Thursday, February 1, 2018

Contractor Gets Caught Misrepresenting its Veteran Ownership Status

There have been so many 'rent-a-vet' schemes uncovered and prosecuted lately that we're surprised that companies continue to think the risks are low enough that they won't get caught. In fact, uncovering 'rent-a-vet' schemes seems to be one of the easiest contract frauds to detect. Its like picking the "low-hanging fruit" as one former auditor would often quip.

Take Patriot Company, for example. The company obtained some contracts that were set aside for veteran-owned businesses. A quick unannounced trip to one of the company's job site by the Veterans Administration however, found that the guy who was supposed be be managing the day to day operations of the company, was 40 miles away working at his full-time Government job. Seems that Patriot was not so patriotic after all.

Patriot company is ostensibly owned by Wilson and Salavitch. Wilson is not a veteran but Salavitch is, and a service-disabled veteran at that. Wilson was responsible for the day-to-day operations and the long-term decision making of the company. Salavitch however certified to the VA that he was responsible for managing and long-term decision making. Based on that representation, Patriot was granted SDVOSB (Service Disabled Veteran Owned Small Business) status.

Ultimately, Patriot used its ill-gotten SDVOSB status to obtain 20 Government construction contracts valued at $13.8 million. These were contracts that legitimate SDVOSB contractors were not awarded.
Patriot has now been de-certified but that is not the end of the story. Wilson and Salavitch face a year or so of jail time without parole and have agreed to forfeit $2.1 million.

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

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