WEST FARGO — A West Fargo construction business raided by the FBI in a potential multi-million dollar fraud case has filed for bankruptcy.
FBI agents raided Pro-Mark Services, Inc., 3275 Oak Ridge Loop E., in March 2022 as part of an investigation into whether former owner Kyle Ralph Berg defrauded government programs for "millions of dollars" worth of contracts, according to search warrants filed in federal court.
Pro-Mark filed the Chapter 7 bankruptcy case on Monday, April 22, in U.S. Bankruptcy Court for the District of North Dakota.
Chapter 7 provides for "liquidation" or sale of a debtor's nonexempt property so proceeds can be distributed to creditors.
The authorized representative in the proceedings is Chad DuBois, president of Pro-Mark.
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The debtor’s attorney, Gene Doeling, did not return The Forum’s call in time for publication of this story.
Meanwhile, the federal government reached a resolution in its potential criminal case against Pro-Mark in October 2023.
The U.S. Department of Justice Antitrust Division and U.S. Attorney’s Office for North Dakota entered into a non-prosecution agreement with Pro-Mark.
Kyle Berg, 53, and his wife, Connie Berg, are not named in the non-prosecution agreement, but referred to throughout as individuals A and B or "Original Owners" of Pro-Mark. While the document did not identify the Bergs, The Forum has identified them based on past reporting.
The agreement requires the company to pay a penalty of $949,000 and to continue implementing a compliance and ethics program.
That penalty amount represents profits realized from contracts illegally awarded to Pro-Mark before 2020, when the Bergs were owners, the document said.
The document stated that between 2008 and 2020, Pro-Mark’s original owners executed a scheme to secure approximately $70 million in government set-aside construction contracts, despite Pro-Mark not being eligible for those contracts.
The contracts were meant for businesses owned by women, minorities and other socially or economically disadvantaged individuals.
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This conduct occurred at the direction of Kyle Berg, who managed the company, and Connie Berg, who was listed as the sole owner, the agreement stated.
The Bergs then cashed out in August 2020, selling the company to Pro-Mark employees via an employee stock ownership plan transaction for approximately $32 million, before the government became aware of the “criminal conduct,” the document said.
The Bergs have had no role in managing or operating the company since at least April 2022.
Attempts to reach Kyle Berg were unsuccessful.
The document stated Connie Berg was portrayed as president of Pro-Mark from 2008 to 2020, running and controlling the business and making decisions on the federal construction projects.
In fact, she had no role in those matters, the document said.
It was Kyle Berg who made or delegated all the strategic and day-to-day decisions concerning Pro-Mark and its federal construction business.
Even though Kyle Berg would not have been eligible for those government set-aside contracts, he selected which set-aside contracts Pro-Mark would bid on, structured the bids, estimated their costs, and directed the hiring of and work of Pro-Mark employees, subcontractors, and suppliers. Finally, he managed the company’s financials, including its bank accounts.
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While Connie Berg was listed as the sole owner of Pro-Mark on paper, her husband was the primary point of contact for the employee stock ownership transaction, the document said.
In May 2023, The Forum reported that Kyle Berg owned at least four residences — an oceanfront home in south Florida, two lakeside homes in Minnesota and a family home in West Fargo.
He also either owned, had a stake in, or exerted control over more than a dozen businesses at the time, according to U.S. District Court documents.
Regarding the Chapter 7 bankruptcy filing, a meeting of creditors is set for 9:30 a.m., Thursday, May 30.
The filing lists Pro-Mark jobs sites in Fergus Falls, Minnesota, the Minot Air Force Base, Glenburn, North Dakota and the Grand Forks Air Force Base.
It also lists rental properties with property stored in Fargo, Grand Forks, Minot, Rapid City, South Dakota and Billings, Montana.
Pro-Mark’s estimated assets in the filing are listed as between $1 million and $10 million, while its liabilities are listed as between $10 million and $50 million.
Forum reporter Tasha Carvell contributed to this story.
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