A federal judge has sentenced a Maryland man to 42 months in prison for fraudulently obtaining contracts under the 8(a) Program.

According to a Department of Justice press release, after Vernon J. Smith III serves his prison sentence, he will be subject to three years of supervised release.  And on top of the prison sentence, the federal judge ordered Smith to pay more than $7 million in restitution and forfeiture.

In a March blog post, I wrote about the government’s case against Smith–and Smith’s guilty plea.  The DOJ alleged that Smith arranged for an African American who was his former employee to form a company called Platinum One Contracting.  Although the company’s paperwork identified Smith as the 40% owner and Vice President, in reality, Smith exercised complete control over the company.

After Platinum One was established, Smith directed Wright to submit an application to the 8(a) Program.  The 8(a) application did not reveal Smith’s control over the company, nor did it reveal other salient facts (such as Smith’s former employment of Wright).

During its tenure in the 8(a) program, Platinum One received more than $52 million in 8(a) contracts to which it was not entitled.  Each year during its 8(a) program term, Platinum One submitted false 8(a) annual updates, certifying that Wright controlled the company and was the highest-paid employee.  In fact, Smith continued to control Platinum One and was its highest-paid employee.  The DOJ states:

Vernon Smith and his wife, Georgia Smith also transferred millions of dollars from Platinum to bank accounts in their own names, to casinos on their own behalf, to [two companies owned by Smith], and to credit card companies to pay for personal expenses that Vernon and Georgia Smith charged to Platinum’s corporate credit cards, including extensive dental work, veterinary visits for personal pets, lavish vacations, a Royal Caribbean cruise, limousine transportation to casinos in Atlantic City, N.J., funeral expenses for a family relative, and fencing for their personal residence, among others.

Georgia Smith has pleaded guilty, and will be sentenced on July 21.  Wright also pleaded guilty and was previously sentenced.

Vernon Smith’s crimes were egregious, and he did not get off with a mere slap on the wrist.  In the Platinum One case, the DOJ–and the federal judge–sent a strong message that 8(a) crime does not pay.