Last week a federal grand jury in Puerto Rico returned a five count indictment charging three men with a multi-million dollar Service-Disabled Veteran-Owned Small Business (SDVOSB) scheme to defraud the U.S. Department of Veteran Affairs (VA). Justice Department Announcement.
The indictment alleges that from 2007 to 2014, Ivan Rosa-Colon, Jose Rosa-Colon and Torres Louis Enrique conspired to use Jose’s service-disabled veteran status to create a company – BELKRO General Contractors – which was nothing more than a “pass-through or front company” for Ivan’s other business, IRC Air Contractors.
According to the indictment, Jose’s service-disabled veteran status was used to register BELKRO in various government databases as an SDVOSB. This step was taken when Ivan learned about a new government stimulus program that would encourage agencies to award non-competitive, set-aside or sole-source contracts to SDVOSBs.
To make matters worse, apparently Jose, BELKRO’s owner, was a full-time U.S. Postal Service Carrier who was simply a figurehead or “rent-a-vet” being used for his service-disabled veteran status to obtain contracts for his brother’s company, IRC. As a result of the scheme, BELKRO unlawfully received a number of SDVOSB contracts from the VA.
If convicted, the three men face up to 20-year prison terms for each wire fraud charge and up to 10-year terms for the major fraud charges, plus significant penalties. Unfortunately, many try to abuse the set-aside system. Fortunately, most don’t succeed.
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