$4.35M DBE/Small Business Fraud Settlement
On April 30, 2020, the U.S. Attorney’s Office for the Northern District of New York entered into a civil settlement agreement with Northland Associates, Inc. (Northland); JDS Construction (JDS); James Tyler, co-owner and president of Northland/JDS; and the Diverse Construction Group, LLC (Diverse). The four defendants agreed to pay a total of $4.35 million to resolve civil False Claims Act allegations. According to the settlement agreement, Northland, Tyler, and others established Diverse as a service-disabled, veteran-owned small business (SDVOB) so that it could obtain Government contracts set aside for SDVOBs and small businesses operating in historically underutilized business zones (HUBZones). The defendants did not inform the Small Business Administration (SBA) or other Government entities that Northland was involved in Diverse’s day-to-day operations, which made Diverse ineligible for these contracts. The scheme deprived legitimate SDVOBs and HUBZone businesses of contracts set aside for their benefit. Diverse received approximately $57 million in Federal contracts, funds that had been set aside for SDVOBs and HUBZone or other small businesses. DOT awarded the company a $1.1 million SDVOB contract through the Saint Lawrence Seaway Development Corporation; other contracts came from the Department of Defense and the Veterans Administration (VA). DOT-OIG conducted this investigation with SBA-OIG, VA-OIG, Army-Criminal Investigation Division, and Defense Criminal Investigative Service.