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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of New York

FOR IMMEDIATE RELEASE
Friday, August 11, 2017

Academy Medical, LLC and its Owners to Pay $335,000 to Resolve False Claims Act Liability

Government Contractor Admits that it Violated Federal Laws Designed to Enhance Contracting Opportunities for Our Nation’s Service-Disabled Veterans

ALBANY, NEW YORK – West Palm Beach, Florida-based government contractor Academy Medical, LLC (Academy) and its owners, Edward D. Desser and Daniel M. Shaw, have agreed to pay $335,000 to resolve allegations that they took advantage of federal contracting opportunities reserved for certified service-disabled veteran-owned small businesses (SDVOSBs), announced Acting United States Attorney Grant C. Jaquith. During the time at issue, Academy was not a SDVOSB.

“We will continue to hold accountable individuals and entities who defraud federal programs and take opportunities away from our nation’s service-disabled veterans,” said Acting United States Attorney Jaquith. “Settlements like this one help to ensure the integrity of programs designed to help our wounded warriors succeed in starting and growing small businesses.”

The United States has long used government contracting to promote small businesses in general, and specifically small businesses owned by veterans who have service-connected disabilities. Congress has established a targeted procurement program for the U.S. Department of Veterans Affairs (VA), which requires the VA to set annual goals for contracting with SDVOSBs. To be eligible for these contracts, an applicant must qualify as a small business. In addition to being a small business, a service-disabled veteran must own and control the business and handle its strategic decisions and day-to-day management.

The settlement resolves allegations that Academy exploited the SDVOSB certification of a service-disabled veteran to profit from VA contracting opportunities that Academy would not have qualified for on its own. To do this, Academy prepared teaming and other business agreements for the parties to sign. Before Academy signed the documents, however, it was specifically warned that the veteran must have tangible and substantive tasks to perform in their relationship and must not act as a “pass-through” for Academy. Rather than heed that warning, Academy structured its dealings with the veteran so as to relegate the veteran to the role of a pass through. For example, an Academy employee prepared and submitted a bid to the VA in the name of the veteran’s company. After the VA awarded that contract to the veteran as a SDVOSB set-aside, Academy arranged to procure the goods for the VA from a third party. When the VA paid the veteran under the contract, an Academy employee (who was also a signatory on the veteran’s bank account) transferred that money to Academy. Academy, Desser, and Shaw each admitted in the settlement agreement that their conduct violated federal regulations designed to encourage contract awards to SDVOSBs.

“There are significant consequences to those who wrongfully obtain benefits from the Small Business Administration’s (SBA) preferential contracting programs,” said Acting Inspector General Hannibal “Mike” Ware. “It is particularly troubling when opportunities set aside for our nation’s service disabled veterans are involved. I want to thank the Department of Justice for its leadership and dedication to serving justice in this case.”

SBA General Counsel Christopher M. Pilkerton said: “This case is yet another example of the tremendous results achieved through the joint efforts of the SBA and the Department of Justice to uncover and forcefully respond to civil fraud committed by a participant in a Federal Government contracting program such as the Service-Disabled Veteran-Owned Small Business Concern Program. Identifying and aggressively pursuing instances of civil fraud by participants in these procurement programs is one of SBA’s top priorities.”

“This civil settlement should send a clear message to individuals who exploit opportunities meant to support our nation’s veterans,” said Michael J. Missal, Inspector General for the Department of Veterans Affairs (VA-OIG). “VA-OIG and its law enforcement partners will vigorously investigate and expose procurement fraud in order to safeguard the American taxpayer and deserving veteran business owners with disabilities who should properly be receiving these contracts.”

The government’s investigation was triggered by a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act, which allows private persons, known as “relators,” to file civil actions on behalf of the United States and share in any recovery. The relator in this case will receive $67,000 of the settlement proceeds. The case is docketed with the U.S. District Court for the Northern District of New York under number 14-cv-17.

The investigation and settlement were the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of New York, the SBA-OIG, and the VA-OIG. The United States was represented by Assistant U.S. Attorney Adam J. Katz.

 

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Topic(s): 
False Claims Act
Updated August 11, 2017