O’Fallon company settles federal fraud claim involving contracts at Scott AFB
An O’Fallon building company has agreed to pay back $400,000 to settle a complaint by the federal government that it fraudulently accepted $8 million worth of contracts that were reserved for disadvantaged small businesses.
R&W Builders agreed to pay the $400,000 in a civil settlement to resolve allegations that it violated the False Claims Act, said Assistant U.S. Attorney Nathan Stump. The allegations against R&W were raised during a federal investigation and no criminal complaint was filed.
R&W Builders owner and President Jill Rutter said she cannot comment on the investigation or settlement.
“I have been advised from my lawyer to not make any comment regarding the news release,’’ Rutter said. “People are going to believe what they want no matter what I say and the people that mean anything to me and knows me knows the real truth behind this. Just don’t believe everything you read.”
According to the Small Business Administration website, its Business Development Program is intended to help provide a level playing field for small businesses owned by socially and economically disadvantaged individuals by limiting competition for certain federal contracts.
It also permits program participants to partner with others on certain contracts through joint venture agreements approved by the SBA.
In 2014, after R&W was no longer eligible to participate in the Business Development Program when it entered into a joint venture agreement with St. Louis-based Global Environmental, Inc. (GEI), according to a release by the U.S. Attorney’s office. R&W and GEI named the joint venture Patriot Commercial Construction, LLC.
Patriot successfully secured more than 30 task orders with a combined value of approximately $8 million from the Air Force through the Multiple Award Construction Contract (MACC) at Scott Air Force Base, according to the U.S. Attorney.
The government claims that R&W misrepresented itself to obtain the SBA’s approval on the Patriot joint-venture agreement and, as result, received numerous government contracts that would have otherwise been limited for bid to Business Development Program participants.
“The 8(a) Business Development Program is vital to helping disadvantaged businesses gain valuable experience and access to federal contracts,” U.S. Attorney for Southern Illinois Steven Weinhoeft said through the release. “When contractors abuse the Program and divert opportunities to themselves it takes away critical assistance from those who truly need it.
“We will continue to fight this type of fraud to ensure that disadvantaged businesses in southern Illinois have the chance to compete.’’
The investigation was conducted by the SBA Office of Inspector General, Department of Defense Office of Inspector General, Air of Force OSI, and the Defense Contract Audit Agency. The United States was represented by Assistant United States Attorney Laura Barke.
