Judge considers request to dismiss suit against Zavoral firm
MINNEAPOLIS - A prominent East Grand Forks construction firm appeared in federal court in Minneapolis, seeking the dismissal of a federal fraud charges it faces.
R.J. Zavoral and Sons' attorney Kyle Hart and U.S. Attorney David Fuller spent 25 minutes Friday pleading their cases in front of Chief Judge Michael J. Davis, who took Zavoral's motion to dismiss under advisement.
A representative from the U.S. District Court in Minneapolis said Davis could decide on the motion within a week or it could take up to six months.
Zavoral is accused of taking control of a $19.1 million contract from its partner Ed's Construction of Cass Lake contractor. The contract was part of a Small Business Administration program aimed at helping economically-disadvantaged, minority-owned firms, which Ed's qualified for.
According to the joint-venture agreement between the two companies that made Zavoral eligible to bid on the contract, Ed's Construction was supposed to administer the contract and have final approval of payments.
Neither of those things happened and Ed's was not allowed to do the prescribed amount of work or receive the commensurate pay, according to the government's complaint.
The government said the contract for the Heartsville Coulee Diversion in East Grand Forks paid Ed's $1.7 million less than it was supposed to when the contract was awarded.
According to Zavoral's motion to dismiss filed April 16, the government made an "overreaching interpretation" of federal law and failed to prove parts of its fraud claim.
The government responded with new details about the alleged Zavoral fraud, including a claim Zavoral prepared documents that made it appear Ed's Construction had completed work and ordered materials for that work, neither of which actually occurred.
The suit, filed under the False Claims Act, entitles the government to seek $1.1 million in damages or up to $5.5 million for continuing violations.