Set-Aside Alert exclusive:

DOJ sees a surge in small biz contracting & loan fraud: Part 1

False Claims Act settlements hit $5.6 billion in FY21; Here’s Set-Aside Alert’s state-by-state fraud cases list

      Bribes, kickbacks, false statements, sweetheart deals, bid rigging and theft--all are on the rise in small business federal contracting and borrowing.

      The Justice Dept. said it obtained more than $5.6 billion in settlements and judgments from civil cases involving False Claims Act violations among U.S. government contractors and small business loan recipients in the fiscal year ending Sept. 30, 2021.

      That is the highest level since 2014 and the second highest level in the history of the False Claims Act. The settlements generally occur a year or more after the fraudulent activity takes place.

      More than $5 billion recovered is from medical and health care contracting fraud. Other violations include a suspected $89 billion in frauds involving pandemic aid to small businesses, nearly all in 2020. There also is small business contractor fraud, at times with government employees as co-conspirators.

      Here is Set-Aside Alert’s exclusive state-by-state review of DOJ’s prominent anti-fraud actions in fiscal 2021 and 2022:

California

• Used Catheters: Dr. Donald Woo Lee was sentenced to 93 months in prison for defrauding Medicare and risking lives by repackaging contaminated catheters for use on patients. He also must reimburse $4.5 million (https://bit.ly/3NK8pne).
• Alleged fraud ring: Eight defendants--Peter An, Edwin Bonilla, Tina Chen, Joseph Greco, Frank Hamilton, Michael Jones, Tim Park and Kenny Tran--are charged with conspiring to obtain $7 million in fraudulent SBA COVID-19 loans. They each face up to 20 years in prison (https://bit.ly/3uty5xo).
• Cybersecurity false claims: Aerojet Rocketdyne Inc. agreed to pay $9 million to resolve allegations that it misrepresented its compliance with cybersecurity requirements in federal contracts (https://bit.ly/3p05bBO).

Colorado

• Subcontractor gets kickbacks: Jared Newman was sentenced to 55 months in prison for a kickback scheme that netted him $652,000 at an Energy Dept. agency in Montrose, CO (https://bit.ly/3Pa7xJo).

Florida

• Rigging allegation: Lawrence O’Brien, Bruce LaRoche and Thomas Dailey were charged with conspiracy to rig bids to defraud the U.S. Army on marketing materials. They each face up to five years in prison and $250,000 fines (https://bit.ly/3nGWZWu).
• Huge PPP scam: James R. Stote was sentenced to 48 months in prison, and Phillip J. Augustin, 120 months, for operating a nationwide scheme to fraudulently obtain over $35 million in Paycheck Protection Program (PPP) loans. More than $17 million was recovered (https://bit.ly/3nIokaV).
• PPP fraud: Keyaira Bostic was sentenced to 44 months in prison for defrauding the PPP program of $3.3 million. She was ordered to pay $1.3 million in restitution (https://bit.ly/3NONP4S).

(Editor’s note: Part 2 will be published in Set-Aside Alert’s Aug. 26th edition.)

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