Prosecutors allege Ganos built network of companies on fraud

Building & Construction

Brian Ganos built a thriving construction business in the decade after he took over his father’s firm, in part by using government programs aimed at helping minority businesses get a foothold in the industry.

Sonag Co. Inc. graduated from a U.S. Small Business Administration contract set-aside program in May 2003. The next year, Sonag and Sonag Ready Mix, an affiliated company, reportedly had $43 million in revenues. The businesses continued to grow and when the Northwestern Mutual Tower and Commons project needed 10,000 cubic yards of concrete for its foundation in 2015, Sonag Ready Mix provided it.

Prosecutors allege a number of Ganos-affiliated companies operated from this building at the corner of North 55th Street and West Florist Avenue.

But the year before that massive pour, a former Ganos employee provided law enforcement with allegations of an inappropriate affiliation among several of his companies. The tip helped kick off a years-long investigation.

Federal prosecutors now allege as he continued to grow Sonag, Ganos also built a network of companies with straw owners to continue bidding on the government contracts that helped kickstart his business. Profits from those businesses allegedly came back to Ganos and funded his personal expenses, including cars, a condo in Colorado and remodeling at his Muskego home.

The case has left City of Milwaukee officials questioning how their policies might have allowed Sonag-affiliated companies to be certified as a small business enterprise, giving them an avenue to get work on major city-funded developments like the Northwestern Mutual tower. Those projects have targets for how much work must be performed by businesses certified under the small or disadvantaged enterprise programs, with the goal of building capacity in the city’s construction industry.

“Our application process is very detailed. We ask for a plethora of documents,” said Nikki Purvis, director of the Milwaukee Office of Small Business Development, at a recent committee meeting. “We oftentimes hear from our small businesses that our application process is too cumbersome.”

Officials discussed the possibility of going after companies in court, attaching monetary penalties for falsifying city documents, creating a random audit system, or establishing more stringent recertification processes.

Sonag-affiliated companies performed about $12.3 million worth of work on the Northwestern Mutual tower and Milwaukee Bucks arena projects, according to the latest reports to the city. Officials estimated the companies may have had another $3 million to $4 million in work with the Department of Public Works in recent years.

“It’s not just the theft of today; they stole somebody’s future,” Milwaukee Alderman Michael Murphy said.

Charges filed

Ganos was indicted in early April and faces 23 counts, including mail and wire fraud, money laundering and bank embezzlement. Sonag Co. is also charged with one count of mail fraud, Nuvo Construction Co. is named on eight counts and Mark Spindler, an accountant, was charged.

Attorneys for Ganos and Spindler declined to comment when charges were initially filled.

Four other individuals, including Nicholas Rivecca Sr., have reached plea deals in related cases. Rivecca is co-owner of Sonag Ready Mix with Ganos.

The charges came 20 months after federal investigators seized documents, bank statements, computer data and more from a Ganos-owned building at 5510 W. Florist Ave. and the home office of another accountant in Menomonee Falls.

Documents supporting the search detailed Ganos’ alleged connection to companies that fraudulently obtained $268 million in government contracts intended for minorities and service-disabled veterans.

Two years before Sonag graduated from the SBA 8(a) program, which sets aside contracts for socially and economically disadvantaged business owners, Ganos allegedly approached Jorge Lopez about starting a new company. According to court documents, Lopez had construction management experience and was a project manager for Sonag at the time. He also was on the verge of losing his residence, according to the former employee who prompted the investigation, so he accepted Ganos’ offer.

Lopez agreed in April to plead guilty to one count of conspiracy to defraud the United States, specifically for making false statements to investigators in 2016 when asked about his involvement in Nuvo.

According to court documents, he changed the name of a company he had incorporated to Nuvo Construction Co. in 2001. Ganos also became a 15 percent owner in the company around the same time, the documents say.

Nuvo was granted 8(a) status by the SBA in fall 2004. The informant told investigators that after the certification, work on Sonag projects slowed as crews began performing Nuvo work. The documents also say Lopez moved to Minnesota not long after the certification and was not involved in the day-to-day operations.

In Minnesota, Lopez worked for the Southwest Minnesota Housing Partnership. Court documents say those involved in the scheme arranged for his SWMHP compensation to come through Nuvo’s payroll. Contracts, checks and other documents were “routinely” executed in Lopez’s name and other individuals had access to his email account to send messages in his name.

Ganos and others also made it appear Nuvo provided ready-mix concrete and trucking on its own when the company’s operations “depended heavily” on Sonag Ready Mix, according to documents supporting Lopez’s plea agreement.

Documents submitted to the SBA indicated Ganos received no compensation from Nuvo and in some years didn’t have access to Nuvo bank accounts. Court documents, however, allege Ganos received nearly $140,000 from Nuvo in one five-month stretch and used company funds to pay insurance on his home, personal valuables, boat and vehicles, including a 1956 Chevrolet Bel Air, 1967 Ford Mustang and 1969 Chevrolet Camaro.

In addition to Ganos, Nuvo was actually operated by James Hubbell, who has reached a plea agreement on one count of conspiracy to defraud the United States.

Expanding the network

Once Nuvo was established, Ganos and Hubbell sought to create a service-disabled veteran-owned small business to participate in a Department of Veterans Affairs set-aside contract program, according to court documents.

Hubbell met Telemachos Agoudemos, a service-disabled veteran, at VA contractor meetings. In 2006, Ganos and Hubbell made Agoudemos president of C3T Inc., the new name of another company, Sonag Masonry. He was also made a majority owner, helping the company qualify for the VA program.

Agoudemos has reached a plea agreement on one count of making false statements. According to the agreement, Agoudemos tried to participate in C3T operations, but by January 2007 Hubbell and Ganos said they didn’t want him involved and he could stay home while drawing a salary. He eventually returned to operations in 2013, but Ganos, Hubbell and others retained control of the business.

Prosecutors also allege Ganos sought to establish a third company that would be eligible for the SBA’s 8(a) program. According to court records, he chose an Asian-Pacific American female who had been a C3T project manager for four years to establish Pagasa Construction Co. Inc. in 2012. The business received SBA 8(a) status in 2015, but the woman has not been charged with a crime.

The indictment against Ganos, Sonag, Nuvo and Spindler accuses them of lying about the relationship among the companies to federal, state and Milwaukee officials on four different occasions dating back to 2006.

Nuvo and Ganos are charged on four counts for payments received for work on Highway 20 in Racine County, Layton Avenue in Milwaukee County and at the Milwaukee Intermodal Station.

An arraignment hearing is scheduled for May 16.

Brian Ganos built a thriving construction business in the decade after he took over his father’s firm, in part by using government programs aimed at helping minority businesses get a foothold in the industry.

Sonag Co. Inc. graduated from a U.S. Small Business Administration contract set-aside program in May 2003. The next year, Sonag and Sonag Ready Mix, an affiliated company, reportedly had $43 million in revenues. The businesses continued to grow and when the Northwestern Mutual Tower and Commons project needed 10,000 cubic yards of concrete for its foundation in 2015, Sonag Ready Mix provided it.

Prosecutors allege a number of Ganos-affiliated companies operated from this building at the corner of North 55th Street and West Florist Avenue.

But the year before that massive pour, a former Ganos employee provided law enforcement with allegations of an inappropriate affiliation among several of his companies. The tip helped kick off a years-long investigation.

Federal prosecutors now allege as he continued to grow Sonag, Ganos also built a network of companies with straw owners to continue bidding on the government contracts that helped kickstart his business. Profits from those businesses allegedly came back to Ganos and funded his personal expenses, including cars, a condo in Colorado and remodeling at his Muskego home.

The case has left City of Milwaukee officials questioning how their policies might have allowed Sonag-affiliated companies to be certified as a small business enterprise, giving them an avenue to get work on major city-funded developments like the Northwestern Mutual tower. Those projects have targets for how much work must be performed by businesses certified under the small or disadvantaged enterprise programs, with the goal of building capacity in the city’s construction industry.

“Our application process is very detailed. We ask for a plethora of documents,” said Nikki Purvis, director of the Milwaukee Office of Small Business Development, at a recent committee meeting. “We oftentimes hear from our small businesses that our application process is too cumbersome.”

Officials discussed the possibility of going after companies in court, attaching monetary penalties for falsifying city documents, creating a random audit system, or establishing more stringent recertification processes.

Sonag-affiliated companies performed about $12.3 million worth of work on the Northwestern Mutual tower and Milwaukee Bucks arena projects, according to the latest reports to the city. Officials estimated the companies may have had another $3 million to $4 million in work with the Department of Public Works in recent years.

“It’s not just the theft of today; they stole somebody’s future,” Milwaukee Alderman Michael Murphy said.

Charges filed

Ganos was indicted in early April and faces 23 counts, including mail and wire fraud, money laundering and bank embezzlement. Sonag Co. is also charged with one count of mail fraud, Nuvo Construction Co. is named on eight counts and Mark Spindler, an accountant, was charged.

Attorneys for Ganos and Spindler declined to comment when charges were initially filled.

Four other individuals, including Nicholas Rivecca Sr., have reached plea deals in related cases. Rivecca is co-owner of Sonag Ready Mix with Ganos.

The charges came 20 months after federal investigators seized documents, bank statements, computer data and more from a Ganos-owned building at 5510 W. Florist Ave. and the home office of another accountant in Menomonee Falls.

Documents supporting the search detailed Ganos’ alleged connection to companies that fraudulently obtained $268 million in government contracts intended for minorities and service-disabled veterans.

Two years before Sonag graduated from the SBA 8(a) program, which sets aside contracts for socially and economically disadvantaged business owners, Ganos allegedly approached Jorge Lopez about starting a new company. According to court documents, Lopez had construction management experience and was a project manager for Sonag at the time. He also was on the verge of losing his residence, according to the former employee who prompted the investigation, so he accepted Ganos’ offer.

Lopez agreed in April to plead guilty to one count of conspiracy to defraud the United States, specifically for making false statements to investigators in 2016 when asked about his involvement in Nuvo.

According to court documents, he changed the name of a company he had incorporated to Nuvo Construction Co. in 2001. Ganos also became a 15 percent owner in the company around the same time, the documents say.

Nuvo was granted 8(a) status by the SBA in fall 2004. The informant told investigators that after the certification, work on Sonag projects slowed as crews began performing Nuvo work. The documents also say Lopez moved to Minnesota not long after the certification and was not involved in the day-to-day operations.

In Minnesota, Lopez worked for the Southwest Minnesota Housing Partnership. Court documents say those involved in the scheme arranged for his SWMHP compensation to come through Nuvo’s payroll. Contracts, checks and other documents were “routinely” executed in Lopez’s name and other individuals had access to his email account to send messages in his name.

Ganos and others also made it appear Nuvo provided ready-mix concrete and trucking on its own when the company’s operations “depended heavily” on Sonag Ready Mix, according to documents supporting Lopez’s plea agreement.

Documents submitted to the SBA indicated Ganos received no compensation from Nuvo and in some years didn’t have access to Nuvo bank accounts. Court documents, however, allege Ganos received nearly $140,000 from Nuvo in one five-month stretch and used company funds to pay insurance on his home, personal valuables, boat and vehicles, including a 1956 Chevrolet Bel Air, 1967 Ford Mustang and 1969 Chevrolet Camaro.

In addition to Ganos, Nuvo was actually operated by James Hubbell, who has reached a plea agreement on one count of conspiracy to defraud the United States.

Expanding the network

Once Nuvo was established, Ganos and Hubbell sought to create a service-disabled veteran-owned small business to participate in a Department of Veterans Affairs set-aside contract program, according to court documents.

Hubbell met Telemachos Agoudemos, a service-disabled veteran, at VA contractor meetings. In 2006, Ganos and Hubbell made Agoudemos president of C3T Inc., the new name of another company, Sonag Masonry. He was also made a majority owner, helping the company qualify for the VA program.

Agoudemos has reached a plea agreement on one count of making false statements. According to the agreement, Agoudemos tried to participate in C3T operations, but by January 2007 Hubbell and Ganos said they didn’t want him involved and he could stay home while drawing a salary. He eventually returned to operations in 2013, but Ganos, Hubbell and others retained control of the business.

Prosecutors also allege Ganos sought to establish a third company that would be eligible for the SBA’s 8(a) program. According to court records, he chose an Asian-Pacific American female who had been a C3T project manager for four years to establish Pagasa Construction Co. Inc. in 2012. The business received SBA 8(a) status in 2015, but the woman has not been charged with a crime.

The indictment against Ganos, Sonag, Nuvo and Spindler accuses them of lying about the relationship among the companies to federal, state and Milwaukee officials on four different occasions dating back to 2006.

Nuvo and Ganos are charged on four counts for payments received for work on Highway 20 in Racine County, Layton Avenue in Milwaukee County and at the Milwaukee Intermodal Station.

An arraignment hearing is scheduled for May 16.

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