the state's House Transportation Committee who represents parts of Brunswick and New Hanover counties. Miller, an incumbent, is running unopposed.

Neither Drew Boggs nor his brother lives in the southeastern North Carolina house district that Charlie Miller represents, but both gave the maximum personal campaign donation — $5,600 — to Miller’s 2022 campaign.

Combined, the donations from Carl Andrew ‘Drew’ Boggs and David Christopher Boggs are the largest Miller has received in the 2022 campaign cycle. Only two other individuals have given the maximum amount.

According to state campaign finance records, Miller has so far raised over $100,000 from over 130 separate donors. In 2020, when he first won a seat in the house, he raised over $140,000 — although unlike his first race, where he faced challenger David Perry in the Republican primary and then Democrat Marcia Morgan in the general, this year Miller has no opponent.

For David Boggs, who has also made campaign donations under his middle name as Chris Boggs, this is apparently the only significant North Carolina contribution in a decade. For Drew Boggs, who has also made contributions as Carl Boggs, this is one of three $5,600 donations made recently; the other two were for county commissioner candidates Parker Mills and Dennis Pope, both running in Union County, where the Boggs’ company is located.

It’s not clear why the Boggs chose to support Miller’s campaign. Neither responded to attempts to contact them through their business.

Miller said he had only spoken to the Boggs brothers on the phone — and that they had not lobbied him for any legislation.

When Miller was asked if he was aware of Drew Boggs’ criminal past, Miller’s campaign consultant, David S. Capen, responded.

“As you know, in NC, any individual has a right to contribute up to $5,600 per election cycle to any non-federal candidate. Contributions are an indication of support for a political campaign and have nothing to do with legislative business. I've never heard of these folks and our campaign was not aware of any of their previous legal entanglements. To the best of my knowledge, Representative Miller has never met with them, they have never spoken about any legislation nor have they made any request of the Representative,” Capen wrote in an email, emphasizing the second sentence.

The Boggs’ scheme

According to the U.S. Department of Justice, Boggs Paving, Inc. ran a decade-long scheme to fraudulently acquire state and federal contracts by falsely claiming that Disadvantaged Business Enterprises (DBE) or Small Business Enterprises (SBE) would be performing part of the work. The USDOT’s DBE program is designed to help “level the playing field” for businesses owned by women and minorities, who have historically faced significant discrimination.

An investigation by the USDOT Inspector General’s office, the IRS, and the FBI eventually unraveled the scheme. Here’s how it worked: when bidding for contracts, Boggs Paving certified that Styx Cuthbertson Trucking Company, Inc. — a company that was legitimately certified as both an SBE and DBE — would be performing a certain amount of work.

Having a DBE as part of their application made Boggs Paving more attractive, and from 2003 to 2013 the company was the primary contractor (and occasional subcontractor) on dozens of state and federal projects, worth over $87 million. In total, Boggs Paving reported that $3.7 million worth of work was done by Styx Trucking — but in reality, the company only received $375,432.

Boggs Paving pocketed the rest.

Boggs Paving took several measures to protect the scheme, some more complicated — like running payments through a nominee bank account under Styx’s company name — and some simpler — like affixing magnetic decals with the Styx company logo on top of the Boggs’ logo on the trucks doing the fraudulently acquired contract.

Styx’s owner, John “Styx” Cuthbertson, willingly allowed this fraud and received kickbacks in exchange for letting Boggs Paving use his company’s name and DBE status.

Boggs and his accomplices face fines and prison

Cuthbertson ultimately pleaded guilty to one count of conspiracy to defraud the USDOT. He was 70 at the time of sentencing, and received three years probation, two served confined to his home, and $2,000 in fines.

Drew Boggs was also indicted, and in 2014 he pleaded guilty. In November, 2015, he was sentencedto 30 months in prison and two years of supervised release, and received a $15,000 fine after pleading guilty to conspiracy to defraud the USDOT and money laundering conspiracy. Boggs Paving, Inc. was ordered to pay a half-million-dollar fine.

David Christopher Boggs was never charged.

In January 2021, then-President Donald Trump pardoned Drew Boggs.

According to the White House, “[t]his pardon is supported by the Honorable David Lee and South Carolina Department of Transportation Chairman Tony Cox. In 2013, Mr. Boggs pled guilty to two counts of conspiracy. Since his release, Mr. Boggs has rebuilt his company, has employed hundreds of people, and has dedicated countless hours and financial resources to his community.”

Changes to the Boggs’ companies

It’s worth noting that the contributions for both Drew and David Boggs are made as an ‘Owner’ of Boggs Paving — a company that doesn’t technically exist anymore, having changed its name to Boggs Contracting, Inc. in late 2019. According to the company, that was done “in order to better reflect the multiple types of work we perform.”

The new name was one of several changes in the Boggs paving empire that followed Drew Boggs’ felony fraud plea and prison sentence, which includes eponymous contracting, materials, and transport companies.

These changes included the naming Bernard Freismuth to replace Drew Boggs as president of Boggs Contracting, Inc. in North Carolina in 2016, a move that may have helped the company acquire government contracts — since Boggs, and any company he was directly operating, were banned from doing business with the government at the time (according to the USDOT, the ban was lifted in 2017). The Boggs are currently suing Freismuth in federal court for “misappropriation” of “confidential information and trade secrets.” According to court filings, Freismuth was hired due to his experience in the surety industry.

The Boggs made more drastic changes in South Carolina. Shortly after Drew Boggs and his associates pleaded guilty, the family created Lynches River Contracting (LRC) in September of 2014. A 90% ownership share of the company was equally split between two trusts, created by Drew and David Boggs for their respective children.

The Boggs avoid 'debarment' in South Carolina

According to a 2015 report from the South Carolina Office of the Inspector General, the company was essentially designed as an end run around the ban on Drew Boggs and his company receiving government contracts.

Patrick J. Maley, who served as South Carolina’s inspector general from 2012 to 2017, wrote that Lynches River Contracting’s “business operations and components appear to be materially the same as the debarred BPI [Boggs Paving, Inc.].

The one exception, Maley wrote, was that ownership had legally been transferred to “irrevocable trusts benefitting [the Boggs’] young children.”

Maley wrote that the creation of LRC effectively neutered the debarment of Boggs — but that state regulations didn’t prevent the move.

“[T]he deterrent value of the state’s debarment regulation is diluted when wrongdoers are debarred, yet the debarred business can essentially continue to generate economic wealth for their families, which indirectly benefits the debarred wrongdoers, by placing the debarred company’s assets and business operations in a new company owned by trusts to benefit close family. However, to address this dilution of debarment’s deterrent effect, SC DOT would have to establish new regulations to cover similar situations as BPI and LRC in the future. “

Ben Schachtman is a journalist and editor with a focus on local government accountability. He began reporting for Port City Daily in the Wilmington area in 2016 and took over as managing editor there in 2018. He’s a graduate of Rutgers College and later received his MA from NYU and his PhD from SUNY-Stony Brook, both in English Literature. He loves spending time with his wife and playing rock'n'roll very loudly. You can reach him at BSchachtman@whqr.org and find him on Twitter @Ben_Schachtman.