Brian Kowert Sr., a white contractor from Clayton, will have 18 months in federal prison to think about his crime of subverting minority business enterprises regulations.
“We’re not going to tolerate it. This program is to right the wrong, if you will, of years and years of racism in the construction trades.” – Assistant U.S. Attorney Hal Goldsmith
A former co-owner and chief operating officer of HBD Construction Inc. in Clayton, Kowert was sentenced by U.S. District Judge Henry E. Autry for committing fraud to qualify for tax abatements designed to encourage minority-owned businesses in St. Louis. He was also fined $100,000.
Brian Kowert Sr. “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.
Kowert also knew what he was doing was wrong, as he committed a similar Minority Business Enterprise fraud 17 years ago, Goldsmith wrote.
The fraud involved Charles Kirkwood, the 83-year-old Black owner of Midwestern Construction. Kirkwood told FOX2 “I was used.”
“I don’t know what all he was doing really, to be honest with you; I’m not sure,” he said.
The St. Louis U.S. Attorney’s Office said Kowert pled guilty to two counts of wire fraud in January.
According to the US Attorney’s Office, Kowert functioned as the project manager for the renovation and redevelopment of a property for Greater Goods LLC in St. Louis, officials said.
Kowert agreed to falsely list Kirkwood’s company as providing materials and performing work on the project, the U.S. Attorney’s Office said.
Court documents show Kowert “recruited an elderly Black business owner as a pass-through, paying him $2,000 in order to pass through hundreds of thousands of dollars to non-minority owned and operated business.”
Because of the scheme, the business lost hundreds of thousands of dollars in tax incentives after the plot was revealed. Goldsmith wrote “Kowert’s shady behavior set back years of work to fix discrimination in the construction field.”
While he says he had no knowledge of the criminal activity, Kirkwood’s role allowed the project to satisfy St. Louis requirements for 25% participation by MBEs to qualify for a 10-year tax abatement.
The MBE participation requirements seek to address historical social and economic disadvantages experienced by minority group members and to reduce minority-based barriers to and foster participation by minority-owned businesses in city contract opportunities.
“We’re not going to tolerate it,” Goldsmith said.
“This program is to right the wrong, if you will, of years and years of racism in the construction trades.”
Kowert’s attorney, Joel Schwartz, said his client has a history of trying to make positive differences for MBEs or minority businesses and that the program “couldn’t possibly be more flawed.”
He claims Kowert wants “to educate and teach so that there are more qualified MBEs to complete projects for the city.”
Kowert issued duplicate subcontracts to Kirkwood’s company for work that was performed and materials that were supplied by two other non-MBE companies. Kowert also issued a duplicate HBD purchase order to Kirkwood’s company for materials provided by a third non-MBE company.
Kowert submitted a false chart of projected costs for the redevelopment project to the St. Louis Development Corporation, the city agency charged with reviewing, approving, and recommending tax abatements. The chart falsely listed Kirkwood’s MBE company as providing labor and materials valued at approximately $198,000 on the Greater Goods redevelopment project and concealed the involvement of the three non-MBE companies.
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. Kirkwood deposited those checks into his company bank account and then issued checks to the three non-MBE companies, at Kowert’s direction.
Kirkwood was paid approximately $2,000 by Kowert for his role in the criminal scheme.
Kowert and HBD then caused a false application for tax abatement on behalf of the Greater Goods redevelopment project to be submitted to the St. Louis Development Corporation.
The application falsely represented that Kirkwood’s MBE company had performed about $224,361 in project costs, comprising about 6 ½ % of the required 25% MBE participation in the project.
KSDK.com and FOX2 contributed to this report.
