COLUMBIA, S.C. – A newly formed highway construction company has landed more than $27 million in new government projects across the Carolinas despite its deep ties to a discredited North Carolina paving firm barred from bidding on state contracts.
An Associated Press review shows Lynches River Contracting sprang into existence after Carl “Drew” Boggs pleaded guilty in August 2014 in a bid-rigging and kickback scheme involving $88 million in highway projects for his company, Boggs Paving. By court orders, Boggs Paving is barred from bidding on contracts as are its affiliates, companies with interlocking management, and those with a “common use of employees.”
Nevertheless, Boggs’ brother — and a co-owner of the barred company — David “Chris” Boggs signed paperwork last September creating Lynches River at the address of an existing Boggs Paving affiliate. He then turned ownership over to two trusts the brothers established to benefit their children. The new company also named Boggs Paving managers as its president and vice-president.
The setup means Boggs Paving “can essentially continue to generate economic wealth for their families, which indirectly benefits the debarred wrongdoers,” South Carolina Inspector General Patrick Maley wrote in a report Thursday. Maley said the situation raised serious concerns but appeared to be legal, and he recommended new regulations to prevent similar situations in the future.
Emails obtained by AP show officials in both states expressed concern about the connection.
Still, South Carolina officials were willing to rush approval to let the company bid as a chief contractor on projects, even though it told officials it didn’t have employees or equipment.
“If a firm I didn’t know sent this in, we would deny it immediately based on company experience, employees and equipment,” Department of Transportation construction engineer Todd Steagall wrote Dec. 3.
Lynches River’s attorney told Carolina officials the company had no connection to Boggs Paving or the brothers — even as he explained that, upon winning a contract, its employees would come from Boggs Paving and its equipment from Boggs Transport.
Its critics called the arrangement a farce.
Rep. Gary Simrill, R-Rock Hill, said Lynches River was basically an alias for Boggs Paving.
It’s “a slap in the face of every taxpayer in the state of South Carolina and the process by which we operate,” he said.
Last month, SCDOT internal auditor Paul Townes told a House Oversight panel the company is “really, really questionable” and its arrangement deliberately skirts the law.
SCDOT officials said their hands were tied.
DOT commission Chairman Jim Rozier told legislators the board hired an outside attorney for an opinion on whether Lynches River could legally bid. The attorney concluded the company “did meet the letter of the law,” he said. The commission awarded Lynches River eight contracts in April on a 5-3 vote.
Lynches River initially won approval to bid on SCDOT projects Dec. 8, just three days after submitting an application. Emails and court documents show Thad Preslar, Lynches’ designated president, was still working as a Boggs Paving manager even though he had been getting help from SCDOT on the new company’s application for more than a month.
In a Dec. 3 exchange, he asked how to “get creative on the work experience part.”
The company needed quick approval as a prime DOT contractor to keep Boggs Paving employees from jumping ship, Preslar explained.
At the time, Chris Boggs was listed as Lynches’ director and president. But that connection to Boggs Paving wouldn’t have allowed Lynches to bid.
Chris Boggs resigned his role in Lynches the same day the company submitted its application. Lynches became co-owned by the family trusts that bought out Drew and Chris Boggs’ stakes of Boggs Transport and Boggs Materials, including one overtly named the David C. Boggs Family Dynasty Trust. A day after Lynches River received bidding approval, the trusts each invested $150,000.
But on Jan. 8, Steagall informed Preslar that DOT was revoking Lynches’ certificate to bid, citing “new information” concerning “dual employee issues with a suspended contractor, Boggs Paving.”
Preslar and another Boggs manager, Lee Sanders, each submitted a one-sentence resignation Jan. 11 from Boggs Paving and were officially hired the next day as president and vice-president of Lynches River — its only employees. A Jan. 12 letter from the company’s attorney to SCDOT shows he thought that should settle it.
But Steagall said he’d already made clear to Chris Boggs that it wouldn’t.
Lynches River sued Feb. 10 and received a temporary restraining order letting it bid on projects. The DOT signed a settlement in March agreeing to get an opinion from an outside firm, and the company agreed not to protest if it lost contracts in the meantime.
It didn’t. While the DOT said the firm cleared Lynches to bid, it refused to provide the opinion, citing attorney-client privilege.
North Carolina officials also recognized the links to Boggs when the company applied there in late January.
“Due to the possible affiliation with Boggs Paving, please let me know if this firm should be allowed” to bid, NCDOT qualification officer Michael Biedell wrote three transportation officials on Jan. 21.
The next day, a DOT official said the state attorney general’s office had reviewed the arrangement and “cleared us to move forward.”
Biedell asked Preslar for references. Several were from SCDOT officials.
“In his previous capacity with his previous employer, I would rate him Above Average…” Jason Johnston, an SCDOT district construction manager wrote about Preslar, never mentioning the previous company was Boggs Paving.
NCDOT prequalified the company in March and it has received $11.5 million in contracts since.
South Carolina legislators now are trying to force Lynches River off the qualified bidders list.
In April, after Lynches River secured eight of its nine contracts, bills were introduced in both chambers to disqualify contractors owned by trusts tied to a disbarred firm or its family.
“It’s not prudent to do business involving taxpayer dollars with the reincarnation of a company that’s historically defrauded the government,” said Senate sponsor Greg Gregory, R-Lancaster.
The proposal received unanimous approval in the House but got blocked in the Senate amid a fight over raising gas taxes to fund highway construction. The company hired a top lobbyist and a leading GOP attorney to fight it.
The bill will be on the Senate calendar when it returns in January.
Weiss reported from Charlotte, N.C.