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By Lynn Hulsey and Tom Beyerlein 
Staff Writers Updated 5:06 PM Sunday, January 29, 2012

Internal documents obtained by the Dayton Daily News show for the first time that Washington Twp. developers David and Shery Oakes tried to distance themselves from their business partner, Sherif Aziz, as the federal government questioned ties between an Oakes company and Aziz’s TesTech Inc.

The documents, obtained in a public records request to the U.S. Department of Transportation, reveal how deeply the Oakeses’ CESO Inc. was involved in Aziz’s financial affairs, and what company officials did to craft a separation.

“What we are trying to accomplish is to disassociate Sherif from the Oakes,” wrote CESO Inc. Controller Tina Gunter in an Aug. 10, 2007, email to CESO’s accountant, Tom Gmeiner, tax director for Brady Ware, a Dayton financial services company.

With the U.S. Small Business Administration questioning Aziz about potentially improper business ties with the Oakeses, Aziz sold his shares in CESO to Amy Montgomery, then 22 and engaged to the Oakeses’ son Peter. In her email, Gunter said the idea was suggested by “SBO,” an apparent reference to Shery B. Oakes.

Aziz and the Oakeses are part of federal and state investigations into the true ownership of TesTech, a Washington Twp. engineering firm that has raked in millions of dollars’ worth of federally funded transportation contracts as a Disadvantaged Business Enterprise, or DBE. Aziz also has gained entry into several similar government programs that give contracting preference to disadvantaged minority-owned businesses.

Aziz won the DBE status, in part, by claiming to be the sole owner and president of TesTech since founding it in 1997. Federal regulations require that companies getting those lucrative set-aside contracts be independent and controlled by the disadvantaged minority. The DBE program, which is meant to redress discrimination, is particularly valuable because it gives companies a leg up in winning big-money roadway and airport contracts. The Oakeses are not eligible for the DBE program.

A Feb. 13 appeals hearing has been set on ODOT’s efforts to terminate TesTech from the DBE program because of its ties to the Oakes companies. In a prepared statement last week, Aziz accused ODOT of launching “unwarranted and scurrilous public attacks on TesTech’s integrity and reputation which potentially threatened the company’s business operations.”

In a statement issued on Friday, Aziz said it is “an established and documented fact” that he is the sole owner of TesTech. He said he did not know about the Gunter email until it was later provided to him by state and federal transportation officials.

“Mrs. Gunter should be the person asked about its contents,” he said.

Steven R. Stanforth, Brady Ware chief operating and financial officer, said he could not comment on the documents the Daily News obtained.

“As a matter of firm policy and in accordance with the standards of our profession, Brady Ware vigorously protects the confidentiality of its clients’ personal, financial and tax reporting information,” Stanforth said in a prepared statement.

David Reed, the Oakeses’ attorney, declined comment. Gunter did not respond to requests for comment.

Under DBE rules, Aziz’ company is supposed to be independent and it must be controlled by him. Yet the documents show clear ties between the Oakeses and Aziz.

The documents show:

• While Aziz claimed to own and control TesTech, David Oakes tried to sell the company in December 2007, according to an agreement signed by Oakes and an executive of Brady Ware. Oakes signed the document as TesTech Inc. president.

• In mid-2007, the U.S. Small Business Administration was preparing to reject Aziz for its Small Disadvantaged Business program on the grounds he had too many assets. CESO officials moved to transfer his 21 percent ownership in CESO Inc.’s Michigan operations to Montgomery.

• Despite the requirement that TesTech be independent, emails from 2007 and 2008 show CESO’s Gunter discussed with the accountant Gmeiner TesTech’s tax liabilities and other internal financial information.

• David Oakes and Aziz were also connected through CESO Testing Technology, an Oakes company that Ohio transportation officials allege was “indistinguishable” from Aziz’s TesTech Inc., in apparent violation of federal rules requiring DBE independence.

Documents show Aziz borrowed $2 million from CESO Testing Technology in 2009 to buy the now-defunct company’s assets for nearly $3.3 million. Aziz said he hoped to expand his operations in Michigan and secure a contract with Walmart. For years before the purchase, CESO Testing Technology held the licenses to key equipment TesTech needed to do its work.

The SBA’s 2007 letter rejecting Aziz’s application for the agency’s disadvantaged business program raised some of the same questions state and federal transportation officials are asking about TesTech’s DBE status.

The SBA determined Aziz was not economically disadvantaged, one requirement of the program. It said Aziz had too many assets and asked him to “address the appearance that Mr. Aziz has additional asset holdings that he has not adequately disclosed . ...”

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