Company Pays $1 Million in Size Fraud Case An Arizona company has agreed to pay the government $1 million to settle charges that its predecessor corporation falsely claimed to be a small business. In the settlement, Insight Public Sector Inc. did not admit any wrongdoing. The company was known as Comark Government & Education Services Inc. before it was acquired by Insight Enterprises Inc. in 2002. Lloyd Chapman, president of the American Small Business League, said he filed a complaint against CGES with SBA’s inspector general more than two years ago. Chapman has charged that many large businesses are masquerading as small ones to qualify for preferences on federal contracts. According to SBA’s announcement, CGES claimed to be a small business when it applied for a GSA Schedule contract in 1996. After the company was acquired, Insight withdrew the small business certification in 2005, while the federal investigation was in progress, according to SBA. “Although there has been no admission of liability, we believe this settlement sends a strong message to the contracting community about the need for accuracy in making small business certifications,” said Peter McClintock, SBA’s acting inspector general. But Chapman believes the company got off too lightly. “This firm received millions of dollars in awards for several years by falsely claiming to be a small business,” he said. “A $1 million fine is a drop in the bucket for a Fortune 1000 firm. They should be permanently debarred from doing business with the government.” In a statement, Insight Enterprises said: “Insight Public Sector disputed the government’s claims but has agreed to settle the matter. The release and settlement includes no admission of wrongdoing or fault by Insight Public Sector and is not expected to materially affect the on-going operations of Insight Public Sector.” The company agreed to the settlement “to avoid the risk, expense and internal diversion of litigation,” according to its president, Richard Fennessy. Chapman said he has given the IG the names of several other companies that he believes are falsely claiming small-business status. A whistleblower in such a case can receive from 15% to 25% of any money the government recovers. Under the Small Business Act, misrepresenting a firm’s size status to receive contracts is punishable by up to 10 years in prison and debarment from federal contracting. SBA officials have said such cases are difficult to prosecute because they must prove that the misrepresentation was intentional.