Five California masonry companies pay total of $1.9 million to settle small business fraud allegations

by Ben Vernia | April 9th, 2014

On April 9, the Department of Justice announced that five companies, based in California, had agreed to settle claims originally brought by a whistleblower that they misrepresented their small disadvantage business status in obtaining DOD construction contracts. According to DOJ’s press release:

Five California-based masonry subcontractors and two individuals paid the government nearly $1.9 million to resolve allegations that they violated the False Claims Act by misrepresenting their disadvantaged small business status in connection with military construction contracts, the Department of Justice announced today. The defendants are Frazier Masonry Corp., F-Y Inc., CTI Concrete & Masonry Inc., Masonry Technology Inc., Masonry Works Inc., Russell Frazier and Robert Yowell.

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The case involved contracts to construct facilities at Marine Corps bases at Camp Lejeune, N.C., and Camp Pendleton, Calif. Under the rules of the Small Business Administration, the contracts required that a certain percentage of the work be performed by disadvantaged small businesses. This contract requirement was intended to benefit small firms owned by women, minorities and other disadvantaged groups.

The government alleged that the defendant masonry subcontractors and their principals misrepresented to the prime contractors that they were small businesses, and that these misrepresentations caused the prime contractors to falsely certify that they had complied with the small business provisions of the contracts in claiming payment. Russell Frazier previously pleaded guilty in related criminal proceedings to causing false statements.

The relator, a former employee of one contractor, will receive $393,383 of the settlement (a 20.7% share), DOJ announced.

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