MINNEAPOLIS — Anderson Brothers Construction Company, a well-known Brainerd-based road construction firm, has agreed to pay $1,295,610 to settle allegations that it submitted false quality test results for paving materials on federally funded road projects between 2017 and 2022, according to an announcement by the U.S. Attorney’s Office in Minneapolis on Friday, April 4.

Federal and state officials claim the company misrepresented the quality of its materials by submitting falsified test results, thereby obtaining unearned performance incentives and avoiding financial penalties that would have been imposed had the true data been reported.

“Protecting taxpayer dollars from fraud and abuse is one of our top priorities,” said Acting U.S. Attorney for the District of Minnesota Lisa D. Kirkpatrick. “The submission of false claims for federally funded government contracts will not be tolerated. This settlement should serve as proof that we will actively investigate this conduct whenever it occurs and will hold to account any company that fails to bill accurately for the products provided.”

While the $1.3 million agreement resolves the case, the government emphasized that the settlement is not an admission of liability and that “the claims resolved by the settlement are allegations only.”

The U.S. and the state of Minnesota allege that Anderson Brothers was contractually obligated to perform specific quality control tests on paving materials and submit the results as part of its roadwork contracts. Officials say that Anderson Brothers knowingly manipulated or falsified these test results, submitting data that misrepresented the quality of the pavement.

“Today’s settlement reinforces the fact that companies doing business with the government must fully comply with federal regulations and contractual obligations,” said Special Agent in Charge Anthony Licari of the U.S. Department of Transportation Office of Inspector General. “When fraudulent conduct like this undermines the integrity of highway paving, putting the safety of the traveling public at risk, it’s our job, together with our law enforcement and prosecutorial partners, to put an end to it.”

Company Responds: “No-Fault Agreement” Allows Business to Move Forward

In response to the settlement, Terry McFarlin, President and CEO of Anderson Brothers Construction, released a statement underscoring the company’s commitment to compliance and customer service.

“We’re pleased to have resolved the government’s concerns about our past testing protocols through a no-fault agreement. It lets us avoid the time, distraction and expense of lengthy government litigation and instead focus on taking care of our customers,” McFarlin stated.

“This settlement does not affect our ability to serve our customers, take on new projects, or achieve our long-term goals; it represents about one-half of one percent of the value of the projects during this time. We’re excited for the future and for the opportunities to continue serving our customers and our communities to the highest standards of quality, compliance and service.”

Whistleblower Played Key Role

The civil settlement also resolves claims brought under the False Claims Act's whistleblower provisions by Kacie Dixon, a former bituminous mix technician at the company. Under the law, whistleblowers are entitled to a portion of any government recovery when they expose fraud. The case, filed in federal court, is Dixon v. Anderson Brothers Construction Company of Brainerd, LLC.

This kind of whistleblower contribution is increasingly common in False Claims Act cases and is considered vital in surfacing corporate misconduct that might otherwise go unnoticed.

Funds Allocation and Government Collaboration

Of the total $1.29 million civil settlement:

• $660,761 will go to the U.S. government, and
• $634,849 will go to the state of Minnesota.

The investigation was led by a collaborative team across state and federal agencies, including the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Minnesota, with support from the Minnesota Attorney General’s Office and the Minnesota Department of Transportation.

Attorneys Danielle Rowan (DOJ Fraud Section), and Assistant U.S. Attorneys David Fuller and Adam Hoskins were credited with conducting the investigation and pursuing the civil enforcement.

Originally reported by Matt Rricson in Brainerd Dispatch.