The former owner of a construction company pleaded guilty on Aug. 23 to his part in a scheme to defraud the government by channeling set-aside contracts through small businesses while his company did all the work.

Walter Crummy, an officer and owner of MCC Construction Company, pleaded guilty to a charge of conspiracy to commit wire fraud and agreed to forfeit $105,618 as part of the deal.

According to investigators, two companies with small business status worked with MCC to obtain federal contracts that were set aside for small and disadvantaged vendors. Once the contracts were awarded, MCC did all the actual work, with the small businesses acting merely as a conduit for payments.

For instance, "Crummy drafted corporate documents between MCC and one of the SBA-eligible companies whereby MCC would provide all labor, equipment, materials, safety and supervision and in return receive 97 percent of the contract task order amount," according to prosecutors. "This agreement by its terms meant that the SBA-eligible company would be violating SBA rules and regulations and would instead collect a 3 percent fee for allowing their small business status to be used."

Between 2008 and 2011, MCC used this method to win 27 government contracts worth more than $70 million.

"Those who commit fraud in [the Small Business Administration’s] preferential contracting programs will face justice," SBA Inspector General Peggy Gustafson said. "The integrity of SBA’s programs is vital to honest, hard-working small business owners across the nation."

Crummy faces a maximum of five years in prison and the potential for further monetary penalties. Sentencing is scheduled for Dec. 13.

The company pleaded guilty on fraud charges earlier this year and agreed to pay almost $1.8 million in criminal penalties and forfeitures.

Crummy’s partner, Thomas Harper, pleaded guilty in June on charges of conspiring to obstruct proceedings before a department or agency.

"The FBI and our law enforcement partners are committed to upholding the integrity of the federal contracting process and protecting opportunities intended for small and economically disadvantaged businesses," said Assistant Director in Charge Paul Abbate. "Those who cheat the system through unlawful, fraudulent means are harming small businesses and stealing from American taxpayers and they will be held accountable under the law."

Aaron Boyd is an awarding-winning journalist currently serving as editor of Federal Times — a Washington, D.C. institution covering federal workforce and contracting for more than 50 years — and Fifth Domain — a news and information hub focused on cybersecurity and cyberwar from a civilian, military and international perspective.

Share:
In Other News
Load More