Spotlight on Government Contracts Fraud: The Threat of Government Set-Aside Fraud

It shouldn’t surprise us anymore, but it’s the type of fraud that surprises anyone who believes in supporting the American dream.  We’ve seen it before and, sadly, we know we’ll see it again – people taking advantage of programs intended to help small businesses succeed, especially businesses run by our country’s veterans and/or historically disadvantaged groups.  We take solace in the people we work with, those who step forward and say, “This isn’t right.” As a law firm for whistleblowers in defense contract fraud cases, we rely on honest individuals to help us fight government set-aside fraud and we are committed to protecting their interests, including ensuring they receive due compensation if their time, effort, and information leads to the recovery of government funds.

Four Charged With SBA Fraud

Last week, the Justice Department announced an indictment formally charging four individuals with defrauding Small Business Administration grant programs to obtain $24 million in unlawful profits.  The SBA operates programs that help businesses owned and controlled by disabled veterans and socially or economically dimoneysadvantaged individuals compete for government contracts.  In order to qualify, the business must be unconditionally owned and controlled by a qualified individual.

According to the indictment, the defendants submitted false eligibility statements and allowed unauthorized persons to control business entities that received over $140 million in federal agency contracts.  The government alleges that the defendants exploited SBA programs, in effect stealing taxpayer money specifically marked to help veterans and the disadvantaged succeed in business.  An investigator involved in the case explains, “[T]he defendants allegedly took U.S. taxpayer dollars from the 8(a) contracts intended to support the U.S. military.  These acts erode public confidence and deny opportunities for honest contractors.

Similar Schemes Target Veterans’ Department

Sadly, similar schemes have also targeted government contract preference administered by other agencies, diverting additional funds from deserving businesses.  Earlier this month, the Justice Department announced the indictment of three individuals on charges they defrauded the Service-Disabled Veteran-Owned Small Business (SDVOSB) program run by the U.S. Department of Veteran Affairs.  Three defendants stand accused of using one defendant’s status as a service-disabled veteran to register a company as a SDVOSB.  Allegedly, this company was merely a front for other entities.  Further, the Justice Department suggests that the veteran was not actually in charge of the even the SDVOSB-registered company and “was simply a figurehead or ‘rent-a-vet’, who was being used for his service-disabled veteran status to obtain contracts.”

The Importance of Whistleblowers

In 2014, the federal government spent more than $447.6 billion on government contracts.  The scope of this spending means the government simply cannot catch every fraudulent contract on its own and it relies on honest individuals to help.  The False Claims Act allows private individuals to bring actions on the government’s behalf against the perpetrators of government contract fraud.  In addition to the knowledge that they chose to do the right thing, the individual is entitled to a substantial monetary award if the case leads to the government recovering wrongfully diverted funds.

If you have knowledge regarding government contract fraud, including cases involving set-aside programs, call our office at (800) 427-7020 to arrange a consultation with a government contracts fraud attorney.  We are located in California, however we work with whistleblowers on government contract fraud claims nationwide to protect the integrity of the government contracts system, defend taxpayer’s money, and safeguard the intended beneficiaries of set-asides and other government programs.

See Related Blog Posts:

Protecting Those Who Protect Us: Pursuing Scammers Posing as Veteran-Owned Businesses

Fighting Fraud: Government Contract Fraud Attorney Examines Procurement Fraud

(Image by Damian Gadal)