Construction Contractors To Pay in False Claims Case Owners of two Maryland construction firms allegedly engaged in a brazen, years-long scheme to falsely obtain 8(a) and HUBZone contracts worth tens of millions of dollars, then agreed to pay $200,000 to settle false claims charges. The Justice Department said Platinum One Contracting and its president, Anthony Wright, served as a front for Capitol Contractors Inc. and its president, Vernon J. Smith III, in winning 8(a) contracts with the Army and Navy. In addition, the department said Platinum One falsely claimed to be located in a HUBZone and was awarded HUBZone contracts by the Air Force. Wright, Smith and both their companies have been proposed for debarment from federal contracting, according to the government’s Excluded Parties List System. After Capitol Contractors graduated from the 8(a) program in 2002, Justice said its owner, Smith, controlled Platinum One and used it to continue receiving 8(a) contracts. Wright worked for Capitol before founding Platinum One, according to his biography on Platinum One’s website. Justice said Platinum One’s main office was in space owned by Capitol in Capitol Heights, MD. In its April 2010 report on fraud in the 8(a) program, the Government Accountability Office said one firm—designated as “Case Study 3,” but identified by sources as Platinum One—received $48 million in 8(a) contracts “by operating as a pass-through for a graduated company.” Investigators found Platinum One was controlled by a white father-son team who did not qualify as disadvantaged. “[T]he white vice-president worked in a large executive suite. The black president, meanwhile, sat in a small room located at the back of the building,” GAO said. “One of the white men told us that in order to receive federal contracts, a person needed to ‘create’ other companies because it was difficult to compete without some type of preference,” the investigators said. “He referred to this process as ‘succession planning.’” In a 2008 investigation of HUBZone firms, GAO found that Platinum One claimed an address in a HUBZone in Landover, MD, that turned out to be half of a residential duplex where no employees were present during business hours. The company received at least $4 million in HUBZone contracts from the Air Force before SBA expelled it from the program. Neither Justice nor SBA responded to questions about whether the business owners had been referred for criminal prosecution. Justice Department spokesman Charles Miller said the $200,000 settlement was equal to “at least the amount the government was defrauded of.” Under the False Claims Act, the government is entitled to recover up to three times the amount of the fraud. As part of the settlement, the two companies and their owners did not admit any liability. “Those who seek to obtain government contracts intended for businesses run by socially or economically disadvantaged individuals or for companies located in areas that need jobs must play by the rules,” said Tony West, assistant attorney general for the Justice Department’s Civil Division. “We will take action against those who use false statements to cheat both the government and the companies and communities that should have received the valuable benefits.” A former GSA subcontractor has pleaded guilty to stealing $1.9 million from the federal government by creating false bills for construction projects at the National Institutes of Health campus in Bethesda, MD Nicole Shantelle Smith of Upper Marlboro, MD, faces sentencing Jan. 21 in U.S. District Court in Washington on one count of theft of government property. The charge carries a maximum 10-year prison term, but Smith cut a deal to repay the money and accept a recommended sentence of 37 to 46 months, in line with federal sentencing guidelines. Smith admitted that between 2004 and 2007, she used her access to GSA’s contractor payment system to double-bill the government for work that she was already being paid to do as a subcontractor to Washington Business Group and Project Support Services. Guilty Plea In Double-Billing Case A former GSA subcontractor has pleaded guilty to stealing $1.9 million from the federal government by creating false bills for construction projects at the National Institutes of Health campus in Bethesda, MD Nicole Shantelle Smith of Upper Marlboro, MD, faces sentencing Jan. 21 in U.S. District Court in Washington on one count of theft of government property. The charge carries a maximum 10-year prison term, but Smith cut a deal to repay the money and accept a recommended sentence of 37 to 46 months, in line with federal sentencing guidelines. Smith admitted that between 2004 and 2007, she used her access to GSA’s contractor payment system to double-bill the government for work that she was already being paid to do as a subcontractor to Washington Business Group and Project Support Services.