CHICAGO (Legal Newsline) - Illinois Attorney General Lisa Madigan has announced a lawsuit against a Chicago construction firm that is alleged to have fraudulently obtained public funds reserved for minority-owned subcontracting firms.

Madigan's civil complaint, which names Castle Construction Corp. and its owner and president Robert Blum, alleges that the defendants intentionally defrauded both the city of Chicago's Public Building Commission and the Chicago Transit Authority. The defendants allegedly falsified bid and contract documents to give the appearance that Castle was in compliance with the PBC's and CTA's minority-owned subcontracting requirements.

"Castle Construction's alleged deceptive practices effectively prevented other legitimate companies from securing contracts intended to provide business growth opportunities for minority-owned businesses," Madigan said.

"Castle would never have received these public contracts without fraud and deception."

Castle received a contract in 2006 from the CTA to upgrade three train- and bus-washing facilities. According to Madigan's complaint, the defendants certified falsely that a minority-owned business would perform heating, ventilation and air conditioning subcontract work on the project.

According to the lawsuit, Castle itself performed most of the subcontract work itself, rendering the business noncompliant with the CTA's contractual requirements for employing minority-owned subcontractors.

Another similar contract was received through the PBC by Castle in 2007 to construct a firehouse on Chicago's North Side. Madigan alleges that, as part of their winning bid, the defendants falsely certified that a minority-owned business would perform the project's masonry subcontract work. The defendants allegedly then hired a non-minority-owned business to perform the subcontract work instead.

Madigan's complaint alleges that the defendants did not have any intention of subcontracting with minority-owned businesses that it named in its bid documents. Further, the complaint says, the defendants continued their fraud after winning the PBC and CTA bids by submitting additional false documentation.

A criminal indictment was obtained against both Castle and Blum by Madigan in 2009 from a Cook County Grand Jury in regards to the allegedly fraudulent conduct. That case remains ongoing.

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