Service Disabled Veteran Small Business and Its Owners Pay to Pay $335,000 to Resolve False Claims Act Liability – Protect Your Company

Contractor Faces Service Disabled Veteran Fraud and False Claims Act Criminal LiabilityWhen a small business certifies as a Serve Disabled Veteran Owned Small Business (SDVOSB), it must also realize that the federal government investigation agencies are seriously increasing oversight and are bringing criminal charges against business owners that commit procurement fraud or in other situations violate the False Claims Act.

In order to stay compliant with the governing regulations, companies should make sure that they are informed about the legal requirements, criminal penalties and civil fines associated with False Claims Act violations.

In a recent case in West Palm Beach, a Florida-based government contractor and its owners agreed to pay $335,000 to resolve criminal allegations that they took advantage of federal government contracting opportunities that were set aside for certified service-disabled veteran-owned small businesses (SDVOSBs).

When companies are charged with criminal violations, they should immediately seek the legal advice of a viable and experienced government contracts attorney that understands the criminal defense aspect of the case as wells the substantive issues related to the SVSOB programs. Companies that could not have submitted a bid on a SDVOSB government contract should be also aware of the criminal and civil penalties involved.

The federal investigations usually end up in some type of action or charge involving the False Claims Act or Qui Tam case. The initiation of an investigation or subpoena request for documents should immediately trigger the need to find a defense lawyer.  Information that companies submit to the federal government can be incriminating and can damage the outcome of a SVOSB criminal investigation case.

In the West Palm Beach case, a whistleblower triggered the investigation and further criminal proceeds against the small business and the individual owners. The IG from the VA and SBA attorneys worked together to get the final result.

In the article, the government found that the Defendant, Academy Medical, LLC “exploited the SDVOSB certification of a service-disabled veteran to profit from VA contracting opportunities that Academy would not have qualified for on its own. To do this, Academy prepared teaming and other business agreements for the parties to sign. Before Academy signed the documents, however, it was specifically warned that the veteran must have tangible and substantive tasks to perform in their relationship and must not act as a “pass-through” for Academy.

Rather than heed that warning, Academy structured its dealings with the veteran so as to relegate the veteran to the role of a pass through. For example, an Academy employee prepared and submitted a bid to the VA in the name of the veteran’s company. After the VA awarded that contract to the veteran as a SDVOSB set-aside, Academy arranged to procure the goods for the VA from a third party.

When the VA paid the veteran under the contract, an Academy employee (who was also a signatory on the veteran’s bank account) transferred that money to Academy. Academy, Desser, and Shaw each admitted in the settlement agreement that their conduct violated federal regulations designed to encourage contract awards to SDVOSBs.”

Government contractors should take proactive measure to make sure they understand the rules and make sure that they avoid criminal liability for SDVOSB set- side procurement fraud.

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For help with government investigations or criminal defense in a pending case, call Watson & Associates, LLC lawyers for immediate help.