CIV (202) 514-2008 TDD (202) 514-1888

U.S. INTERVENES IN LAWSUIT AGAINST VIRGIN ISLANDS CONTRACTOR WASHINGTON, D.C. -- The Department of Justice announced today that it has intervened in a qui tam lawsuit originally filed by the Virgin Islands Housing Authority alleging a construction company and several of its officers defrauded the U.S. Department of Housing and Urban Development of $800,000 by submitting false claims for the renovation and rehabilitation of two public housing projects in the Virgin Islands. A second claim against HUD for more than $1 million is pending. Assistant Attorney General Frank Hunger of the Civil Division said the suit was filed in the District Court of the Virgin Islands, Division of St. Thomas and St. John, against Coastal General Construction Services Corp., Coastal Fabrication Corporation, William Koenig, Esther Koenig, Leonard Childs, Carl Kruse, Advanced International Inc., Gregory C. Budnick, Cornistone (MORE) Inc. and Peter Firestone. Hunger said the government contends that Coastal, headquartered in St. Thomas, violated the provisions of the False Claims Act, 31 U.S.C. Section 3729, by causing the housing authority to submit false claims to HUD. According to the government, Coastal, its president, William Koenig; his wife, Esther Koenig; Leonard Childs; and Carl Kruse fabricated documents and information they knew were false and submitted the documents to the housing authority to support fraudulent and inflated claims generated from their construction and rehabilitation work at the Donoe and Bovini public housing projects in St. Thomas. To date, HUD, through the housing authority, has paid out more than $800,000 in losses attributed to the defendants' conduct. A second potential claim for $1.2 million currently is pending in the Virgin Islands Territorial Court. According to the suit, Coastal and the housing authority entered into a $2.2 million contract on September 29, 1988, to repair 86 buildings at the Donoe Housing Community. The housing authority later terminated the contract and never authorized Coastal to begin the work. Nevertheless, Coastal, on November 16, 1992, presented $2.2 million in claims to the housing authority for work the suit says was never performed. On December 7, 1988, the suit says, Coastal entered into an

$8.6 million contract to rehabilitate the Bovoni Housing Community. The housing authority issued a notice to proceed and Coastal began the work, but the housing authority later terminated the contract. On January 31, 1992, Coastal presented construction claims of $4.8 million when in fact no work was done, according to the suit. The suit said the housing authority, relying on the accuracy of Coastal's information, paid the claims, then ultimately received reimbursement from HUD. Under can file a percent of prosecutes 95-435 the qui tam provisions of the False Claim Act, a person suit on behalf of the United States and receive up to 25 the damages if the government takes over the suit and it successfully. ###