News and Press Releases

Gulf Shores Man Indicted for Misrepresenting Business to Get Government Contracts

April 26, 2011

BIRMINGHAM – A federal grand jury today indicted a Gulf Shores man for misrepresenting the status of his small business in order to obtain about $2.6 million in government contracts, announced U.S. Attorney Joyce White Vance and U.S. Small Business Administration, Office of Inspector General, Special Agent in Charge Scott Dennis.

The indictment filed in U.S. District Court charges KENNETH NEAL CHAPMAN, 58, of Gulf Shores, with two counts of misrepresenting to the Small Business Administration that his business, Computer Access Government Sales Inc., was located within a designated “HUBZone,” or Historically Underutilized Business Zone, in Jacksonville, Ala.

If a small business has its principal office located within an SBA designated HUBZone, and 35 percent of the company’s employees live within a HUBZone, the company can qualify to bid on federal government contracts that are reserved specifically for such companies.

According to the indictment, Chapman’s business was initially certified as a HUBZone company based on a 2005 application in which he falsely claimed the main office for Computer Access Government Sales was located on Nisbet Street Northwest in Jacksonville and that 35 percent of its employees were HUBZone residents. Between 2006 and 2009, the indictment says, CAGS received 28 government contracts that were available only to HUBZone companies.

Count One charges Chapman provided the false information again in February 2008 in order to have his company’s HUBZONE certification continued. Count Two charges that he misrepresented the company’s status in February 2009 in another letter to the SBA seeking continued HUBZone certification by falsely claiming the CAGS’ office was located on Nisbet Street and that he, as one of the company’s two employees, lived at the Jacksonville address.

The maximum sentence for misrepresenting the status of a small business in order to obtain government contracts is 10 years in prison and a $500,000 fine.

The SBA, Office of Inspector General, and the U.S. Army Criminal Investigation Division and the Defense Criminal Investigative Service, investigated the case. Assistant U.S. Attorney David Estes is prosecuting the case.

Members of the public are reminded an indictment contains only charges. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.




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