The federal government has recently settled a number of cases involving allegations that several small businesses misrepresented themselves in order to qualify for special set-asides offered to minority or disadvantaged enterprises seeking government contract work. Under current regulations, prime contractors for government work are generally required to offer a certain percentage of sub-contracts to minority or female-owned businesses as a way to discourage discrimination and allow equal access to lucrative government work and experience.
However, much like any other industry, these programs are prone to fraud and misrepresentations by contractors looking to get an edge on competitors by meeting the criteria. In a recent settlement, the government addressed this issue, settling allegations that sub-contractors had falsely represented their companies as qualifying for minority status in order to win government masonry work in California and North Carolina.
Background of Sub-Contractor Fraud Cases
According to the allegations, a construction company known as Harper Construction Company, Inc. was awarded a contract to complete the building of the “Courthouse Bay Project” which was to occur at Camp Lejeune in North Carolina. Under the terms of the contract between Harper and the U.S. government, Harper was required to award a certain percentage of sub-contract work to a disadvantaged small business. Harper thereafter received a bid for masonry work from Frazier Masonry, one of the nation’s largest masonry outfits, and one that was too large to qualify as disadvantaged.
Thereafter, Frazier suggested to Harper that it award the sub-contract for masonry work to a small business known as F-Y, Inc., purportedly owned by a disabled veteran. After awarding the contract to F-Y, the relator quickly became aware that the business was a sham business created as a front to help win more government contracts. F-Y allegedly only had two employees and the relator reportedly had difficulty discerning between Frazier and F-Y, describing the two as “inextricably intertwined.” The relator further asserted that the masonry work on the project was completed entirely by Frazier employees.
In addition to the relator’s allegations involving the Camp LeJeune project, further evidence revealed identical shams involving masonry work on the west coast. Specifically, the relator was able to present evidence showing overlap of employees and personnel between these “disadvantaged businesses.”
When a relator files a lawsuit under the False Claims Act, the U.S. government may opt to get involved in the case, thereby engaging in its own investigation in the fraud and taking lead in the court proceedings. In this case, the government decided to intervene in an effort to further its aggressive efforts against combating fraud.
Several years following the relator’s initial complaint, the government settled with seven subsidiaries of Frazier caught masquerading as unrelated, disadvantaged small businesses.
It is not immediately apparent how much the relator was awarded due to his efforts in exposing the bi-coastal fraud. In False Claims Act cases, relators can win awards up to 30 percent of the total settlement or judgment.
Contact a Reputable Whistleblower Attorney Today
If you are interested in pursuing a claim involving similar allegations as those described above, your best bet is to enlist the services of a qualified and knowledgeable qui tam lawyer. For more information, contact Berger Montague today!