Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Pasco contractor accused of $1 million fraud

NEW PORT RICHEY — For six months last year, Rosa Herrera's company, Covenant Construction Unlimited, billed for more than $1 million in work from Haines City to Hudson, Riverview to Clearwater, at numerous churches, a large retail complex, a tire store, an armory and a parking structure.

She gave the invoices to a third party that paid her up front, then that firm planned to collect the amounts due from Herrera's customers while keeping a cut for itself.

It's a legitimate practice known as invoice factoring, which enables companies to get money to pay their own bills and keep capital on hand without having to wait for their customers to pay up.

But Herrera used the setup for a scam, federal authorities say.

Covenant Construction didn't do the work, and the bills Herrera submitted to the factoring company, Capital Plus Equity in Knoxville, Tenn., were fakes, according to her indictment.

"She did a very good job and knew exactly what she was doing," said Scott Applegate, Capital Plus Equity's chief operating officer.

She pulled it off by using the names of real businesses and real employees, some of whom had been her previous customers, Applegate said. In some instances, the indictment said, Herrera paid Capital Plus herself, but with checks that appeared to be from a customer, to keep up with her debt and allay suspicion.

Herrera, 43, was arrested last month and charged with 15 counts of fraud by federal prosecutors in Tampa. She faces a possible 20-year maximum prison sentence on each count if convicted. In addition, the government wants her to repay the $1.13 million.

Like a Ponzi scheme?

Covenant Construction incorporated in 2007, according to state records. When Capital Plus looked into doing business with her, Applegate said, nothing in Herrera's background was a red flag.

"From everything we found out, she was a legitimate business doing work," he said.

She operated out of a nondescript building on Troublecreek Road, not far from a one-story house on Kennedy Drive that is listed as the corporation's principal address. Both are abandoned now.

Applegate said his company discovered the alleged fraud and reported it to federal authorities. He wouldn't elaborate on how it was uncovered for fear that others could use the information to find new ways to cheat.

He likened Herrera's operation to a Ponzi scheme, saying that she didn't use the money to fund a lavish lifestyle for herself but to cover debts and pay vendors to keep the process going.

When she fell behind, he said, she simply fabricated invoices and materials lists for nonexistent projects.

A sample from her indictment:

• February 2008: A $45,000 invoice "for work purportedly performed" for Manantial de Vida Assemblies of God Church on Missouri Avenue in Clearwater.

• April 2008: An $18,000 receipt "purportedly issued by Cemex, Inc.," a cement supplier, acknowledging full payment from Herrera for work performed at Trinity Town Center, for which Herrera sought reimbursement as a subcontractor.

• May 2008: A $150,000 invoice "for work purportedly performed" for another construction company at First Baptist Church of New Port Richey. She issued another invoice that month for $95,000 "for work purportedly performed" at New Hope Assembly of God church in Brooksville and Gulf Coast Worship Center in New Port Richey.

The indictment lists at least seven more church construction projects in New Port Richey, Hudson and Clearwater during 2008.

In each, there are glaring curiosities.

For instance, Herrera listed the Baptist church in New Port Richey at 2600 Troublecreek Road. The church's numerical address is 6800.

Another invoice placed Gulf Coast Worship Center on State Road 54. It's actually on Little Road, and an official there said the church hasn't done any construction projects for at least two years.

Another church is listed on "S. River Road" in Hudson — a street that does not exist.

In the bills submitted to Capital Plus, Herrera claimed to have been working for Hawkins Construction on the Trinity Town Center, the troubled Main Street-style retail and office complex being built on Little Road. But John McCaugherty, president of Hawkins Construction, told the St. Petersburg Times that his Tarpon Springs company hasn't done any work at Trinity Town Center.

"We were not the contractor," he said. "We didn't do anything. Someone else built it."

A 'smooth con job'

Applegate said Capital Plus has stepped up its due diligence. But for every precaution they took, he said, Herrera had a trap door.

If Capital Plus called the main phone number of a church listed on her invoices, they would often be told that the named employee worked there but wasn't in the office. Then they'd call the number for the employee that Herrera had given them. The person would answer and vouch for her work.

But Applegate said Herrera was giving them phoney numbers, and the person on the other end of the line was working for her.

No other arrests have been made in the case, though the indictment refers to phone calls between Capital Plus and "a person purportedly representing" Herrera's customers.

Capital Plus, which has eight employees, had to make up in profits what it lost to Herrera's scheme, but Applegate said the company is healthy.

"It was a pretty smooth con job," he said.

Molly Moorhead can be reached at moorhead@sptimes.com or (727) 869-6245.

Pasco contractor accused of $1 million fraud 08/15/09 [Last modified: Saturday, August 15, 2009 10:08am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Craft beer of the week: Electric Chair Sour Shandy, Angry Chair Brewing

    Bars & Spirits

    Traditionally, a shandy, like its German cousin the radler, is a simple combination of beer and a soft drink, such as a citrus-flavored soda or fresh juice. These drinks are low-alcohol, fruity and highly refreshing, making them ideal candidates for summertime sipping.

    Justin Grant/Special to tbt*
  2. Can you feel the heat? Indie rock gifts dynamite playlist for summer

    Music & Concerts

    For most of June, there was precisely one song by a rock band in the top half of Billboard's Hot 100: Believer by Imagine Dragons. (If you're feeling generous, you could count Something Just Like This by the Chainsmokers and Coldplay, but c'mon.) On the list of America's hottest singles, there were more …

    Arcade Fire performs at the Panorama music festival on Randall Island in New York.
  3. Bar review: Sample whiskey, vodka, rum, absinthe and more at Fish Hawk Spirits in Ybor

    Bars & Spirits

    While craft brewing has firmly entrenched itself in local drinking culture, craft distilling is still a very niche market. Part of this is due to outdated and arguably unfair distilling laws, and part of it is because successful distilling can often be a lot tougher and more time-consuming than brewing up a few batches …

    For $10, you can sample four of Fish Hawk Spirits’ fruit-infused vodkas, as well as its molasses-based rums, tangerine brandy and more. Old whiskey barrels lend a rustic vibe to the Ybor shop.
  4. Pinellas deputy in trouble for social media boast: 'Nothing like almost shooting someone'

    Public Safety

    LARGO — A Pinellas County Sheriff's deputy is under investigation after a photo that shows him boasting about almost shooting someone made the rounds on social media.

    A Pinellas County Sheriff's deputy is under investigation after a photo that shows him boasting about almost shooting someone made the rounds on social media. Sheriff's Office spokesman Sgt. Spencer Gross on Thursday confirmed deputy Austen Callus' employment and said the agency is "aware of the social media post." [Facebook'
  5. ReliaQuest's benevolent hackers try to make companies more secure

    Corporate

    TAMPA — Their goal is to get in. Past a security desk, through a firewall, into a system they shouldn't have access to. Sometimes they'll look like a regular person in the lobby who innocently forgot their access badge. Most times they won't be seen at all, remotely and quietly prodding a company's systems from a …

    Angelo Castellano of Tampa works at his desk at ReliaQuest | | [CHARLIE KAIJO, Times]