In April of this year, the Georgia Tech Procurement Assistance Center (GTPAC) reported on the guilty plea entered by the operator of a phony government contract registration firm charged with wire fraud for his part in tricking at least 1,200 businesses into believing they needed to employ his services in order to qualify for contracts issued by the Federal Emergency Management Agency (FEMA), a unit of the U.S. Dept. of Homeland Security.
On Friday, August 11, 2017, he was sentenced to four years and two months in federal prison, along with a $594,000 judgment against him, for his role in these fraudulent activities.
In Tampa, Florida, U.S. District Judge Charlene E. Honeywell imposed the sentencing terms on Michael Pirolo who earlier pled guilty to the charges against him. According to court documents, Pirolo served as the president of Government Contract Registry, Inc. (GCR), doing business as FEMA Contract Registration. He employed telemarketers who, during communications with victim-companies, falsely claimed that — for a fee — GCR would “register” the companies with FEMA to enable them to receive preference in obtaining contracts from FEMA. The GCR telemarketers’ communications were based on instructions and scripts that they received from Pirolo.
Specifically, the telemarketers falsely and fraudulently stated that for a one-time fee of $500, the customer would be registered with FEMA, and that this registration would place the customer on a list of “preferred” vendors. When the need for a vendor arose, GCR telemarketers falsely stated that FEMA would bypass the standard contract acquisition process, contact the registered victim-company, and then offer a no-bid contract. At times, Pirolo also instructed GCR telemarketers to go back to victim-companies that had already paid the $500 one-time fee and seek renewal and payment of another fraudulent $500 fee.
To further the scheme, the GCR telemarketers provided victim-companies with an online GCR form that requested the same information as a form on FEMA’s public website. In fact, FEMA does not charge a fee to companies to complete its vendor information form. The purpose of FEMA’s form is to assist the agency with market research in identifying viable possible vendors. FEMA’s form does not “register” companies. In actuality, registration in the federal government’s System for Award Management (SAM) is the government-wide vendor registration system. Vendors can register in SAM at no cost.
Once GCR telemarketers received the victim-companies’ information, GCR completed and submitted the online FEMA form that then enabled emails to be sent from FEMA to the victim-companies, giving the appearance that the companies had been “registered.” The FEMA emails gave GCR the appearance of legitimacy.
The approximate 1,200 victim-companies who were misled by this scheme paid GCR at least $604,500.
This case was investigated by the U.S. Department of Homeland Security, Office of Inspector General, and the General Services Administration, Office of Inspector General. It was prosecuted by Assistant United States Attorney Adam M. Saltzman.
GTPAC again reminds its clients and all other vendors that government agencies never charge a fee for registration in government databases. This includes vendor databases maintained by FEMA and the government-wide vendor database known as SAM.
While one scam — the company featured in this article — has been put out of business, there are others still in operation, so beware! To read more about questionable practices involving the FEMA and SAM vendor registration databases, click on the links below:
- FEMA Vendor Registration: http://gtpac.org/2015/08/26/fema-warns-vendors-to-look-twice-at-privately-operated-registration-schemes/
- SAM Vendor Registration: http://gtpac.org/sam-gov-registration-is-free-and-help-with-sam-is-free-too/
For no-cost assistance with registering in SAM — and no-cost help with many other aspects of government contracting — contact GTPAC at http://gtpac.org/contact-us. If your business is located outside the state of Georgia, feel free to contact the procurement technical assistance center (PTAC) nearest you. Locate the PTAC offices in your state at http://www.aptac-us.org/find-a-ptac.