The Eastern District Court bought the gravel down on two federal contractor executives for SBA 8a small business fraud and abusing the Small Business Administration’s (SBA) 8a contracting program to obtain more than $31 million in contracts unlawfully. See case where defendants were sentenced to 27 and 15 months in prison.
Small business owners, and government executives alike, can experience severe penalties for SBA fraud, criminal or civil, for procurement violations for 8a Program fraud.
However, there are many situations where prosecutors or criminal defense attorneys may not quite understand how indictments and SBA 8a business fraud charges must incorporate the underlying statutes that govern the 8a certification, HUBZone or other small business programs.
Underlying Theories of 8a Program Fraud Where 8a Contractors Are Targeted
Typically, allegations of SBA fraud by government contractors or 8a small business fraud against a contractor will include:
- Adopting and furthering a scheme that attempts to defraud the government for funds that SBA 8a contracting programs do not allow
- A non-disadvantaged member being in control of the business against SBA Program regulations
- Wire Fraud
With applying the underlying statutory regulations that govern specific legal terms of art under procurement laws, the result would be that the SBA 8a Program participants, or other defendants, would be subject to one set of laws under a civil analysis, termination actions by the SBA, and be subject to a different stand under criminal litigation. See information about the Mandatory Disclosure Rule.
Protecting Your Rights in the SBA Fraud Cases is Essential
When it comes to government contracting for small companies, businesses and individuals have certain constitutional rights whether they are state or federal. For example, certain indicted defendants may not have been their administrative due process rights where the SBA may not have given notice that someone is doing something wrong.
The SBA typically terminates an 8a contractor from the program non-compliance with 8(a) rules. The SBA is required to the notify the participant of its intent to terminate and give some level of process. See 13 CFR 124.304
Still, in some federal indictments, facts may show there was no action by the SBA but yet there is a criminal indictment in existence. See Criminal Defense for Defrauding SBA Disadvantaged Small Business Program
Criminal Conspiracy in the 8a Program
Many SBA fraud cases include allegation of conspiracy between defendants. The U.S. attorney will have to show the relevant elements of the conspiracy charge.
A problem can occur when one of the parties in good faith believes that it is in compliance with 8a statutory provisions, or has no reason to believe that it is conspiring to the defraud the government.
- These are all issues of contention in SBA 8a contracting criminal litigation.
Having the right defense attorney that is experienced with the nuances of SBA complaints and federal small business programs in government contracting is essential when addressing indictments and SBA 8(a) criminal charges.