Andrew Otero, Roger Ramsey, and their companies – A&D General Contracting, Inc. (“A&D”) and Action Telecom, Inc. (“Action”) – were named in a fourteen-count indictment returned April 7 by a federal grand jury in San Diego.
The indictment alleges that the defendants participated in a conspiracy to defraud the government by forming a joint venture – Action-A&D, A Joint Venture (“the JV”) – and falsely representing that Action and the JV qualified as service-disabled veteran-owned small businesses (“SDVOSB”). Based on the false claim to SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts or task orders with the Department of Veteran Affairs (“VA”) and the Army Corps of Engineers (“ACE”).
According to the indictment, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D. To appear qualified, Otero (on behalf of A&D) and Ramsey (on behalf of Action) initially executed an agreement to create the JV (“the JV Agreement”), which stated that Ramsey’s company (Action) would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.
However, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply “use the Disabled Veteran Status of Action Telecom” to bid on contracts. The side agreement also stated that A&D – not Action – would run the construction jobs. They also agreed that “A&D will keep 98% of every payment; Action Telecom will receive 2% of every payment.”
In addition to the secret side agreement, the indictment describes a variety of ways in which the JV did not operate as a legitimate SDVOSB, but was essentially controlled by Otero and A&D. For example, although Ramsey (a service-disabled veteran) nominally served as president of Action and the JV, he actually worked full-time for another telecommunications company. Otero and A&D, not Ramsey, controlled the day-to-day management, daily operation and long-term decision making of the JV. Among other things, Otero and A&D appointed an A&D employee as the project manager for every contract and task order. Consistent with their side agreement, Action received just a small fee for using Rasmey’s status as a disabled veteran.
The indictment also alleges several examples of the conspirators deceiving government agencies about the true nature of the JV. For example, on two separate occasions, A&D submitted the JV Agreement to (and withheld the side agreement from) the government in response to requests for information about the joint venture – despite the fact that the side agreement said on its face that it superseded the original JV Agreement.
Today’s indictment cites three contracts or task orders which the VA or ACE awarded to the JV, each worth over a million dollars, and one as high as $8.2 million. In addition to the conspiracy charge, all defendants were also charged with three counts of wire fraud relating to the payment of invoices on the three contracts or task orders, and with one or more counts of major government program fraud and false statements in connection with fraudulent certifications to the government. Today’s indictment also contains forfeiture allegations, which would require the defendants to forfeit to the government any property derived from the proceeds of the fraud scheme.
Acting United States Attorney Robinson said “One important way in which our country tries to repay the debt of gratitude we owe to our veterans is by setting aside some government contracts for those who have been disabled during their service. But unscrupulous contractors have abused this program through ‘rent-a-vet’ schemes, such as the one described in today’s indictment. The Department of Justice will work to ensure that criminals who abuse important contracting programs such as the SDVOSB are held to account.”
Rebeccalynn L. Staples, Resident Agent-in-Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, San Diego Resident Agency, stated, “This investigation demonstrates the OIG’s continued commitment to aggressively pursue individuals and companies that misrepresent themselves as Service-Disabled Veteran-Owned Small Businesses and deny legitimate disabled veterans the opportunity to be awarded VA set-aside contracts. The VA OIG will continue to work these cases in order to protect the integrity of the program. I urge anyone with knowledge of such an ongoing fraud to call the VA OIG’s Hotline at 1-800-488-8244.”
The lesson from this story is not to cheat the feds. For a 11 million theft, the perpetrators can see up to a decade in jail, according to my experience of tracking cases like this. Of course, the government will work with other co defendants to testify against the masterminds and the ones who cooperate will get reduced sentences.
To see what they can expect in federal prison, go here...https://www.amazon.com/PRISON-expect-Federal-Bureau-Prisons-ebook/dp/B011GTWLOG
for paperback version
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