U.S. files case against contractor for fraud saying it is service disabled veteran-owned

The United States filed a complaint against a Western New York contracting company, and its owners and an employee, alleging that they submitted false claims for federal contracts intended for service-disabled, veteran-owned small businesses, the Department of Justice announced. The lawsuit was filed in U.S. District Court in Buffalo, New York, against Strock Contracting, Inc., Lee Strock, Kenneth Carter and Cynthia Ann Golde, who are alleged to have defrauded the government by falsely claiming eligibility for millions of dollars in contracts being awarded by the Air Force, Army, and Department of Veterans Affairs intended for service-disabled, veteran-owned (SDVO) small businesses. Strock largely owns and manages Strock Contracting, Inc., and Strock and Carter were officers and partial owners of Veteran Enterprises Company, Inc. (VECO), which was awarded the contracts. Golde was a former employee of VECO.

“Congress established the Service-Disabled, Veteran-Owned contracting programs to provide economic opportunities for veterans with service-connected disabilities and to help them participate in federal contracting and compete in the American economy,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.”The Justice Department is committed to making sure that only eligible companies participate in these types of federal contracting programs.”

“This country long ago developed policies designed to ensure that our wounded warriors have the ability to participate in government-funded programs, and to have their transition into the civilian economy eased to the extent possible,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York. “This lawsuit  ‘the first of its kind in this District’ sends a strong message that this office will vigorously protect programs designed to aid those who have already given so much in the honorable service of their country.”

Between 2008 and 2013, VECO obtained millions of dollars in federal contracts offered by the government to legitimate SDVO small businesses. The defendants won these contracts after claiming that VECO met all the requirements to be an SDVO small business. The government’s complaint alleges that VECO did not meet the requirements and was not entitled to such contracts.

In particular, the government alleges that VECO was a sham business whose day to day operations were controlled by Strock Contracting and the individual defendants. For example, the government’s complaint alleges that the purported owner of VECO did not even have a key to VECO’s offices, which were located in the same building as Strock Consulting.

The civil complaint is the result of an investigation by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of New York, the Veteran’s Administration, Office of Inspector General, Northeast Regional Office; the U.S. Army Criminal Investigation Division Command, Major Procurement Fraud Unit (MPFU); the FBI; the Small Business Administration’s Office of Inspector General and Office of General Counsel and the Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service.

The case is captioned United States v. Lee Strock, et al, No. 15-CV-887-G (W.D. New York). The claims made in the complaint are allegations only, and there has been no determination of liability.

Jeffrey Newman represents whistleblowers. He does not represent the whistleblowers in this particular case.