The owner of a Kansas City construction company and a co-conspirator (the veteran) were indicted last Friday by a Federal grand jury for their roles in a "rent-a-vet" scheme to obtain nearly $14 million in federal contracts.The Department of Justice announced the indictment in a press release last Friday.
The two individuals participated in a conspiracy to defraud the Government by falsely representing that Patriot Company was a veteran-owned or a service-disabled veteran-owned small business in order to fraudulently obtain approximately $13.8 million in Government contracts for work in nine states.
According to the indictment, Patriot Company was a front company for a non-veteran owned construction company who used another person's veteran and service-disabled veteran status in a "rent-a-vet" scheme to bid on Government contracts. As a result of the fraud scheme, legitimate veteran-owned and run businesses were not awarded the contracts that were awarded to Patriot.
The service-disabled veteran implicated in this scheme worked full time for the Department of Defense. Although nominally the President of Patriot, he did not actively control the day-to-day management, daily operation or long-term decision making. He never managed a construction company prior to his involvement with Patriot and had limited Government contracting experience.
According to the Press Release, the real owner of the company was living very well, using more than $600 thousand in company funds to buy a couple of homes and using another $400 thousand to buy life insurance policies. The poor rent-a-vet schmuck didn't seem to get anything out of the deal except, now, a lot of grief.
There was no mention as to how the fraud was uncovered. We know that the Government has been scrutinizing set-aside awards lately to ensure the propriety of awardees' status. Perhaps that's how this particular scheme was uncovered.
Indictments, of course, are only accusations and not evidence of guilt and not conviction.