By Tara Hoke
Cases of corporate misconduct often involve some degree of knowledge or participation from individuals at multiple levels of authority within the organization. Examples like the following case serve as a reminder that “doing what you’re told” is never a defense for a legal or ethical misstep, and all engineering professionals must take personal responsibility for upholding professional obligations.
Situation
The newly elected governor of a New England state establishes an independent commission to investigate allegations of widespread corruption, fraud, and waste on state infrastructure projects. Over the next three years, the commission’s efforts lead to civil and criminal prosecutions of several prominent state officials and more than 50 private individuals and companies operating within the state.
Local and national news coverage focuses on the commission’s work to expose a pay-to-play culture in which major state contracts are awarded on the basis of political contributions or other improper influence. Meanwhile, the commission is also quietly uncovering evidence of other forms of financial misconduct on state projects. One such case involves investigators’ discovery of substantial discrepancies in its review of billing records from a small engineering firm.
The engineering firm had served as a subcontractor on a cost-plus contract issued by the state’s port authority. During its 11-month involvement in the project, the firm submitted monthly invoices to the prime contractor for its services — invoices that, when compared with the firm’s internal business records, appear to grossly overstate the firm’s actual labor fees and costs. In total, the conflicting records suggest that the firm overcharged its prime contractor, and consequently the state, by more than $200,000.
The commission seeks answers from the firm’s chief engineer, an ASCE member and licensed professional engineer. The engineer initially denies any knowledge of wrongdoing, but when pressured to explain inconsistencies between the firm’s records and bills bearing the engineer’s own signature, the engineer admits to his involvement in submitting overstated charges.
The engineer explains that he manages the firm’s delivery of technical services but that all other aspects of the firm’s business are tightly controlled by the engineer’s boss, i.e., the firm’s owner and chief executive officer. As part of the engineer’s responsibilities on a project, he reviews timesheets and expenditures at the end of each monthly billing cycle and prepares a draft bill for the CEO’s approval.
After preparing his first draft invoice on the port authority project, the engineer claims he was called into the CEO’s office and told the firm “would go belly up” if it did not charge more on the project. Though the engineer protested that the bill was an accurate reflection of the firm’s costs, the executive named an amount that was significantly higher and instructed the engineer to increase the hours billed until he got to that amount.
The engineer reluctantly complied, setting the stage for all future billings on the project. Each month, the engineer would submit a draft bill for work completed, the CEO would tell the engineer how much more he wanted to bill, and the engineer would modify the bill accordingly.
Based on the engineer’s testimony, a grand jury indicts the firm and its CEO/owner on 11 counts of larceny. At trial, the defense attempts to depict the engineer as the chief orchestrator of the scheme, but the engineer’s statements are bolstered by witnesses affirming the owner’s “complete control” of billing and by evidence of the owner’s fraudulent dealings in a previous unrelated business activity. The owner is found guilty and sentenced to two years in prison, while the owner and the firm are ordered to make restitution for the inflated payments.
Though the chief engineer receives immunity from criminal prosecution in exchange for his testimony, he does not wholly escape accountability for his actions: A complaint is filed with the state licensing board, which finds him in violation of the state’s professional practice act and revokes his P.E. license.
A volunteer leader from the local ASCE section forwards notice of the board’s action to ASCE’s Committee on Professional Conduct, which promptly opens its own investigation.
Question
What does the ASCE Code of Ethics have to say about the member’s actions in this case?
Discussion
At the time of this case, Fundamental Canon 4 of the ASCE Code of Ethics instructed engineers to “act in professional matters for each employer or client as faithful agents or trustees.” This ethical principle has remained largely unchanged since the code was first adopted in 1914, and today it can be found in Section 4a: “Engineers act as faithful agents of their clients and employers with integrity and professionalism.”
When contacted by the CPC, the member made no attempt to deny either the facts of the case or the ethical implications of his actions. He described his participation in the scheme as a “terrible mistake,” which he made not for personal enrichment nor any benefit to himself, but from fear of the threat to the firm and to the staff depending on its survival. He expressed sincere remorse for his actions and claimed that his decision to cooperate with prosecutors was an effort to clear his conscience and make amends for his conduct.
By way of a character reference, the engineer provided the CPC with a letter from the state attorney general’s office. The letter praised the engineer for his cooperation in the state’s investigation, without which an indictment could not have been obtained, and it expressed the writer’s “strong conviction” of the engineer’s desire to address his wrongdoing and rebuild his professional reputation. The engineer also shared a letter from the state licensing board, which similarly acknowledged his contributions to the state’s case, and in view of those actions agreed to entertain an application to restore his professional license “at an early date.”
Though the CPC believed the member’s actions clearly violated his ethical duty to serve his client as a faithful agent or trustee, its decision on an appropriate action engendered some debate.
On the one hand, the CPC appreciated the engineer’s stated remorse and acknowledged that the member had already been penalized by the lengthy trial and by the board’s disciplinary action. On the other hand, the CPC felt that neither the engineer’s remorse nor his cooperation with prosecutors excused his compliance in a scheme to defraud a client. The CPC noted that the engineer had remained silent about the wrongdoing for the duration of this scheme and even when first approached by the state investigators, raising questions about whether his cooperation was guided more by remorse or by fear of discovery.
The CPC also disagreed with the engineer’s claim that he had not personally benefited from the scheme. Even if the engineer was not directly paid for his complicity, the CPC felt he willingly benefited from a job and a salary that were sustained by payments from fraudulent invoices.
The CPC ultimately reached a decision to recommend the member’s suspension from ASCE for a period of two years, a recommendation that was upheld by the Executive Committee.
Though the ethical duty of faithful service certainly includes fair and honest financial dealings, it was not until several years after this case that ASCE’s code was amended to expressly address this obligation, in what was then Canon 6’s requirement to “act with zero tolerance for bribery, fraud, and corruption.” The current code further strengthens this obligation by adding a reporting mandate: Section 1d requires engineers to “have zero tolerance for bribery, fraud, and corruption in all forms, and report violations to the proper authorities.”
Viewed under the lens of today’s code, the engineer’s ethical culpability in this case is even more evident. A true commitment to zero tolerance requires not only an unwillingness to follow corrupt or unlawful orders, but also the courage to speak out against such conduct, even if disclosure comes at the risk of lost employment, legal entanglements, or other personal cost.
Tara Hoke is ASCE’s general counsel and a contributing editor to Civil Engineering.
This article first appeared in the July/August 2026 issue of Civil Engineering.”
