Lack of understanding SBA 8(a) Regulations Can Put Criminal Defendants at Risk
On the issue of defrauding SBA Disadvantaged Small Business Program, there many recent cases where the Department of Justice, SBA Inspector General and other government entities have investigated and indicted Small Disadvantaged Business (SDB) owners for committing procurement fraud under the SBA 8(a) Program. In one SBA 8(a) Program Fraud Case, a Defendant pleaded guilty to conspiring to defraud the United States in connection with schemes to fraudulently seek federal contracts under a Small Business Administration program to assist socially and economically disadvantaged small businesses; and to defraud the IRS.
Criminal charges for these types of procurement small business fraud cases typically include: Conspiring to defraud the government, sometimes, false tax returns, submitting false financials to the SBA and various counts of wire fraud.
Indictments usually suggest that a Defendant in a case caused a disadvantaged person to submit an application to the SBA Section 8a program. However, the Defendant never reveals that he is actual control of the business.
To further develop their case on government procurement fraud, U.S. attorneys will also suggest that there was an underlying scheme where the defendant coerced or conspired with the 8(a) certification program applicant to get government contracts and pass the money on the Defendant.
Proving control is one area where there are differing opinions when a procurement fraud case is on the way.
Under the SBA 8(a) Program, and other small business regulations, there are statutory definitions and case law that address these complicated issues. 13 CFR 124.106 creates the statutory guidelines of how to determine control.
What you will generally see in a SBA procurement fraud case alleging control violations, is that the U.S. attorney will make the allegations but fail to prove at court that the defendant was actually the highest paid. By contrast, when SBA decisions are appealed at the SBA Office of Hearings and Appeals (OHA), the level of details and facts looked at by the court is substantially more than what the criminal case will show.
There are varying opinions as to whether in a criminal case whether the government must be held to the same standard of proving all of the underlying allegations to the standard that SBA cases are held to at OHA.
Underlying Legal Issues When Charged With Defrauding SBA Disadvantaged Small Business Program
Conspiracy to commit fraud is a criminal charge that has serious penalties. When individuals are charged with small business fraud with the SBA Small Disadvantaged Business Program, facts and hard evidence should be presented to prove the government’s case.
Burden of proof: Proving government procurement fraud to the level of “beyond a reasonable doubt” is a very high standard. Making suggestions to grand jury that incidents may have led to conspiracy simply does not meet the legal burden of proof.
Mail and Wire fraud when charged with charged defrauding SBA Disadvantaged Small Business Program is a catchall where the allegations suggest that the Defendant committed mail and wire fraud by using fax machines, e-mail or other mechanisms through interstate commerce to submit the fraudulent and false information to the government contracting agency to get funds.
Once the government succeeds on the fraud schemes, conspiracy, control issues etc, then it is easier to prevail on the wire fraud issues.
Getting the proper criminal defense: Many defendants in a case involving defrauding SBA Disadvantaged Small Business Program, or simple the 8(a) program, seek traditional criminal defense attorneys to defend the case.
Government contracts law is very unique and carries a vast level of complex issues. Attorneys should be well-versed in the various aspects of SBA 8(a) Program regulations and the nuances that arise. In addition, knowing the regulations involved in contract performance is an essential part of case preparations.
Without this level of expertise, criminal defendants charged with defrauding SBA Disadvantaged Small Business Program can find themselves in a precarious position.
Defending against criminal cases for defrauding SBA Disadvantaged Small Business Program, 8(a) Program or other small business benefits carry serious consequences. There are varying opinions as to how federal cases are presented in court. However criminal defendants should make sure that they have the right people on their team. Find out more about our Government Contractor Defense services.