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Construction Company Pleads Guilty In SBA Fraud

As part of a recent press release from the Department of Justice, Thomas Harper, former owner of the MCC Construction Company, made a guilty plea on charges to obstruct justice, resulting from an illegal pass-through conspiracy. Mr. Harper evaded limitations on subcontracting and obstructed justice during a Small Business Administration (SBA) fraud investigation regarding a size protest of his company’s relationship (or lack thereof) with small qualified businesses.

According to the Department of Justice (DOJ), during a four year span, Harper’s company, MCC Construction, entered into an arrangement with two 8(a) companies. The arrangement with these companies included ‘set-aside’ contracts, which meant that MCC would illegally perform all the work, leaving out the small qualified businesses. Performing contracts worth $70 million before the GSA filed a size protest with the SBA stating that one of the 8 (a) companies was affiliated with MCC Construction. Harper and his company make false statements to the SBA and took steps to actually impede and obstruct the SBA investigation. As part of Harper’s guilty plea, he has agreed to pay $165,711 in restitution and based on federal sentencing guidelines, he may serve up to 16 months in prison for committing SBA fraud.

The SBA and DOJ are serious about weeding out illegal pass-through activity and work hard to uncover SBA fraud. In fact, cases like Harpers, show that investigations and prosecutions are alive and well inside the government judicial system to protect America’s small businesses. Hopefully, facing hefty fines and jail time will discourage illegal pass-through in the future.

KDuncan & Company LLC (KDC) is a Licensed Certified Public Accounting and Financial Services firm that provides support to agencies of the federal government and government contractors. If you have questions regarding set-aside contracts or pass-through process mentioned, contact us for more information.

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KDuncan & Company is dedicated to providing knowledge and support for small government contractors about concerns regarding government contracting. For questions on areas such as as cost proposals, accounting systems, DCAA compliance, and incurred cost audits, reach out to KDuncan & Company.

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