Whistleblower to Receive $2.9 Million for Reporting Fraudulently Obtained Small Business Contracts
In a case filed under the qui tam provisions of the False Claims Act by a whistleblower, Virginia Beach based defense contractor ADS Inc. has agreed to pay the United States $16 million to settle allegations that it conspired and caused ineligible companies to improperly obtain contracts set-aside for small business and service disable veteran-owned companies. The whistleblower, Ameliorate Partners LLP, who filed the lawsuit in federal district court in the District of Columbia on behalf of the United States, will receive approximately $2.9 million.
“Small or disadvantaged businesses serve as important engines of economic growth, and the United States utilizes small business set-aside contracts to aide those businesses in their development,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “When ineligible companies improperly obtain set-aside contracts, they prevent the small business community from receiving the assistance that Congress intended.”
To qualify as a small business, companies must meet defined eligibility criteria, including requirements concerning size, ownership, and operational control. The settlement with ADS resolves allegations that ADS, together with several purported small businesses that it controlled, fraudulently induced the government to award certain small business set-aside contracts by misrepresenting eligibility requirements. The purported small businesses affiliated with ADS include Mythics Inc., London Bridge Trading Co. Ltd., as well as MJL Enterprises LLC, which falsely claimed to be an eligible service-disabled veteran-owned company, and SEK Solutions LLC and Karda Systems LLC, both of which falsely claimed to qualify as socially or economically disadvantaged businesses under the Small Business Administration’s 8(a) Business Development Program. ADS and its affiliates allegedly concealed the companies’ affiliations with ADS and knowingly made misrepresentations concerning the size of the businesses and their eligibility as service-disabled or 8(a) qualified businesses. Finally, the settlement resolves allegations that ADS engaged in illegal bid rigging schemes that inflated or distorted prices charged to the government under certain contracts.
This settlement ranks as “one of the largest recoveries involving alleged fraud in connection with small business contracting eligibility,” according to the Department of Justice.
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