The Justice Department just announced the indictment of a Michigan business owner for fraudulently obtaining nearly $12 million in Government construction contracts over an eight-year period by falsely claiming the company was owned and controlled by a service-disabled veteran.
CA Services is a construction company in Michigan. Mr. Kozerski and CA Services held out that a service-disabled veteran was the owner and primary manager of CA Service. However, an investigation by the FBI, the Department of Veterans Affairs, and the Defense Criminal Investigative Service (DCIS) found that this particular service-disabled veteran was not the owner of CA Services nor did he materially participate in the day-to-day management of the company.
Presumably, CA Services performed the work required by the contracts satisfactorily. Otherwise, the company would not have continued to be awarded contracts. The problem is that these contracts were set-aside for service-disabled-veteran-owned small businesses, of which CA Services was not one.
Its surprising to us that fraud involving misrepresenting one's status as a service-disabled, a woman-owned, or other "disadvantaged" class still happens. Its such an easy crime to identify. Qui-tam relators (whistleblowers who have a chance to share in recoveries), often employees of the company itself, have strong incentive to call the hotline. Competitors who have lost out to misrepresented companies often raise red flags. And the SBA is doing a much more thorough job of vetting companies seeking one or more of these special statuses.
The Justice Department press release on this case can be found here.
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