False SDVOSB Certification Results in Criminal Conviction

In this era of enforcement, lost contracts are just the tip of the iceberg when it comes to false certifications of eligibility for the SBA’s and VA’s small business programs.  The story of John White and Mitsubishi Construction Corp. should serve as a dire warning about just how serious the consequences of false certifications can be.

Between 2007 and 2010, Mitsubishi won four VA construction contracts set-aside for service-disabled veteran-owned small businesses.  The problem?  White, the company’s owner, has never served in the military.

When the VA found out about the scheme, it pressed criminal charges against White.  In April, a New York jury convicted him of making false statements and witness tampering (when the scheme started to unravel, White tried to convince an actual veteran to pretend to be the company’s owner).

White’s sentencing is forthcoming.  He faces a potential maximum of 75 years in prison, plus millions of dollars in fines.

White’s case is particularly egregious, since White never even served in the military, and had absolutely no reason to believe he qualified as a service-disabled veteran.  But could White’s conviction portend criminal actions against others who violate the set-aside programs’ rules, even if the facts are not quite so stark?

For instance, the SBA and VA require that a service-disabled veteran be the highest officer in an eligible service-disabled veteran-owned small business.  Might a company or its employees face criminal charges for self-certifying as a SDVOSB if its highest officer was a non-veteran, even if a veteran owned the company?

Whether the government will seek criminal penalties in less-egregious cases remains to be seen.  However, White’s conviction should serve as a reminder of just how important compliance is within the SDVOSB program–and all of the government’s small business contracting programs.

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