Manager of Asbestos Abatement Firm Pleads Guilty to Defrauding SBA’s 8(a) Business Development Program
Greenbelt, Maryland - David Muir, age 42, of Olney, Maryland, pleaded guilty today to conspiracy to defraud the U.S. Small Business Administration’s 8(a) program, which is designed to assist socially and economically disadvantaged small businesses, announced United States Attorney for the District of Maryland Rod J. Rosenstein and Assistant Attorney General Ronald J. Tenpas, of the Department of Justice Environment and Natural Resources Division.
According to the plea agreement, since August 1998, Muir worked for or was associated with three Maryland companies that performed asbestos and lead abatement and demolition work on federal and private facilities. Between 1998 and 2007, all three companies participated in the SBA’s 8(a) program. For one of the companies, Muir represented himself to different contractors and subcontractors doing business with the company as operations manager, project manager, quality control manager and Vice President.
Unbeknownst to the SBA and in violation of its regulations, Muir and his co-conspirators, who are all non-disadvantaged individuals, exerted significant financial and operational control over the three Maryland corporations in a variety of ways, including: personally indemnifying the liabilities of one of the companies, which enabled it to obtain higher bonding and 8(a) contracts of higher value than the company otherwise would have been qualified; for exercising significant control over the contracts bid upon by all three companies; and exercising control over the selection and payment of subcontractors on behalf of two of the companies.
In order to continue participating in the 8(a) program, each year the companies’ presidents were required to submit annual updates to the SBA in which they certified that the companies remained eligible. On June 27, 2005, Muir faxed to the SBA the 2004 financial statements of one of the companies, as part of that company’s annual update. These statements failed to disclose that bonuses were paid to Muir and his co-conspirators, and that their bonuses and other compensation far exceeded the compensation paid to the disadvantaged individual. In fact, between 2002 and 2004, Muir and his coconspirators received approximately $900,000 more in bonuses and salaries than the president of the company. These salaries and bonuses were given without the SBA’s knowledge and approval.
Muir knew that he and the co-conspirators provided critical bonding, financial and operational support to the three 8(a) certified companies, and during the course of the conspiracy the presidents of two of the companies submitted fraudulent annual updates to the SBA in which they falsely certified that their companies continued to meet the SBA regulations related to eligibility, including those which prohibit financial and operational control of the firm by a non-disadvantaged individual.
“Today's guilty plea makes it clear that the government will take action against those who put illegal financial gain ahead of their obligation to obey the law," said David Dillon, Special Agent in Charge of the EPA's Criminal Enforcement office in Philadelphia.
Muir faces a maximum sentence of five years in prison, followed by three years of supervised release. U.S. District Judge Peter J. Messitte has scheduled sentencing for October 30, 2008 at 9:30 a.m.
United States Attorney Rod J. Rosenstein and Assistant Attorney General Ronald J. Tenpas thanked the Small Business Administration - Office of Inspector General, the Environmental Protection Agency - Criminal Investigation Division and the Naval Criminal Investigative Service for their investigative work. Mr. Rosenstein and Mr. Tenpas commended Assistant United States Attorney Gina L. Simms and Trial Attorney Mary Dee Carraway, of the Justice Department Environment and Natural Resources Division, who are prosecuting the case.