Friday, June 24, 2016

Contractor Officer Fined $166 Thousand for Lying to Government Investigators

Last February, the Justice Department announced that MCC Construction Company had agreed to pay $1.8 million in criminal penalties and forfeiture for conspiring to commit fraud by illegally obtaining government contracts that were intended for small disadvantaged businesses (e.g. 8(a) set-asides). Unfortunately, these kinds of cases are not rare - MCC used a couple of firms in SBA's 8(a) program to obtain contracts and then proceeded to do the work themselves. The scheme involved

  • Allowing the two 8(a) companies to retain a guaranteed percentage of each contract for simply obtaining the contracts for MCC
  • Allowing the two 8(a) companies to perform no labor on the awarded construction projects
  • Performing the accounting and government reporting for the two 8(a) companies
  • Falsely representing to the government that MCC employees were in fact employees of the 8(a) companies prior to bidding, and
  • Conspiring with the 8(a) companies to hire straw employees for the 8(a) companies whose labor and salaries were paid for by MCC.
Over a four year period, MCC, through its 8(a) co-conspirators, was awarded 27 Government contracts totaling more than $70 million.

That's not the end of the story however. Earlier this week, GSA's (General Services Administration's) Inspector General announced another settlement in the case. The former owner and officer of MCC pled guilty to an obstruction of justice charge. Essentially, when the U.S. Attorney, the FBI, the SBA's Inspector General and GSA's Inspector General, and the Defense Criminal Investigative Service (DCIS) and the Army CID (Criminal Investigative Command) began investigating the relationship between MCC and the two "front" companies, the owner/officer lied. The Government calls this "obstructing a Government proceeding". 

Now the former owner/officer has agreed to pay restitution of $166 thousand and could face jail time when sentenced later this year. 

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