According to an August 3, 2015 Department of Justice Press Release, U.S. District Court Judge Deborah Chasanow sentenced Yogesh Patel, age 48, to 21 months in prison followed by three years of supervised release for "conspiring to commit wire fraud in connection with a scheme to fraudulently obtain more than $2.6 million in federal government contracts through a Small Business Administration (SBA) program designed to assist disadvantaged businesses." Patel was also ordered to forfeit $554,541.07.
In 2007, Patel met Wesley Burnett, who had experience in constructing and maintaining barriers at military and government installations. Mr. Burnett was not a socially or economically disadvantaged individual as defined by SBA regulations. Patel and Burnett agreed that UNTI would pursue barrier-related contracts which had been set aside for the SBA 8(a) program; that Burnett would perform all of the contract work but would then pay Patel 4.5 percent of the contract value.
Again, as most of readers know, this type of "pass-through" arrangement is prohibited by regulations. During the course of bid proposal/preparation, the two individuals exchanged emails which acknowledged the illegality of this scheme. In 2011, Patel met another individual, N.P., and entered into a similar arrangement with that individual.
From 2011 - 2013, Patel falsely represented to the SBA that no outside entity or individual provided financial support to UNTI. This statement was false because UNTI was in fact receiving financial support from both Burnett and N.P.
From October 2010 through July 2013, UNTI was fraudulently awarded $2,682,430 in set-aside contracts with the federal government. From November 2012 to October 2013, Patel received $973,407 in government funds under fraudulently obtained contracts. This case was investigated and ultimately prosecuted by the National Procurement Fraud Task Force, which was formed in 2006 "to promote early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs."
This case is illustrative of the need for small businesses doing business with the federal government to make compliance a priority and to implement effective compliance programs no matter how small you might be. It is unfortunate that cases like this continue to make the news, as it puts the 8(a) program at risk and casts a shadow over the "good" actors such as those that Holomua Consulting Group works and consults with on a regular basis.
For questions on implementation of compliance programs for federal contractors, please contact us at: email@example.com or (808) 369-9710.