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Construction company officer pleads guilty to 8(a) fraud

November 22, 2016 By Nancy Cleveland

As part of a plea deal with the U.S. Dept. of Justice, Michelle Cho, an officer of Far East Construction Corporation (Far East) and other construction companies, has agreed to forfeit $169,166 and pay a criminal fine in the amount of $35,000.

Justice Dept. seal - CopyAccording to court documents filed as part of the plea, Cho utilized two straw companies, including Far East, to conspire with MCC Construction Company (MCC) and others to defraud the SBA.  Cho’s two companies were eligible to receive federal government contracts set asides for small, disadvantaged businesses.  Cho and MCC understood that MCC would, illegally, perform all of the work on these contracts.  In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011.  The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.

Cho, 45, of Downers Grove, Illinois, was charged on October 12, 2016 in the U.S. District Court for the District of Columbia with one count of conspiring to commit wire fraud.  She waived the requirement of being charged by way of federal indictment, agreed to the filing of the information and accepted responsibility for her criminal conduct.

Court documents show that Cho and MCC violated the provisions of the SBA 8(a) program, which is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.”  To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meets the SBA’s definition of socially and economically disadvantaged.  The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success.  Participants in the 8(a) program are subject to regulatory and contractual limits.  Also, under the program, the disadvantaged business is required to perform a certain percentage of the work.  For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.

Court documents also state Cho conspired with MCC and others for MCC to exercise impermissible control over Far East, to obstruct a U.S. Government Agency proceeding, and to reach an agreement whereby MCC would provide all labor, equipment, materials, safety, and supervision and, in return, receive 97 percent of the contract task order amount.  This agreement by its terms meant that Cho’s company would violate SBA rules and regulations and would collect a 3 percent fee for allowing its small business status to be used.

Earlier this year, MCC pleaded guilty to conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses and agreed to pay $1,769,924 in criminal penalties and forfeiture.  In June, Thomas Harper, another former officer and owner of MCC, pleaded guilty to conspiring to obstruct proceedings before a department or agency.  In August, Walter Crummy, another former officer and owner of MCC, pleaded guilty to conspiring to commit wire fraud.

FBI SealParticipating in this investigation were the FBI’s Washington Field Office, the Inspector General for the Small Business Administration (SBA), the Inspector General of the U.S. General Services Administration (GSA), the Central Field Office of the Defense Criminal Investigative Service (DCIS) and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

Source: https://www.justice.gov/opa/pr/construction-company-officer-pleads-guilty-conspiring-defraud-government

Filed Under: Contracting News Tagged With: 8(a), abuse, deception, DOJ, FBI, fraud, IG, Justice Dept., SBA

Energy IG: Solyndra knowingly ripped-off government

September 11, 2015 By Nancy Cleveland

There’s plenty of blame to go around in the green-energy debacle of Solyndra, but the blame begins with the executives of the solar-panel company itself.

Energy Dept.That’s a big takeaway from the Energy Department inspector general’s new report on Solyndra, a company once highly touted by the White House that collapsed in 2011 after getting a $535 million federal loan two years earlier.

The IG’s report finds that executives with the California company, ahead of winning the loan, repeatedly gave the Energy Department, the credit-rating agency Fitch, and outside analysts bad, overly rosy information about its sales contracts.

“Our investigation confirmed that during the loan guarantee application process and while drawing down loan proceeds, Solyndra provided the Department with statements, assertions, and certifications that were inaccurate and misleading, misrepresented known facts, and, in some instances, omitted information that was highly relevant to key decisions in the process to award and execute the $535 million loan guarantee,” the report states.

“In our view, the investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive and mislead the Department,” it adds.

Keep reading this article at: http://www.govexec.com/oversight/2015/08/energy-report-solyndra-knowingly-ripped-government/119582/

Filed Under: Contracting News Tagged With: deception, DOE, Energy Dept., FBI, fraud, IG, Justice Dept., loan guarantee, misrepresentation, Solyndra, Treasury Dept.

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