Feds probe MDOT corruption case with alleged ghost contractors, bonuses for wives
Mar. 6—Five state Department of Transportation contractors are targets of an FBI investigation probing whether they defrauded taxpayers out of more than $7.3 million by overbilling, submitting phony expenses and giving no-show, six-figure jobs to their wives, according to sealed court records obtained by The Detroit News.
Search warrant filings reveal a years-long, ongoing wire fraud, conspiracy and money laundering investigation targeting at least five executives at Surveying Solutions Inc. The company is one of the state's preeminent surveying firms and has worked on more than 150 MDOT projects in recent years worth $29.3 million.
The filings raise questions about why the state, as recently as January, continued to employ the Standish-based firm despite auditors uncovering alleged fraud and overbilling in 2018. Also unclear is what impact the FBI investigation and possible criminal charges could have on a broad range of projects as road construction season gets underway.
The News obtained hundreds of pages of FBI search warrant affidavits and lists of items seized during a series of raids in mid-Michigan in July 2019. The FBI documents were briefly unsealed in federal court Thursday and obtained by The News before the records were resealed by a magistrate judge.
The affidavits identify company owner Jeff Bartlett and four others as targets of the investigation. No criminal charges have been filed in the case, but Assistant U.S. Attorney Anca Pop wrote in a court filing Thursday that the search warrant records needed to be "sealed to avoid compromising an ongoing investigation."
The records describe a sprawling investigation and an elaborate conspiracy involving allegations of wasted tax dollars, ghost employees and $70,000 bonuses for wives who never worked on state construction projects because they had full-time jobs, including work at a spa and a Saginaw high school.
"While the investigation continues, MDOT still has contracts with the firm," department spokesman Jeff Cranson wrote in an email Friday. "There is due process."
Cranson could not say how much the firm has been paid during the investigation.
The firm employs more than 120 families in Michigan and is charging taxpayers a lower overhead rate during the investigation, company lawyer Wade Fink told The News.
"Michigan residents can be proud of theMDOT by doing everything in its power not to sacrifice the safety of our roads and highways," Fink said. "As far as these allegations are concerned, if and when they are unsealed, and should they ever be made in a courtroom, that is where we will defend against them."
The investigation dates to 2018 when state auditors uncovered indications that Surveying Solutions was involved in fraudulent billing practices, according to a search warrant affidavit written by an FBI special agent.
The agent authored a series of search warrant affidavits listing probable cause to raid seven locations, mostly in Saginaw and Standish, including several homes and the Surveying Solutions headquarters.
The state audit led to an FBI investigation that started as early as March 2019, the agent wrote, and included help from the Federal Highway Administration's Office of Inspector General.
The agent wrote there was probable cause that Bartlett and four others committed wire fraud, conspiracy to commit wire fraud and money laundering by overbilling MDOT. The scheme involved creating fictitious expenses that were passed along to MDOT, the agent wrote.
"Specifically, (Surveying Solutions) executives organized shell companies to create fictitious expenses," the FBI agent wrote. "The fictitious expenses were ultimately paid by MDOT and also caused profit payments from MDOT to (Surveying Solutions) to be inflated."
Targets of the investigation include:
— Surveying Solutions owner Jeff Bartlett, 48, of Standish
— Former owner Andrew Semenchuk, 49, of Rives Junction
— Surveying Solutions executive Brian Bartlett, 46, of Bentley, who is the brother of Jeff Bartlett
— Surveying Solutions partner Anthony Thelen, 43, of Pewamo
— Surveying Solutions executive Adam Ball, 43, of Saginaw
The firm, with offices in St. Johns, Novi and Saginaw, was paid $14.3 million as a prime contractor from 2016-18.
"We have cooperated with MDOT. Based on negotiations we have had with them, they have continued to use the services of (Surveying Solutions) because their work is a very high quality," Brian Bartlett's lawyer Mark Kriger told The News.
The investigation spans multiple administrations, but Gov. Gretchen Whitmer campaigned on the pledge to "fix the damn roads" in 2018 after years of funding struggles and debates about funding sources. In September, the state borrowed $800 million in road bonds as the first installment of the $3.5 billion in bonds Whitmer announced in spring 2020, prior to the pandemic.
For years, lawmakers have called for more accountability within the department, including assurances that contract work be done efficiently, transparently and with long-lasting results.
The sealed court filings reveal FBI agents raided the Standish-based firm's headquarters and six other locations, including Bartlett's heavily wooded 80-acre estate.
The FBI investigators believed two years ago that Surveying Solutions executives created shell companies and fraudulent invoices to inflate expenses and boost payments to the firm, according to the affidavit.
The shell companies were used to inflate overhead for IT expenses, equipment and vehicle rentals and real property rental expenses, the agent wrote.
A team of FBI agents searched the surveying firm's headquarters along M-61 in Standish on July 25, 2019. Investigators seized more than 120 computer hard drives, tax records, expense and bank documents, contents of a safe, and the bureau's computer crimes unit made forensic copies of more than 20 computers, cellphones and storage devices.
Agents also collected an employee roster that resembled a family tree. Investigators learned that by early 2019 one alleged shell company, Southfield IT Group, transferred $5,334,332 from Surveying Solutions to company executives and spouses, including Ball, his wife, Sarah, and Semenchuk's wife, Tara.
"No more than three percent was used to cover managed IT services and internet connectivity," the agent wrote.
The raid at Surveying Solutions coincided with a search of Semenchuk's house 30 miles south of Lansing. Inside, FBI agents seized thumb drives, financial records, lease agreements and computers, according to an inventory obtained by The News.
"At this time, the allegations are being investigated, and my client is maintaining his innocence," Andrew Semenchuk's lawyer, Elias Muawad, wrote in an email to The News.
Spouses dominated the list of Surveying Solutions' highest-paid employees. Though listed as project assistants, "none of the relatives appear to have assisted on projects," the agent wrote.
Four spouses received bonuses totaling $317,600 in 2017, according to the FBI. Jeff Bartlett's wife, Jenny, for example, received a $70,800 bonus, bumping her total compensation to $128,880, the agent wrote.
Adam Ball's wife, Sarah, was paid $119,420, which included an $83,000 bonus, according to the FBI.
"I believe Jenny Bartlett and Sarah Ball received the above-described payroll while also maintaining employment with other entities," the agent wrote. Jenny Bartlett owns a spa in Midland, the agent noted, while Sarah Ball is listed as a high school teacher in Saginaw.
Jenny Bartlett's lawyer declined comment.
State investigators, meanwhile, asked Surveying Solutions executives to produce sample timesheets for employees, including Sarah Ball and Thelen's wife, Celena.
"I have reviewed the timesheets for Celena Thelen and Sarah Ball," the FBI agent wrote. "Both employees have differing signatures appearing on their time-cards."
Celena Thelen and Sarah Ball did not respond to messages seeking comment. Attorney Charles Chamberlain, who represents the Thelens, declined comment.
A state auditor estimated that from 2016-18, MDOT overpaid $850,360 to Surveying Solutions due to "fraudulent representations regarding employment of spouses," according to the FBI.
"These allegations are the result of an effective state and federal oversight process," Cranson, the MDOT spokesman, wrote in an email Friday. "If what is alleged turns out to be true, MDOT and (the Federal Highway Administration) will work diligently to recover the funds."
Twitter: @robertsnellnews
Staff Writer Beth LeBlanc contributed.
