The former co-owner of a construction company in St. Louis has been sentenced to 18 months in prison and ordered to pay $329,965 in restitution and a $100,000 fine for falsifying records to inflate minority business participation on construction projects.
Brian Kowert Sr., former co-owner, executive vice president and chief operating officer of HBD Construction Company based in Clayton, Missouri, was originally indicted on five counts of wire fraud in U.S. District Court in the Eastern District of Missouri. Three of the charges were dismissed at his sentencing in June after Kowert pleaded guilty to two counts of wire fraud in January.
Kowert “engaged in an elaborate ‘pass through’ fraud scheme where he used an elderly Black contractor solely to pass company checks through to the non-minority subcontractors who Kowert hired to do the actual work and supply the actual materials on the project,” Assistant U.S. Attorney Hal Goldsmith wrote in a sentencing memorandum. Goldsmith added that Kowert had committed a similar Minority Business Enterprise fraud 17 years ago.
The fraud concerned a renovation and redevelopment project between August 2018 through November 2021 in St. Louis for Greater Goods LLC. Kowert was the project manager. He worked out a deal with Charles Kirkwood, owner of Midwestern Construction, which was a Minority Business Enterprise, to falsely list Kirkwood’s company as providing materials and performing work on the project. Kirkwood’s participation allowed the project to satisfy St. Louis requirements for 25% participation by MBEs to qualify for a 10-year tax abatement.
Kowert issued duplicate subcontracts to Kirkwood’s company for work that was performed and materials that were supplied by three non-MBE companies, according to the U.S. Attorney’s Office, Eastern District of Missouri. Kowert paid Kirkwood $2,000 for his part in the scheme.
“Beginning on August 4, 2020, Kowert caused 14 HBD checks worth a total of about $220,000 to be issued to Kirkwood’s company for the work performed and materials provided by the three non-MBE companies,” the Attorney’s Office reports. “Kirkwood deposited those checks into his company bank account and then issued checks to the three non-MBE companies, at Kowert’s direction.”
Kowert then submitted false information to the St. Louis Development Corporation showing Kirkwood’s MBE company had provided labor and materials worth $224,361 when it was actually provided by the non-MBE companies.
The Attorney’s Office says Greater Goods was unaware of the scheme. “His actions cost the company, which donates a significant share of its sales revenues to charities, a tax abatement of approximately $400,000 over 10 years. As a result, the company was not able to carry out various projects and meet certain charitable goals,” Goldsmith wrote in the memo.
Along with the 18-month sentence in federal prison and $100,000 fine, Kowert was ordered to pay $329,965 in restitution to Greater Goods. After his prison term, he must also serve three years of supervised release.
The case was investigated by the FBI.
The current owners of HBD have said they had no knowledge of Kowert’s scheme. In 2020, HBD merged with Russell construction and development company of Davenport, Iowa. Russell HBD said it was made aware of the investigation in December 2021, and Kowert was no longer part of the company from that point. The company said it fully cooperated with the investigation and that it complies with MBE and all other laws, rules and regulations.
“This matter begins and ends with Brian Kowert Sr.,” company President Caitlin Russell said in a previous statement.