Wednesday, October 4, 2017

Another "Rent-a-Vet" Scheme Settlement

The New York Foundation for Fair Contracting (NYFFC) is a not-for-profit organization established to support, promote and encourage fair contracting by leveling the playing field in public works construction for the benefit of taxpayers, contractors and workers (online source). According to NYFFC, not all construction contractors play by the rules. Unfortunately a number of them skimp on safety, cheat workers out of wages and use shoddy materials. When this happens, the construction industry, the taxpayers and the local economy pay the price. The NYFFC works to ensure that only responsible contractors - contractors that pay the proper wages, perform quality  workmanship and complete projects on-time - are awarded the opportunity to perform wok on public works contracts.

The Foundation just became $450,000 richer. It blew the whistle on a couple of contractors who fraudulently obtained Federal Government contracts that were designated for service-disabled veteran-owned (SDVO) small businesses. The companies involved Zoladz Construction and Arsenal Contracting, and Alliance Contracting (along with the two owners, Zoladz and Lyons) service-disabled veterans and therefore were not eligible for the contracts.

Zoldaz recruited a service-disabled veteran to serve as a figurehead for Arsenal, which purported to be a legitimate SDVO small business but which was, in fact, managed and controlled by Zoladz and Lyons, neither of whom is a service-disabled veteran. The Government determined that Arsenal was a sham company that had scant employees of its own and instead relied on Alliance and Zoldaz employees to function. After receiving numerous SDVO small business contracts, Arsenal then subcontracted nearly all of the work to Alliance (owned by Zoladz and Lyons) and Zoladz (owned by Zoldaz). Neither Alliance nor Zoldaz were eligible to participate in SDVO small business contracting programs.

The principles agreed to pay $3 million to settle the allegations. NYFFC who blew the whistle in this case, will receive $450,000 of that amount. No word on the value of the contracts awarded to Zoladz or Alliance. Presumable, the $3 million was calculated to take away the profits that the companies made as a result of their false statements.

You can read more about this case in the Department of Justice's press release.

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