On November 16, 2015, the United States Department of Justice issued a Press Release announcing that a Federal grand jury in Maryland had indicted Anthony "Tony" Nwagbara Daniels (age 59 of Silver Springs, Maryland) on wire fraud charges arising from a scheme to defraud the United States by fraudulently obtaining a government contract through the SBA's 8(a) Business Development Program from 2011 through 2014.
The indictment in this case alleges the following:
- In 2011, Danison and Individual A entered into an agreement whereby Danison would bid on an Air Force contract for demolition services on Joint Base Andrews and would subcontract A's company to perform substantially all of the contract work.
- A's company, while experienced in demolition work, was ineligible to compete for the contract because it was considered a large business (based on NAICS code size standards).
- On September 29, 2011, Danison was awarded the contract.
- During contract performance, Daniels assured Air Force personnel that Danison was the prime contractor and was compliant with the performance of work limits.
- In reality, A's company was performing most of the contract work.
- Individual A prepared false invoices through Danison, which represented that Danison was performing most of the work.
Ultimately, the case against Daniels is that he knew that the invoices were false in that they failed to disclose the true extent of the work performed by A's company but nonetheless approved and caused each invoice to be submitted to the government for payment. In essence, this case alleges the classic "pass-through" setup, where a large business uses a small 8(a) contractor as a "pass-through" to gain access to 8(a) contracts which it would otherwise not have access to due to its size. As of the date of the Press Release, an initial appearance by Daniels had not yet been scheduled. If convicted, Daniels faces up to 20 years in prison and forfeiture of approximately $1.2 Million.
The investigation of Daniels/Danison/Individual A and subsequent prosecution are attributable to the National Procurement Fraud Task Force, which was formed in 2006 "to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs." For those out there that complain and wonder why the 8(a) program is criticized and why 8(a) companies are subject to such strenuous application screening and ongoing monitoring, the Danison case and others like it should provide some insight.
For more information on the 8(a) program, including eligibility requirements and ongoing compliance issues, please contact us at: email@example.com or (808) 369-9710.