United States intervenes in two whistleblower cases against Ohio construction firm

by Ben Vernia | December 9th, 2013

On December 5, the Department of Justice announced that it as intervening in two cases brought by whistleblowers against a Canton, Ohio-based construction firm, alleging that the company committed fraud in bidding on federal contracts set aside for businesses operating and certified in “HUBZones.” According to DOJ’s press release:

The government has filed a complaint against Canton, Ohio-based TAB Construction Co. Inc. (TAB) and its owner, William E. Richardson III, for allegedly making false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced today.

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The government alleges that TAB used its fraudulently procured HUBZone certification to obtain four U.S. Army Corps of Engineers’ construction contracts worth millions of dollars. Each of those contracts had been set aside for qualified HUBZone companies. The government’s complaint asserts claims against TAB and Richardson under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

Allegedly, Richardson originally applied to the HUBZone program in 2000 by claiming that TAB’s principal office was located in a designated HUBZone when no TAB employees worked out of the HUBZone office, and TAB actually was located in a non-HUBZone. Even though Richardson told the SBA that TAB was located in a HUBZone, Richardson consistently used his non-HUBZone address in conducting TAB’s other business affairs, at one point even stating under oath in private litigation that TAB’s office was located in a non-HUBZone. In 2006, Richardson allegedly applied for re-certification to the HUBZone program, again falsely stating that eight employees worked in the designated HUBZone. The government alleges that just six weeks after Richardson re-certified its eligibility with the SBA, TAB completed an affidavit in an unrelated matter, which stated that TAB’s principal office was located in a non-HUBZone.

Under the HUBZone program, companies that maintain their principal office in a designated HUBZone, and meet certain other requirements, can apply to the SBA for certification as a HUBZone small business company. HUBZone companies can then use this certification when bidding on government contracts. In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.

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