The federal government has filed a complaint in two consolidated qui tam lawsuits filed by four whistleblowers against Ohio-based construction company TAB Construction, Inc. (“TAB”) and its owner William Richardson III (“Richardson”). The government alleges that TAB and Richardson violated the False Claims Act when TAB applied for and obtained certification as a Historically Underutilized Business Zone (“HUBZone”) company.
The HUBZone program is regulated and administered by the U.S. Small Business Administration (“SBA”). The HUBZone program assists small businesses located in urban and rural communities by giving them preferential access to federal contract procurement. HUBZone certification can be obtained by small businesses (as defined by the SBA) that meet the following criteria:
- At least 51% of its owners must be U.S. citizens, a Community Development Corporation, an agricultural cooperative, or a Native American Indian tribe;
- Its principal office must be geographically located within a HUBZone; and
- At least 35% of its employees must reside in a HUBZone.
In the qui tam complaint initially brought by the four whistleblowers, the whistleblowers alleged that TAB and Richardson falsely certified to the SBA in 2000 that its principal office was located in a HUBZone, when in reality, no TAB employees worked out of that office. According to the government, in 2006, Richardson again falsely stated that TAB’s primary office was located in a HUBZone. The government alleges that in multiple un-related matters, Richardson stated under oath that TAB’s primary office was located in a non-HUBZone area.
The False Claims Act complaint filed by the government alleges that TAB obtained four construction contacts with the help of its fraudulently obtained HUBZone certification. Each of the four contracts had been designated for HUBZone qualified companies.
If the government is successful in the prosecution of the matter against TAB, or if the matter settles, the whistleblowers, Roy Fairbrother Jr., Louis Petit, Patricia Hopson, and Vice Pavkov, may be entitled to share in a percentage of any recovery as their reward under the qui tam provisions of the federal False Claims Act. Most states have similar statutes.
More information about the False Claims Act, whistle blower litigation, and qui tam cases can be found here.