The U.S. Justice Department said Wednesday it has reached a $1.1 million settlement with Gilbane Building Company to resolve whistleblower allegations that a Gilbane subsidiary created a front company as a means of getting government contracts intended for disabled veteran-owned businesses.
The lawsuit, filed by Michael Jeske and Samuel McIntosh under the False Claims Act in a Florida federal court, claimed that subsidiary company W.G. Mills, a Florida construction company now doing business as Mills Gilbane, violated the False Claims Act by creating a fictitious company called Veterans Constructors Incorporated.
Mr. Jeske and Mr. McIntosh alleged that Veterans Constructors Inc. was really just a front company created by W.G. Mills so it could be awarded a U.S. Coast Guard contract designated for disabled veterans.
The U.S. government designates contracts for certain projects to disabled veterans under the Service Disabled Veteran Owned Small Businesses (SDVOSB) program. Occasionally, dishonest government contractors create front companies ostensibly owned by disabled veterans as a means of securing these contracts.
In addition to the requirement that the business be owned by veterans disabled in the line of duty, the SDVOSB mandates that the veteran-owned companies not be affiliated with a large company such as Gilbane Building, a Providence, Rhode Island-based company with 50 offices and more than 1,000 construction projects wordwide.
“Those who seek to do business with the government must do so fairly and honestly,” said Acting Assistant Attorney General Benjamin Mizer of the U.S. Justice Department’s Civil Division. “We will not tolerate contractors who seek to profit at the expense of our veterans and taxpayers.”
The settlement also requires Veterans Constructors Inc. to pay the U.S. $50,000 plus five annual contingency payments equal to one percent of the company’s total annual revenues.