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Set-Asides and Preferences

This archive displays posts tagged as relevant to fraud in government contracting set-aside and preference programs. You may also be interested in the following pages:

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June 29, 2023

Vantage Systems Inc. will receive $1.35 million for blowing the whistle on HX5 LLC, its owner and CEO Margarita Howard, and HX5 Sierra LLC for defrauding the SBA’s 8(a) business development program. Over a seven-year period, from 2015 through 2021, HX5 violated the False Claims Act by knowingly providing false information relating to their eligibility for federal set-aside contracts meant for small businesses owned and controlled by socially and economically disadvantaged individuals. HX5 and Howard secured 6 contracts by concealing Howard’s assets and failing to report distributions and payments to Howard’s family. DOJ

January 18, 2023

The owner of several construction companies has been ordered to pay $1.75 million and serve over 2 years in prison after being convicted of fraudulently obtaining over $240 million in government contracts set aside for service-disabled veteran-owned small businesses (SDVOSB).  Michael Angelo Padron had recruited a service-disabled veteran to serve as the companies’ ostensible owner, but he and his business partners retained actual control of all financial and operational decisions, in violation of program rules set forth by the Small Business Administration (SBA).  DOJ

September 22, 2022

The operations manager for Zieson Construction Company has been sentenced to 8 years in prison, ordered to forfeit over $4.6 million in profits, and ordered to pay restitution of over $600,000 to the IRS and over $82,000 to the Missouri Department of Revenue for his role in a massive fraud scheme.  Using an African American service-disabled veteran as the nominal owner of Zieson, Patrick Michael Dingle obtained approximately $335 million in federal construction contracts that were set aside for small businesses owned and operated by individuals fitting the nominal owner’s profile.  In violation of program rules, however, Zieson was actually controlled by Dingle and his co-conspirators.  Dingle also separately admitted to filing fraudulent business tax returns from 2013 to 2016.  USAO WDMO

August 2, 2022

VE Source LLC and its owners, Sherman Barton and Christopher Neary, as well as a related entity, Vertical Source LLC, have together agreed to pay nearly $8 million to resolve claims of violating the False Claims Act.  VE Source had fraudulently obtained more than $16.5 million in contracts with the Department of Agriculture (USDA) and the Defense Logistics Agency (DLA) that were set aside for businesses owned and controlled by service-disabled veterans, which it was not.  USAO NJ

June 2, 2022

Aerospace company Numet Machining Techniques, LLC and related entities have agreed to pay $5.2 million after voluntarily disclosing to the government that Numet, which had certified itself as a small business concern, had affiliations with other businesses that, the government alleged, made it ineligible for 22 small business set-aside contracts that it had been awarded during the relevant time period.  USAO CT

May 13, 2022

Hensel Phelps Construction Company has agreed to pay $2.8 million to resolve allegations of violating the False Claims Act in connection with a federal subcontract designated for service-disabled, veteran-owned small businesses (SDVOSB).  Under a 2011 contract with the General Services Administration to construct a building in Washington, D.C., Hensel Phelps was required to set aside subcontracts for SDVOSBs and other small businesses.  According to qui tam plaintiff Fox Unlimited Enterprises, LLP, the company instead made arrangements with another large business to provide equipment and installation services, and used a SDVOSB in name only.  USAO NDNY, USAO EDWA

TriMark Settlement Highlights Fraud in Set-Aside Programs

Posted  03/1/22
In a settlement that DOJ has touted as “the largest-ever False Claims Act recovery based on allegations of small business contracting fraud,” food services equipment supplier TriMark USA agreed to pay $48.5 million to resolve allegations that its subsidiaries used front companies owned by service-disabled veteran-owned small businesses (SDVOSBs) to secure federal set-aside contracts.  While TriMark made it appear...

February 23, 2022

TriMark USA, LLC and related entities will pay $48.5 million to resolve claims brought in a whistleblower lawsuit alleging that they improperly manipulated federal contract set-asides for service-disabled, veteran-owned small businesses (SDVOSB) by enlisting small business to secure the contracts while TriMark actually performed all of the work and received most of the benefits of the federal contract.  In addition, former TriMark executive Kimberley Rimsza has agreed to pay $100,000 to resolve claims against her.  The whistleblower, Fox Unlimited Enterprises, LLP, will receive an award of $10.9 millionUSAO ND NY; USAO ED WA

January 12, 2022

Idaho-based Native American Services Corp. (NASCO) and Texas-based Mirador Enterprises, Inc. (Mirador) have agreed to pay $750,000 and $400,000 respectively, for a combined settlement of $1.15 million, to resolve allegations of fraudulently obtaining two construction contracts at Colorado’s Fort Carson Army installation.  According to the DOJ, one contract was set aside for eligible economically and socially disadvantaged small businesses, and the other was set aside for eligible small businesses.  Although Mirador was eligible for both contracts, it allowed its mentor NASCO to take on the primary role in the performance of the contracts; both companies then took steps to conceal the fraud.  USAO CO

Top Ten Non-Healthcare False Claims Act Recoveries of 2021

Posted  01/7/22
Abe Lincoln
Our roundup of 2021’s Top Ten Non-Healthcare False Claims Act (FCA) recoveries illustrates the statute’s continuing capacity to fight both conventional and emergent frauds straddling a variety of industries. In 2021 alone, the United States recovered hundreds of millions in taxpayer funds obtained through false claims tainted by textbook contracting fraud schemes (overbilling on government contracts, selling the...
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