WAPA gives $375,000 no-bid contract to felon's company


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ST. THOMAS - The V.I. Water and Power Authority on Monday awarded a $375,000 no-bid contract to a company run by a man who was convicted in 1998 of defrauding the federal government.

The company's president, William Koenig, also is tied to a different company that was awarded two contracts related to the controversial guard house that Gov. John deJongh Jr. ordered built in front of his private residence in 2007.

According to records from the Lieutenant Governor's Office, Koenig is the president and one of the incorporators of ABC Concepts, Inc., which received the emergency WAPA contract on Monday.

Under the contract, ABC Concepts will be paid nearly $375,000 to engineer, design and install two new line bollards - sturdy iron posts used for attaching mooring lines - to allow WAPA's new fuel oil supplier, Trafigura AG, to make deliveries of up to 80,000 barrels of fuel to WAPA's Krum Bay facility.

Koenig is listed as one of three original incorporators who created ABC Concepts in 2002, according to records from the Lieutenant Governor's Office. Koenig also is listed as the president of the corporation and his wife, Esther, is listed as another incorporator and the secretary for the corporation.

Koenig and his wife held the same respective positions within Coastal General Construction Services Corporation, first registered with the Lieutenant Governor's Office in 1998.

It was work that company did for the V.I. Housing Authority and the federal Housing and Urban Development Department that landed the Koenigs in federal court in 1998 to face charges that they "conspired to defraud VIHA and HUD through inflated claims made during arbitration demanded by Coastal," according to court records.

Both were convicted, but Esther Koenig's conviction later was vacated by the 3rd U.S. Circuit Court of Appeals. The court upheld William Koenig's 10 convictions, and he was sentenced to serve two years in jail and pay a civil penalty of $50,000, court records show.

Fraud conviction

Trouble for William Koenig began in 1994 when the V.I. Housing Authority sued him, his wife and other parties under the federal False Claims Act, according to court records.

The federal government intervened in this case and filed its own complaint in November 1996. The U.S. government argued that the defendants submitted numerous false claims, statements and documents to the V.I. Housing Authority in connection with arbitration involving housing projects in Donoe and Bovoni, according to court records.

According to a 1995 press release announcing the federal government was intervening in the case, the U.S. Justice Department said Coastal General Construction submitted claims for $2.2 million for work never done in the Donoe project and $4.8 million for work never done in the Bovoni project.

About a year after the lawsuit was filed, a federal grand jury in November 1997 indicted Koenig and his wife, charging that they attempted to defraud the housing authority - though the federal government never actually paid the false claims made during the Donoe arbitration, according to court records.

The following April, the Koenigs were convicted, court records show. Upon appeal to the 3rd Circuit, William Koenig's convictions on 10 counts were upheld; his wife's single conviction was vacated.

William Koenig's upheld convictions affirmed that during the 1992 Donoe project arbitration, Koenig "knowingly and willfully made and caused to be made false, fictitious and fraudulent statements or representations concerning material facts" under HUD's jurisdiction by "claiming with supporting documents various costs that were not, in fact, direct costs of the Donoe project."

Koenig was sentenced in 1999 to spent two years in jail and three years on probation. In the civil case, District Judge Thomas Moore ordered Koenig to pay $50,000 in penalties.

Banned contractor

Within months of his conviction, William Koenig and his company Coastal General Construction were on the federal government's list of ineligible contractors.

Records available online through the federal General Services Administration's System for Award Management show William Koenig and Coastal were excluded from receiving federal contracts starting in March 2000.

Camille Campbell, who is listed as HUD's point of contact for excluded-contractor issues, confirmed on Tuesday that William Koenig and Coastal are prohibited from receiving federal contracts through HUD.

She said the debarment still is in effect regarding HUD contracts. The online General Services Administration record shows exclusions for William Koenig and Coastal were terminated in 2003. It is unclear from the exclusion record whether the termination is because of the government dropping the ban, the company dissolving - both exclusion records were flagged as "inactive" - or some other factor.

Campbell referred further questions, including whether companies registered to William Koenig subsequent to his conviction would be subject to the same restrictions, to her supervisor, who had not returned a message by late Tuesday. A message left Tuesday with the General Services Administration press office also was not returned.

Guard house

On Feb. 8, 2005, a limited liability company called WMK Mechanical Group filed business registration paperwork with the Lieutenant Governor's Office. William Koenig is listed as the organizer in that paperwork and is listed on WMK's website as the company's president; his wife is listed as the office manager.

The company became the subject of public scrutiny in 2009, when it was revealed that WMK was one of two main contractors hired to add security implements to deJongh's private residence in Estate Mafolie in 2007. The government used more than $490,000 in public funds for the security upgrades, but the governor's administration has maintained that it did nothing wrong based on the argument that the governor was avoiding the costs associated with living in a government-owned house in Estate Catherineberg.

WMK received two contracts related to the project - one in April 2007 for a guard house that ended up costing $137,701.80 and one in June 2008 for a perimeter fence that eventually cost $148,170. Both contracts were awarded after at least two bids were received.

A woman answering phones at the phone number listed on WMK's website identified the company on Tuesday as ABC Concepts. Messages left for William Koenig at his office and cell phone numbers were not returned Tuesday.

'No red flags'

WAPA Executive Director Hugo Hodge Jr. did not return a call for this story, but other WAPA officials reached Tuesday were unperturbed by William Koenig's past.

WAPA spokeswoman Cassandra Dunn, who said Hodge would not be available for comment on Tuesday, said WAPA is comfortable with its selection of ABC Concepts for the Krum Bay line bollards project. She pointed out that ABC Concepts has been working as WAPA's emergency and supplemental maintenance provider under a one-year contract approved by WAPA's Board in July. That contract is worth $200,000, according to Daily News archives.

Dunn said that although ABC Concepts was not subject to any competitive bidding process for the line bollards project, WAPA did vet the company before hiring it as its emergency maintenance provider.

"WAPA does a complete analysis of the bid and looks for the financial viability of the company and the credibility of the company," Dunn said. "We certainly look and see if they have any history that would be inappropriate for the work that we have to do or the work that we need them for. And certainly in our vetting process we didn't come across anything that would lead us to believe that the work they said they could do for WAPA was other than work they could do, and they've proven that since we've contracted through them."

Dunn later said she did not know anything about William Koenig's past, but she stood by the evaluation committee that recommended the hire of ABC Concepts over the summer.

"I, Cassandra Dunn, do not know about the owner you're referring to," she said. "But I can certainly say the evaluation committee did its homework."

Dunn said ABC Concepts would be paid for the bollards work with "internal funds."

Gerald Groner, who is chairman of WAPA's board, which unanimously approved the emergency contract Monday, said in a subsequent interview that he had heard "one of the guys had some problems in the '90s with the feds." He said notwithstanding these issues, WAPA has "confidence" in ABC Concepts.

"Fourteen years is 14 years," Groner said. "I just happen to believe people can change. Whatever this guy did or was convicted of, he paid his price."

Dunn and Groner also defended the time line that necessitated the emergency contract, which Hodge described at an emergency meeting Monday as "essentially a waiver for competitive bidding." They said WAPA did not know the exact type of vessel that it would need to accommodate at Krum Bay until approximately three or four weeks ago.

Groner said final plans and permits for the project were not in place until early last week.

"I happen to think that was an awful quick response to a fairly complex engineering problem," Groner said.

- Contact reporter Lou Mattei at 714-9124 or email lmattei@dailynews.vi.

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