Watry Homes' owner pleads guilty to underpaying wages on federally funded project

Scott Watry of New Berlin, Wis., has agreed to plead guilty to conspiring to defraud the United States for underpaying wages on federally funded housing projects, according to United States Attorney James L. Santelle of the Eastern District of Wisconsin.

Mr. Watry is the president and owner of Watry Homes, LLC, a contractor alleged to have underpaid wages on federally funded housing projects. Mr. Watry and Watry Homes have also agreed to settle related civil False Claims Act allegations. In total, Mr. Watry and Watry Homes will pay over $1.6 million in restitution and damages.

Watry Homes does roofing, siding, and carpentry work on private residences, commercial projects, and public housing projects in Wisconsin. From 2011 to 2012, Watry Homes performed contracts worth approximately $4.7 million on the Westlawn public housing project in Milwaukee. Because the federal government contributed funds to the Westlawn project, it was subject to the Davis Bacon Act. The Act requires contractors to pay workers prevailing wages in order to protect local wage rates. The Act further requires contractors to submit weekly certified payroll reports.

Mr. Watry paid workers on the Westlawn project hourly wage rates that were considerably lower than the legally required wage rate. To conceal the scheme, the certified payroll reports consistently understated the number of hours worked to compensate for the overstatement of the wage rate being paid. In some cases, the certified payroll reports falsely listed names of purported employees who did not actually work at the site while crew leaders would pay out lower wages to the actual workers. In mid-2012, the United States Department of Labor began investigating Watry Homes. In response, Mr. Watry and co-conspirators provided false information to investigators and encouraged workers likewise to obstruct the investigation. By an information and plea agreement filed today, Mr. Watry has agreed to plead guilty to conspiring to defraud the United States and obstruct the investigation. He has also agreed to pay $659,822 in restitution to workers who were underpaid on the Westlawn project. DOL will be responsible for distributing the restitution to individual workers.

In the accompanying civil settlement announced today, Mr. Watry and Watry Homes, LLC, have agreed to pay $1,000,490 in damages for violations of the False Claims Act. The civil settlement resolves a lawsuit filed under the qui tam—or whistleblower—provisions of the False Claims Act, which allows private citizens with knowledge of fraud to bring a civil action on behalf the United States and share in any recovery. The complaint alleges that Watry Homes, LLC, submitted false certified payroll reports to support claims for payment on the Westlawn project as well as public housing projects in Beloit and Waukesha that were also subject to the Davis Bacon Act. As part of the resolution, the whistleblower will receive a share of the settlement.

“Contractors should take note that public funds come with strict requirements to pay workers every dollar they are due and to comply with all applicable rules. Under the authority of criminal statutes and the False Claims Act, we will continue to pursue wrongdoing in public contracting vigilantly,” said Mr. Santelle.