Department of Justice Reaches Settlement of $8M Following Government Contract Fraud Lawsuit
The United States Department of Justice settled a case against an apparel manufacturer for falsely claiming to be a service-disabled, veteran-owned small business (SDVOSB) in order to win contracts with the U.S. Department of Agriculture and the U.S. Defense Logistics Agency. Under the terms of the settlement, the contractors and company owners paid almost $8 million. There was no whistleblower in this case, but if an employee of the apparel company had come forward about the false SDVOSB certification, they could have filed a qui tam lawsuit and been entitled to 15-25% of the government’s recovery.
The case centers around two co-owners and two organizations, with “shared employees, vendors, and equipment.” Sherman Barton and Christopher Neary co-owned VE Source LLC. Barton owned 51% of VE Source and is a service-disabled veteran. Neary additionally owned a company called Vertical Source, Inc (VSI), which is also an apparel company. According to the complaint, the government alleged that VE Source unlawfully obtained “more than $16 million in contracts that were set-aside for service-disabled, veteran-owned small businesses” by claiming to be an SDVOSB.
