FBI search focused on WSSC water tank contracts and four local companies

Federal investigators who searched the headquarters of the Washington Suburban Sanitary Commission last month are looking into contracts for work on the utility’s water storage tanks and scrutinizing records for four local companies, according to a copy of a search warrant obtained by The Washington Post.

Online documents show that three of the four companies listed in the warrant have been awarded contracts for painting and other maintenance work on the water tanks. The warrant also shows that investigators are interested in the utility’s computerized system for tracking contracts awarded to businesses owned by women and minorities.

The WSSC headquarters in Laurel, Md., was one of at least four sites searched by the FBI and the Internal Revenue Service on Feb. 11, according to the warrant and a person familiar with the investigation. The other sites included the offices of at least two companies.

In the seven-hour search at the WSSC, federal investigators seized contract documents and project binders for work done on at least eight water storage tanks, including those in Glenmont, Clinton and Cabin John. Investigators also copied computer hard drives and cellphone data.

The WSSC provides water and sewer services for nearly 2 million people in Montgomery and Prince George’s counties.

Investigators gathered records from 2008 to the present related to four companies and their leaders: Corfu Contractors of Oakton, Va., and its president, Christos Kollas; Keys Materials and Utilities of Mount Airy, Md., and its president, Jerrie Ann Keys; Beltsville Industries Group of Beltsville, Md., and its chief financial officer, George Grillo; and Humphrey & Sons of Laurel and owner Hugh Humphrey Sr.

It is unclear which, if any, of the companies and people named in the warrant are the focus of the investigation. Court records, including the affidavit in which investigators would have spelled out their reasons for conducting the search, remain under seal.

FBI spokeswoman Amy Thoreson declined to comment on the scope of the investigation.

Interviews and online documents show that three of the companies have worked together on previous WSSC contracts for water storage tank maintenance.

Keys Materials and Humphrey & Sons are listed as subcontractors to Corfu Contractors on three contracts in 2008 and 2009. Keys Materials is listed as the “certified minority-owned firm” on all three contracts. The contracts ranged from $1.1 million to $1.6 million. Those contracts do not appear to be part of the investigation.

Reached last week, Keys said about 15 FBI agents searched her Mount Airy office in February for a couple hours and seized contract documents.

“I don’t know what it’s all about,” she said. “Not knowing is the worst. I haven’t done anything wrong.”

Keys is Humphrey’s daughter, according to the Humphrey & Sons Web site.

Humphrey said he was included in the warrant because Keys Materials leases land from him for a storage yard at the Humphrey & Sons offices in Laurel. Humphrey said FBI agents searched his company’s offices for several hours the same day as the WSSC headquarters search.

“I don’t know what they were looking for,” he said.

The warrant served on WSSC headquarters shows that investigators searched the office cubicles of two employees: Tracy Holmes, an engineer who oversees contracts for water tank repairs and painting; and Leslie Jeffreys, who works in the WSSC’s procurement office.

Holmes declined to comment, saying the utility had not given her permission to speak publicly. Jeffreys did not return a phone message left at her WSSC office seeking comment.

A WSSC spokesman said the utility has cooperated with investigators.

“It’s an ongoing investigation,” said spokesman Jim Neustadt. “As far as I know, we’re not a target.”

When asked whether the WSSC had taken disciplinary action against any employees in connection with the FBI investigation, Neustadt said, “To my knowledge, no action has been taken, and there’s no reason to take any action.”

Kollas, of Corfu Contractors, and a lawyer who has represented him in the past did not return phone messages seeking comment.

Federal court records show that Kollas signed a plea agreement in U.S. District Court in Virginia in 2012 on behalf of Corfu Contractors, which pleaded guilty to failing to withhold and pay some employment taxes. The company was ordered to pay $117,041 in restitution to the IRS and a $40,000 fine.

Court records in Fairfax County show that Grillo, the chief financial officer at Beltsville Industries Group, worked as an accountant for Corfu Contractors in 2012.

The Beltsville Industries Group’s Web site describes the company as a minority-owned firm that has provided engineering, general contracting and construction management since 1994.

Grillo declined to comment about his name being included in the warrant.

“I’m not at liberty to discuss it,” he said.

Humphrey, whose company has done pipe repair and replacement contracts for the WSSC since the 1960s, said his firm worked as a subcontractor to Corfu on six to eight water tank contracts over about eight years. The last time was about four years ago, he said.

The WSSC has about 60 water tanks across Montgomery and Prince George’s counties to store water and maintain pressure in the distribution system, according to the utility. Some are 70 or more years old, requiring that they be repainted inside and out because of water’s corrosive effects on steel.

The work of repainting and repairing water tanks is considered highly technical because they are often 120 feet above ground and can require welding, blasting and other methods to remove paint and make repairs. The contracts are awarded to a qualified company with the lowest bid, WSSC officials said.

As part of the nine-page warrant, investigators requested records related to the utility’s computer system that is designed to ensure that contractors comply with requirements for a program that helps historically underrepresented businesses owned by women and minorities.

WSSC leaders have been working in recent years to overcome the agency’s reputation for labor problems, political infighting and controversy surrounding how much it awards in contracts to minority-owned businesses.

Last fiscal year, the WSSC paid about $465 million to contractors, Neustadt said. Of that, about $92 million, or 20 percent, went to companies owned by women, minorities or small businesses, he said.

Jennifer Jenkins contributed to this report.

Katherine Shaver is a transportation and development reporter. She joined The Washington Post in 1997 and has covered crime, courts, education and local government but most prefers writing about how people get — or don’t get — around the Washington region.
Ann covers legal affairs in the District and Maryland for the Washington Post. Ann previously covered state government and politics in California, New Hampshire and Maryland. She joined the Post in 2005.
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