Disabled Veteran Exploited For Millions of Dollars
Veterans are popular targets for scam artists. Fraudsters peddle military loans with "no credit check" (and nose-bleed high interest rates) or "a quick overhaul of your investments" that are decidedly unwise. But as a bedridden veteran you probably would not expect someone to exploit your status to launch a million dollar business.
Arthur Wayne Singleton, a 62-year old man with 30 years of construction experience, allegedly persuaded a disabled Vietnam War veteran to start up a joint venture. Singleton then secured around $2.85 million in federal contracts, thanks to a government program that set asides contracts to small businesses that are majority owned by service-disabled veterans.
Singleton's start-up "GMT Mechanical" had contracts to do construction work with the departments of Veterans Affairs, Agriculture, the Coast Guard, and Army Corps of Engineers.
There was just one problem: the bedridden veteran had no ownership in these companies, and didn't even work for them, reports the Atlanta Journal-Constitution.
The Georgian man now faces one charge of major fraud against the U.S. government, as well as multiple wire fraud charges. If convicted, he may have to pay more than $1 million in fines and spend 30 years in jail.
The Service-Disabled Veteran-Owned Small Business program was founded as part of The Veterans Benefits Act of 2003. The government has long tried to give small businesses access to the billions of dollars of annual federal contracts. This program was not only an extension of that policy, but also a way to honor the extraordinary service of veterans disabled in the line of duty. In 2010, the program distributed $10.8 billion of awards.
But all of that money didn't go to service-disabled veterans. Abuse in fact runs rampant in the program. In a 2009 investigation, the United States Government Accountability Office found 10 ineligible firms had received $100 million in set-aside contracts, and $300 million in additional federal contracts, through abusive misrepresentation.
Some of the companies were just dummy operations, which subcontracted all the work to other companies, sometimes multinational corporations. Other times, the majority owner was not a disabled veteran, the disabled veteran was in no way involved in the business, or in one case, the alleged disabled veteran owner lived in another city.
When firms are found ineligible, however, agencies are not required to terminate contracts, and those guilty companies are not barred from securing further government money. One firm won a contract to repair the trailers of Hurricane Katrina victims in 2006. Although it later turned out that the owner was not a disabled veteran, the firm nevertheless received $7.5 million from government coffers, and faced no consequences.
The program "does not have effective government-wide fraud-prevention controls in place," the investigation concluded.
In a follow-up study in July this year, the U.S. Government Accountability Office found that some steps had been taken to curb abuse, like suspending guilty individuals from further contracts with the federal government. But the 10 firms that were found fraudulent in 2009 had nevertheless received an additional $100 million in government contracts in the meantime.
The program "remains vulnerable to fraud and abuse," it concluded. One bedridden veteran in south Georgia would agree.
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