Authorities: Contractor used fake companies to sidestep Philly minority-owned business requirements

This article originally appeared on The Philadelphia Tribune.

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A New Jersey contractor schemed to sidestep minority-owned business requirements tied to $2.2 million worth of city contracts by using phony companies linked to his family members, according to authorities.

Peter Pirozzi agreed to forfeit more than $145,000 in city payments and was barred from city contracts for three years for violating the city’s anti-discrimination rules and misrepresenting its use of minority- and women-owned business subcontracting participation, according to a joint investigation by City Controller Rebecca Ryhnhart and City Inspector General Amy Kurland.

The two businesses connected to the family — Material Source Point and Rodriguez Contractor Supply, both based in New Jersey — also were barred from city contracts for three years.

The victims of Pirozzi’s scheme were legitimate businesses who lost out on city contracts, Kurland said in an interview on Wednesday.

“These companies,” she said, “were really just set up as fake minority- or women-owned businesses so Pirozzi could get city work.”

The investigation sends a powerful message to businesses, said Rhynhart in an interview on Wednesday.

“We’re going to root out bad actors,” she said. “We’re not going to tolerate this and we need to have true and real opportunity for minority businesses in the city.”

Authorities said Pirozzi’s son, Thomas, was involved in the ploy, too.

In February 2017, the Philadelphia Water Department awarded Peter Pirozzi, owner of Peter Pirozzi General Contracting LLC, based out of Pittsgrove, New Jersey, a $1.9 million city contract to replace windows at the department’s Baxter Water Treatment Plant.

In August 2017, the Department of Public Property awarded Peter Pirozzi a $329,711 contract to replace exterior panels at the Philadelphia Nursing Home.

Peter Pirrozi claimed he would use Minority Contractors Inc., a certified minority-owned business, and Material Source Point, a certified women-owned business, for subcontracting work on both projects, according to the investigation.

Peter Pirozzi, according to the investigation, intended to use Minority Contractors Inc. just for its name and minority-owned business status. But the business relationship between the two companies fizzled.

Peter Pirozzi then substituted Rodriguez Contractor Supply, a purported minority-owned business, to complete the work alongside Material Source Point. Rodriguez Contractor Supply never did any work on the Baxter project.

However, the Office of Economic Opportunity never approved Peter Pirozzi to replace Minority Contractors, a requirement in the contract, according to the investigation.

When the unapproved substitution was discovered in February 2018, the city withheld a partial payment to Peter Pirozzi and the Office of Economic Opportunity relayed the matter to Rynhart’s and Kurland’s offices.

The year-and-a-half investigation revealed that Material Source Point was not a legitimate woman-owned business. Peter Pirozzi’s wife, Tracey, was the alleged owner of the company, but it was operated by the same staff as Pirozzi Contracting, the investigation revealed. Tracey Pirozzi was a nurse and reportedly knew nothing of the company she supposedly owned.

Thomas Pirozzi, who is an employee at Pirozzi Contracting, coordinated the supply and delivery of materials for both contracts, according to the investigation.

Rodriguez Contractor Supply performed no commercially useful function, according to the investigation. Andrew Rodriguez, Peter Pirozzi’s son-in-law, was the owner.

Peter Pirozzi also submitted false and misleading documents to city officials, including an invoice claiming that Minority Contractors Inc. was paid when it was not, according to the investigation.

The work on the two projects was completed, but Rhynhart’s office withheld $145,315.51 in payments, which Peter Pirozzi forfeited as part of the agreement with the city.

Minority Contractors Inc., Rodriguez Contractor Supply, and Material Source Point were removed from the Office of Economic Opportunity’s registry.

Rhynhart and Kurland will provide their findings to law enforcement officials, signalling criminal charges could result from the investigation.

Less than a decade ago, the issue of companies misrepresenting their use of minority- and women-owned businesses on city contracts was “out in the open,” Kurland said.

But businesses have become more sophisticated in recent years in their attempts to dodge the requirements, Kurland said, adding that her office has additional ongoing investigations.

“They know that it’s wrong,” she said, “and they try to hide it a little bit more.”

mdonofrio@phillytrib.com (215) 893-5782