In another example of the government’s efforts to root out fraud in government procurement programs, on July 5, U.S. District Judge Reggie B. Walton sentenced Virginia businessman, Tarsem Singh, to 15 months in prison followed by three years of supervised release for conspiracy to commit major fraud on the United States. In December of 2015, Singh pleaded guilty to executing a scheme to defraud the Small Business Administration (SBA) and the General Services Administration (GSA) through fraudulent procurement of more than $8.5 million in federal government contracts through SBA’s 8(a) program. Created to help small, disadvantaged businesses engage in federal procurement, the 8(a) program requires that qualifying businesses are at least 51% owned and controlled by a socially and economically disadvantaged U.S. citizen.
From 2000 to 2009, Singh was the vice president of “Company A,” a construction company specializing in renovating and altering buildings. From 2000 through 2009, Company A was certified under the 8(a) program and lawfully received approximately $23 million in contracts from the GSA. The real trouble began in 2009, when Company A graduated from the 8(a) program and, on the same day, entered into a Mentor-Protégé Agreement with “Company B.” With monetary support and guidance from Company A, Company B was certified under the 8(a) program and was ultimately awarded 26 federal contracts under the program. According to the government’s calculations and Judge Walton’s Memorandum Opinion, the contracts awarded to Company B totaled more than $8.5 million.
The two companies worked together to shield the fact that Company B was merely a shell company designed to allow Company A to continue to benefit from the federal procurement market reserved for small businesses. In reality, Company B had only one employee that was able to perform work on the contracts, violating the SBA’s requirement that 15% of the construction work be conducted by the employees of the small business. To get the work done, Company A employees masked their company’s vehicles, magnetic logos and email accounts under the guise of Company B’s name. Company A’s employees were trained to tell GSA representatives that they were representing Company B. Not only was Company A able to make at least $90,397.15 off of the government contracts procured by Company B, Singh was personally compensated at least $28,768.28 for his work.
In determining the appropriate sentencing guidelines, the government and Singh disagreed on how to determine the actual loss the government suffered as a result of the fraudulent practices. The government claimed they lost more than $8.5 million, while Singh argued the loss amount equaled only the $28,768.28 he gained in profits. Ultimately, the Court interpreted “loss” to mean the total amount of the contract at issue – thereby calculating the loss in this case to be $8,533,562.86.
Since Singh played a major role in organizing the criminal activity, the government also pushed to raise the level of Singh’s offense, thereby increasing his sentencing range. Here, while the Court recognized Singh’s managerial role in the criminal activity, it held that government did not provide evidence illustrating Singh’s influence over the other actors in the scheme. Ultimately, in addition to the prison term and supervised release, Judge Walton ordered that Singh pay $25,000 in fines and $119,165 in restitution.
The Department of Justice press release on the sentencing can be found here.