An Idaho contractor has been indicted on federal charges stemming from allegations that she fraudulently lowered her personal net worth in order to enable her company to be certified in the SBA 8(a) Program and the Department of Transportation’s Disadvantaged Business Enterprise Program.
According to a Department of Justice press release, the 8(a) and DBE fraud netted the contractor upwards of $9 million–and the Government wants its money back.
The DOJ press release states that Elaine Martin was the president and majority owner of Marcon, Inc., an Idaho-based contractor. According to the DOJ, beginning in 2000 and continuing for the next 12 years Martin “took steps to lower her personal net worth” in order to qualify Marcon for the 8(a) Program and DBE Program. These “steps” allegedly included transferring assets into the names of others and filing false tax returns with the IRS. Martin then submitted the false tax returns, along with other false documents, to the SBA and DOT in support of Marcon’s applications.
The DOJ alleges that once Marcon was admitted to the 8(a) Program, Martin violated the “excessive withdrawal” rule, under which in some cases the SBA can penalize 8(a) participants for withdrawing too much money from the company for certain purposes. According to the DOJ, Martin covered up her excessive withdrawals by arranging sham loans with family members and other entities she controlled.
Martin has been charged with four counts of tax fraud, two counts of conspiracy, five counts of wire fraud, one count of making a false statement, five counts of mail fraud, four counts of interstate transportation of property taken by fraud, one count of conspiracy to commit money laundering, one count of conspiracy to obstruct justice, and one count of obstructing justice. In other words, Martin is in some big trouble. In addition to other criminal penalties, the DOJ is seeking the forfeiture of $9,237,722.10, which it says represents the proceeds that Martin obtained as a result of her crimes.
Like any criminal defendant, Martin is presumed innocent and entitled to her day in court. However, if the allegations are true, she deserves jail time for defrauding programs intended for legitimate disadvantaged businesses. We’ll see if she cops a plea, like Michael Dunkel just did in another 8(a) fraud case.
It is good to see the SBA, DOT and DOJ cracking down on fraud within the disadvantaged business programs. Perhaps Elaine Martin’s indictment will convince other potential fraudsters to leave the small government contracting programs alone.