Minority Business Star Fights Fraud Allegations A prominent Southern California businessman and three of his relatives have been suspended from federal contracting while they are under investigation for alleged criminal fraud in the 8(a) program. The Air Force also suspended 19 companies allegedly controlled by Craig Jackson, president of Sanders Engineering, a graduated 8(a) firm in Yorba Linda, CA. The suspension order says the companies “received more than $700 million in Government contracts to which they may not have been legally entitled.” The nonprofit news service ProPublica reported that two of the contracts were awarded after the Sept. 23 suspension, but have since been rescinded. The Air Force said Jackson created a network of 8(a) companies owned by family and friends but “managed and, in effect, controlled by either Craig Jackson or companies controlled by Craig Jackson.” It said the affiliated companies returned a portion of their revenues to Sanders Engineering. Jackson’s attorney, Tony Franco, told Set-Aside Alert his client is fighting the suspensions. In a formal response, Franco said the Air Force misunderstands the laws and rules governing the 8(a) program and is usurping SBA’s authority to interpret its regulations. He said SBA has long been aware of most of the relationships among the companies, but “the SBA has never found that the 23 suspended parties are affiliated” or that they have violated any SBA rule or regulation. “At worst, the Air Force’s decision to suspend 23 companies and individuals…is little more than a matter of guilt by association, denying innocent parties the ability to continue in business based upon little or no evidence of wrongdoing,” he added. The Orange County Register said Jackson “turned a small local company into a national success.” In 2001 he was second runner-up for SBA’s minority small business graduate of the year and won the Entrepreneurial Success Award in the Southern California region. SBA praised his work in mentoring other small businesses. The Defense Criminal Investigative Service has been investigating Jackson and the companies he allegedly controls for more than a year. One of the companies, APM LLC, withdrew from the 8(a) program after SBA filed a notice of suspension last year. APM received more than $383 million in contracts from 2004 through 2008, primarily from the Defense Department. According to the Air Force, many of the firms are operated from identical locations or mail drops. The suspension order says Jackson and his relatives concealed their ownership and control by making false statements and providing false documents. Jackson’s wife, brother and sister were also suspended from contracting. The Air Force said the sister, Arnette J. Butler, is a school principal in Virginia and is president of Butler Group, a home-based business. She told investigators Craig Jackson manages the 8(a) company and she does no work other than depositing checks.