In service-disabled veteran-owned SDVOSB fraud cases, and as a result of Public Law 109-461, the VA is authorized to award SDVOSB sole source contracts and/or set aside contracts for Service-Disabled Veteran-Owned Small Businesses (SDVOSB).
From 01/01/2008 to 09/30/2014, the VA OIG Office of Investigations indicted 44 individuals/companies; arrested 40 individuals; and as of 09/30/2014, convicted 33 individuals/companies, resulting in $13.9M in fines and court-ordered forfeitures.
In each of these cases, Federal suspension/debarment was pursued. As of 09/30/2014, there are 81 open investigative SDVOSB fraud cases.
SDVOSB small business government contractors must be aware of the increased oversight and scrutiny for government investigative agencies and law enforcement. Similar to the SBA small business programs, SDVOSB fraud becomes an issue when set-asides create a window of opportunity for those looking to defraud the government.
To avoid an inverse impact, small businesses should seek professional advice when it comes to teaming agreements, avoiding pass-through schemes and various types of SDVSOB fraud cases.
If you own a Service-disabled veteran small business and going after federal government projects, you should make sure that you have viable legal counsel about the regulatory ownership and control aspects, and limitations on subcontracting requirements. These are but a few of the legal issues where companies are charged with wire fraud and mail fraud criminal charges.
Service Disabled Veteran Owned Small Business SDVSOB Fraud Cases and Allegations
Wire fraud and false information: Many Service Disabled Veteran-owned small business fraud cases stemming from allegations of submitting false information to the government with the intent of receiving contracts. In this type of case, defendants can expect to be charged with some level of wire fraud. This is because the government will allege that due to your false information, you then used faxes, telephones, the internet, and other electronics, or in some cases U.S. mail (mail fraud), to send the false information to the federal government agency.
The government, through the Small Business Administration and the Department of Veterans Affairs, encourages businesses that are majority-owned and veteran owned and operated through a federal government procurement program that sets acquisitions aside for exclusive competition among service-disabled veteran-owned small businesses. See information about Mail and Wire Fraud Against the Federal Government.
There are certain penalties in SDVOSB small business fraud cases for defrauding government agencies by submitting fraudulent claims and invoices, government fraud schemes that falsify information about ownership and other material information. In other situations, where a service disabled veteran has to maintain continuously its eligibility, a fraud case can arise if the applicant fails to inform the appropriate agencies and still continue to gain revenues through the SDVOSB Program.
Common Situations With SDVOSB Fraud
Many small businesses find themselves subject to SDVSOB fraud and criminal charges because of executing additional contract agreements besides the formal joint venture agreement. These are the types of cases that can force a grand jury indictment. When you decide to form relationships such as teaming agreements and SDVOSB joint venture arrangements, make sure you have proper legal counsel on your side.
In a recent DOJ press release, two companies, one SDVOSB and the other non-SDVOSB signed a joint venture agreement and then later entered another side agreement. In the second agreement, the two contractors agreed that the non-SDVOSB would oversee the project and get 98% of the revenues.
This type of behavior will be looked at a government contract small business fraud and more importantly SDVOSB fraud.
Not all federal allegations about procurement fraud in the SDVOSB program are valid. However, to overcome and minimize the impact of such criminal allegations, you will also need government contract lawyers that also understand the FAR regulations and SBA procurement laws.
Other SDVOSB fraud cases against the government can arise due to conspiracy to make false statements and defraud the government in connection with other types of small business programs. Other persons besides the applicant can be pulled into criminal cases, whether wire or mail fraud, through a conspiracy theory that alleges making false statements in furtherance of a fraud scheme.
Having an experienced defense attorney that understands the nuances of the service-disabled veteran-owned small business fraud cases, HUBZone, SBA 8(a) BD Programs can be beneficial to businesses or contractors charged with SDVOSB fraud, wire fraud, mail fraud or conspiracy cases.
For help defending your SDVSOB fraud government investigation case, contact a procurement fraud defense lawyer for help. Call 1-866-601-5518.