Two black owners of a Washington-based construction firm were convicted here today of illegally posing as owners of a small minority business to obtain federal contracts, then funneling portions of the contracts to a large white-owned firm.
The U.S. District Court jury found Raymond L. Rice, 42, and Jesse G. Williams, 44, both of Calvert County, guilty of conspiracy ot defraud the federal government and of making false statements to a government agency.
Federal prosecutors said after the verdict that as far as they knew this was the first successful fraud prosecution of contractors who had abused government programs designed to foster small and minority-owned firms by guaranteeing them a portion of the federal government's business.
The main issue in the trial, which began April 16, was whether Rice and Williams really owned and controlled their company, called R&W Contruction Inc., or whether it was actually controlled by Excavation Construction Inc., a huge construction firm with headquarters in Prince George's County.
Prosecutors charged that R&W was an "affiliate" of Excavation Construction, and pointed to reams of paperwork showing that two officers of Excavation Construction gave their personal as well as their company's guarantees so that R&W could obtain bonding, financing, loans and equipment for various construction projects.
Defense attorneys said, however, that the personal guarantees of Larry Campbell and John Lyon, the two Excavation Construction officials, were given merely to help out the two black contractors in starting their own construction business. Rice and Williams had worked for Excavation Construction before incorporating R&W in 1972.
Prosecutors alleged that the "close relationship" continued over many years, and, in fact, that it was Excavation Construction that secured the specifications for bids for R&W on a $2.5 million land stabilization project at the U.S. Naval Academy in Annapolis in 1975, which had been set aside for small businesses.
R&W won the job and immediately handed over a lucrative management-technical assistance subcontract to Excavation Construction, prosecutors said.
After the verdict, which followed seven hours of deliberation, Judge Frank A. Kaufman set sentencing for June 25. Rice and Williams face a maximum sentence of five years in jail and a $10,000 fine on each of the three charges.
In the indictment last December, Campbell and Lyon, the two owners of Excavation Construction, were named as individuals who conspired with Rice and Williams to create R&W in order to obtain government contracts set aside especially for small businesses and minorities. Campbell and Lyon, however, were not indicted.
The U.S. attorney's office said today that its investigation is continuing.