Consumer Fraud

Florida shipyard company settles whistleblower allegations for $1 million

whistleblower Florida shipyard company settles whistleblower allegations for $1 millionA Florida shipyard company that allegedly created a front company so that it could win government contracts designated for disabled veteran-owned companies has agreed to pay the U.S. $1 million to settle a complaint brought against it by two whistleblowers under the False Claims Act.

According to the U.S. Justice Department, Jacksonville-based North Florida Shipyards and its president, Matt Self, established a company called Ind-Mar Services Inc. “merely as a contracting vehicle” to wrongfully secure government contracts to repair five Coast Guard ships. Such contracts are intended for companies owned by veterans disabled in the line of duty.

To qualify for a SDVOSB contract, a company must be operated and managed by veterans disabled in service and it must perform more than half of the contracted labor.

The U.S. government alleged that North Florida Shipyards performed all the work and received all of the profits performed through the front company Ind-Mar Inc. Had the federal government known that Ind-Mar was just a front company, it would not have awarded the company any ship-repair contracts, the Justice Department said.

The allegations were originally filed in a whistleblower lawsuit by Robert Hallstein and Earle Yerger under the qui tam provisions of the False Claims Act, which authorize private individuals to sue on behalf of the federal government. In return, Mr. Hallstein and Mr. Yerger will receive $180,000 for their role in exposing the fraud.

The whistleblower allegations led the Small Business Administration (SBA) to suspend North Florida Shipyards, Ind-Mar, Matt Self, and three other individuals from all government contracting in December 2013. In April 2014, North Florida and Matt Self entered into an administrative agreement with the SBA in which they admitted to having created and operated Ind-Mar in violation of the Coast Guard contracts and SBA statutes and regulations.

“This settlement sends a strong message to those driven by greed to fraudulently obtain access to contracting opportunities set aside for deserving small businesses owned and operated by service disabled veterans,” said SBA Inspector General Peggy Gustafson.  “We are committed to helping ensure that only eligible service disabled veteran owned small businesses benefit from that SBA program.”

Source: U.S. Department of Justice