Keeping It In the Family

The Justice Department issued a press release yesterday announcing the sentencing of a father and son duo for several contracting related frauds. The father was sentenced to nearly six years in prison while the son sentenced to 12 months. In addition, the two agreed to pay $3.2 million in restitution to the Government and to clients they had stolen from. In sentencing, the Judge told the father that it appeared that he'd made a life out of lying and cheating. And it does appear that history supports the Judge's observation.

Father/son sole nearly $600 thousand from three clients. They set up a consulting firm to help small businesses secure USDA (Agriculture) contracts. They then misused their position as the company's agents to change banking information in an online Government system so that when USDA paid on their client's contracts, the monies were diverted to Father/son accounts.

Is your firm vulnerable to this type of fraud? Do you know who has access to your SAM, iRAPT, and WAWF accounts?

After that scheme was uncovered, Father/son set up a new business (Worldwide Connect LLC) as an approved USDA contractor. To do that, they falsified financial information. They also falsified a certification that none of the principals had ever been debarred or suspended. In fact, the father had been suspended and debarred from all federal contracting due to conduct at his prior business.

The new company won over $4 million in USDA food service supply contracts. Four of the five contracts were terminated for default after WWC (Worldwide Connect) failed to deliver. The father/son admitted that they had caused their suppliers to lose more than $1.5 million in the process. The two also admitted to siphoning off company funds for nightclub charges, luxury hotel stays and other personal items.

After those contracts were terminated, the father/son applied to SBA to be readmitted to federal contracting. As part of that application, the father falsely claimed veteran status and submitted falsified tax returns.

The Justice press release did not provide any insight as to how the scheme was uncovered. It is likely however that investigations were initiated based on information from the clients that the two had defrauded.