SALT LAKE CITY – A Utah man pleaded guilty to wire fraud and money laundering in federal court Tuesday afternoon for his role in a fraud scheme he devised to obtain government construction contracts set aside for Service-Disabled Veteran-Owned Businesses.
Stanley Raass, age 44, of Lehi, Utah, was charged in a Felony Information filed Jan. 27, 2018. U.S. Magistrate Judge Dustin Pead accepted the guilty pleas to the two charges and set sentencing for May 23, 2018, before U.S. District Judge Tena Campbell. The plea agreement includes a stipulated sentence of 24 months which is subject to the approval of the court. He also agreed to a money judgment of $640,000.
The United States government sets aside contract benefits for qualifying individuals and companies considered Service-Disabled Veteran-Owned Small Businesses (SDVOSB). Eligibility requirements include qualification as a small business, more than 50 percent owned by a service-disabled veteran, and daily operations of the business must be managed and controlled by the service-disabled veteran.
Contractors obtaining a SDVOSB contract must self-certify annually that the contractor meets the requirements of the status-based business classification.
As a part of his plea agreement, Raass admitted that in August 2013 he devised a scheme to obtain a construction contract set aside for Service-Disabled Veteran-Owned Businesses. He falsely certified under oath that the firm that would perform the work on the contract met the requirements of the status-based classification, when in fact, he knew it did not.
According to the Felony Information, Raass owned and operated a construction company called Raass Brothers, Inc. During its existence, the company provided general construction for the federal government on construction contracts. The defendant controlled the daily operations of the business.
Raass formed another company called RWT, LLC in 2009. The business name corresponded to the initials of the defendant’s father-in-law. The defendant listed his father-in-law as the president and 51 percent owner. The defendant listed himself as the vice president and 49 percent owner.
At the time the defendant formed RWT, his father-in-law was a veteran with a 100 percent disability rating from the Department of Veterans Affairs. According to the Felony Information, the veteran was physically incapable of managing RWT. In actuality, Raass controlled the managerial and daily business operations of RWT. The defendant never served in the United States military.
Raass registered the company as an SDVOSB. Between Sept. 19, 2009 and Aug. 26, 2013, Raass, through RWT, obtained 11 contracts set aside for service-disabled veteran-owned small businesses totaling $16,517,912 in payments from the government. On multiple occasions, according to the Felony Information, the defendant certified RWT as meeting the requirements of the contracts, when he knew the business did not meet those requirements.
The defendant’s other business (RBI) primarily performed the work on the contracts, and the defendant instructed employees to withhold information about the veteran from the government, according to the charging document.
The case is being investigated by the Defense Criminal Investigative Service, the U.S. Department of Veterans Affairs Office of Inspector General, the U.S. General Services Administration Office of Inspector General, the FBI, the Naval Criminal Investigative Service, the Small Business Administration Office of Inspector General, the U.S. Army Criminal Investigation Command, and IRS Criminal Investigation.
"Service-disabled veterans are recognized for their sacrifices and are afforded some special consideration when conducting business with the U.S. Government" said Special Agent in Charge Michael Mentavlos, Defense Criminal Investigative Service Southwest Field Office. "The resolution of this case shows that those who fraudulently claim affiliation with service-disabled veterans, for their personal gain, undermine the program, and will be pursued by the Defense Criminal Investigative Service and our partner agencies."
"Fraudsters like Raass who falsely claim set-aside status steal taxpayer dollars meant for service-disabled veteran-owned small businesses. We will continue to work with our law enforcement partners to identify and prosecute such scams," said Carol F. Ochoa, Inspector General for U.S. General Services Administration
"The Service-Disabled Veteran-Owned Small Business procurement program is to help and honor our veterans, not steal from them," said Las Vegas Field Office Special Agent in Charge Tara Sullivan. "Stanley Raass created an elaborate scheme with no purpose other than defrauding the government and other disabled veterans for his own personal gain. IRS Criminal Investigation is proud to assist its other law enforcement partners with our unique skills in following the money."
“Our nation’s veterans are the ultimate victims when individuals scheme to fraudulently obtain access to federal contracting opportunities set-aside for deserving small businesses owned and operated by service-disabled veterans,” said Special Agent in Charge Kari A. Overson, U.S. Small Business Administration, Office of Inspector General.
"Individuals who devise schemes and use businesses to defraud VA of funds will be aggressively pursued by the VA Office of Inspector General, Criminal Investigations Division and held accountable to the full extent of law," said A.E. Pleasant, Special Agent in Charge of the U.S. Department of Veterans Affairs Office of Inspector General.