The U.S. Government has a long tradition of using government contracts to promote small businesses. Among those initiatives is a preference granted to small business owned by veterans who were disabled due to their service. Congress set up procurement targets for the VA to promote these small businesses. To be eligible for one of these contracts, the applicant must qualify as a “small business” and be managed by a veteran with a disability.

In this particular case, the Hayner Hoyt Corporation agreed to pay 5 million dollars plus interest to resolve allegations that it exploited opportunities reserved for disabled veterans. This settlement resolves Justice Department allegations that the CEO and several employees of Hayner Hoyt misrepresented the status of a now-shuttered company to secure a government contract.

Allegedly, the company, called 229 Construction, was run by a disabled veteran. But, upon further investigation, this veteran was responsible for snow plowing and running the tool inventory. He was not the CEO. Additionally, it appears that the president of Hayner Hoyt had all emails that were intended for the veteran who was represented as running 229 Construction forwarded to his email account.

The defendants admit in the settlement that their conduct circumvented federal regulations and that Hayner Hoyt Corp. made a profit on those contracts that were improperly acquired. The investigation was prompted by a whistleblower lawsuit filed under the False Claims Act. The False Claims Act allows private citizens to file claims on behalf of the U.S. Government and to share in any recovery.

Securing government contracts involves following all stipulations to the letter. Doing otherwise could result in serious issues, and regardless of your intentions, you may end up facing scrutiny. If you are the subject of an investigation by the government, then you may want to speak to an attorney. This case was settled with a payout settlement, but not all of them necessarily end that way.

Source: Department of Justice, “The Hayner Hoyt Corporation to Pay $5 Million to Resolve False Claims Act Liability,” Office of Public Affairs, Mar. 14, 2016