Minority Business Enterprise Fraud
Atlanta MBE Fraud Lawyer – 25+ Years of Experience
Do you know about a company that says it is giving work to a minority-owned enterprise (MBE) – but is keeping the work for itself? Is a company faking its qualifications so that it can be designated an MBE?
If you know about fraud against the MBE program, you can help the Government stop MBE fraud by filing suit under the False Claims Act (FCA). As a whistleblower (also known as a “relator”), the FCA says you can receive between 15% and 30% of what the Government gets back. Attorney Lee Wallace at The Wallace Law Firm, LLC can help you stop fraud on behalf of the government. She is an award-winning Atlanta MBE fraud lawyer who has been named one of Georgia’s Super Lawyers®, Top 100 Trial Lawyers, Top 100 Lawyers, and Top 50 Women Super Lawyers®.
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Importance of MBE Programs
Congress has tried to set aside a portion of the government procurement contracts that are awarded each year in order to give small businesses owned by minorities a chance to get some of the work.
Under 15 U.S.C. § 637, the Small Business Association (SBA) can apply for procurement contracts to supply services, equipment, supplies or materials to other Government agencies. The SBA in turn sub-contracts that work to small businesses, including minority business enterprises (MBEs).
Although MBEs receive only a very small fraction of government contracts, some larger companies try to steal even that limited work from the smaller businesses. These larger companies may fake their qualifications so that the government mistakenly certifies them as MBEs. They also may set up sham MBE companies that get the contract, and then pass the work (and money) through to the bigger company.
Examples of Fraud on MBE Programs
Some examples of MBE fraud cases include:
- In Ab-Tech Construction, Inc. v. U.S., 31 Fed. Cl. 429 (1994), Ab-Tech, a minority-owned company, was awarded a $1.5 million contract for construction of an automated data processing building for the Army Corps of Engineers. AB-Tech sued the U.S., claiming it was entitled to a price increase on the contract. The Government counterclaimed, alleging that Ab-Tech had violated the False Claims Act. The U.S. uncovered a clandestine agreement between Ab-Tech and a sub-contractor, Pyramid Construction Company, that gave Pyramid significant control over the contract. Unlike Ab-Tech, Pyramid was not qualified as an MBE. Under the Ab-Tech/Pyramid agreement, Ab-Tech ceded the right to approve supplier and subcontractor invoices to Pyramid and agreed that Pyramid would get 50% of extra fees resulting from contract change orders. Even more tellingly, Ab-Tech gave Pyramid the right to take over the performance of the contract if Ab-Tech defaulted or violated the agreement. The side contract between Pyramid and Ab-Tech even required Ab-Tech to put all the payments it received for work under the contract into a separate bank account; the account was set up so that Pyramid had to approve any withdrawals.
- In 2010, a Brooklyn, New York, man was sentenced to probation and fined for participating in an MBE fraud scheme in federal roadway construction projects. The Government alleged that the man, a vice president of a construction company, had used a certified MBE subcontractor as a front. The larger company was actually provided the labor, materials and equipment; the MBE subcontractor was assigned simple tasks such as payroll and bill processing.
- The City of Philadelphia collected $400,000 from Aramark Correctional Services and Strother Enterprises, Inc. Strother had been certified by the city as a MBE, and in fact did work on the contract. According to the City, however, Aramark exaggerated how much Strother participated in the contract than Aramark reported; Aramark paid Strother 4% of the contract value, but claimed it was paying Strother 20% of the value of the contract.
The MBE program cannot fulfill its goal of helping small, minority-owned businesses if bigger companies cheat the system by siphoning off the business.
Stop Fraud Today: (888) 581-9132
As a whistleblower, you can help stop fraud on the MBE program! Our team at The Wallace Law Firm, LLC can review your claim and walk you through the steps. We’ve recovered millions of dollars for our clients in verdicts and settlements. Our team is familiar with whistleblower laws and what it takes to build an effective case.
Contact our office if you have any questions about filing a claim.