Date: 11-18-2019

Case Style:

Case Number: 1:19-cr-00148-JG

Judge: James S. Gwin

Court: United States District Court for the Northern District of Ohio (Cuyahoga County)

Plaintiff's Attorney: Alejandro A. Abreu, Om M. Kakani, and Brian McDonough

Defendant's Attorney:

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Description: Cleveland, OH - The United States of America charged James Allen Clark with wire fraud and submitting false and fictitious claims to obtain federal government money.

A federal jury in Cleveland convicted a Florida man of Major Fraud, Wire Fraud and Submitting False and Fictitious Claims after he engaged in six-year long scheme to defraud the government.

James Allen Clark, 62, is scheduled to be sentenced February 25, 2020.

According to court documents and trial testimony:

Federal departments and agencies, as directed by Congress, work with the Small Business Administration and the Department of Veteran’s Affairs to award portions of contracts to small businesses, with specific goals for small disadvantaged business, including service-disabled veteran-owned small businesses.

Businesses must register and meet a number of criteria to be classified as small disadvantaged business – also known as the 8(a) program -- such as being at least 51 percent owned and 100% controlled by socially and economically disadvantaged individuals. Businesses must also meet a number of criteria to be classified as a service-disabled veteran-owned small business, such as being at least 51 percent owned by a veteran with a service-connected disability who controls the management and daily operations of the company. Service-disabled veteran-owned small businesses are permitted to enter into joint ventures with other companies but must meet specific requirements to do so.

Clark, who is neither a service-disabled veteran nor a qualified 8(a) participant, and others engaged in several criminal schemes to submit false claims and defraud the United States by obtaining government contracts set aside for qualified companies to which they were otherwise ineligible to obtain by fraudulently using proxy and pass-through companies.

Clark and others made false statements, misrepresentations and omissions of facts to hide his role in providing bonding assistance and asserting control over businesses that certified to the VA and the SBA that they were either service-disabled veteran-owned or otherwise owned and controlled by socially and economically disadvantaged individuals. Clark then used these companies to obtain government contracts meant for legitimate companies and passed through up to 95% of the contract proceeds to his own unqualified company. As a result, companies legitimately run by service-disabled veterans or socially and economically disadvantaged people were underbid and deprived of contracts with the government.

Evidence showed that Clark obtained over $12 million in government contracts intended for service-disabled veterans and socially and economically disadvantaged individuals.

“As our nation recognizes the dedication and service of veterans, this jury’s verdict in this case is especially timely,” U.S. Attorney Justin Herdman said. “These programs were created to help those who defended our country and freedom, and suffered disabilities as a result of that service. Clark, who never served this country, took advantage of these programs to fraudulently obtain taxpayer money.”

Michael J. Missal, Inspector General for the U.S. Department of Veterans Affairs, said: “We are pleased that this joint investigation resulted in convictions against those who abused federal government contracting set-asides for service-disabled veterans. The VA OIG will vigorously pursue those who wrongfully and fraudulently exploit the integrity of this program.”

“I applaud the excellent work of the entire investigative team,” said NASA Inspector General Paul K. Martin. “Their commitment to protecting the integrity of the Federal procurement process will deter future misuse of taxpayer dollars.”

“Enola Contracting Services and Mr. Clark defrauded the U.S. Marine Corps and jeopardized the integrity of the Department of the Navy procurement process by engaging in a scheme to obtain contracts intentionally set aside for small businesses,” said Matthew Lascell, Special Agent in Charge of the NCIS Southeast Field Office. “NCIS will continue to work collaboratively with our Federal law enforcement partners to combat corruption, financial fraud, and product substitution that threaten Navy and Marine Corps readiness.”

"The conviction secured in this trial is the direct result of a joint investigative effort to protect the integrity of the U.S. Government's procurement process," stated Leigh-Alistair Barzey, Special Agent in Charge of the Defense Criminal Investigative Service's (DCIS), Northeast Field Office. "DCIS will continue to work with its law enforcement partners and the U.S. Attorney's Office, Northern District of Ohio, to ensure that companies and individuals do not engage in fraudulent activity when they contract with the U.S. Department of Defense."

"OIG is committed to bringing to justice those that commit fraud to gain or extend access to SBA’s set-aside contracting programs,” said SBA Inspector General Hannibal “Mike” Ware. “It is paramount that those responsible for committing fraud are held accountable for their wrongdoing to ensure the integrity of these programs. I want to thank the U.S. Attorney’s office and our law enforcement partners for their support and dedication to pursuing justice in this case.”

“The Air Force Office of Special Investigations, along with our investigative and prosecutorial partners, stand firm in defense of our U.S. Air Force, said Special Agent in Charge Wendell W. Palmer of Air Force Office of Special Investigations Procurement Fraud Detachment 5, Dobbins Air Reserve Base, Georgia. “We will aggressively seek out and prosecute to the fullest extent of the law, those who would fraudulently victimize our ability to protect and defend the United States and our citizens.”

This case was investigated by National Aeronautics and Space Administration -- Office of Inspector General, the Defense Criminal Investigative Service, Naval Criminal Investigative Service, Department of Veterans Affairs -- Office of Inspector General, Small Business Administration -- Office of Inspector General, Defense Contract Audit Agency and the Air Force Office of Special Investigations.

Charges:

18:1349 Conspiracy to Commit Honest Services Wire Fraud
(1)
18:1349 Conspiracy to Commit Honest Services Wire Fraud
(1s)
18:1343 and 1346 Honest Services Wire Fraud
(2-20)
18:1343 and 1346 Honest Services Wire Fraud
(2s-20s)
18:1349 Conspiracy to Commit Wire Fraud
(21)
18:1349 Conspiracy to Commit Wire Fraud
(21s)
18:1343 Wire Fraud
(22-26)
18:1343 Wire Fraud
(22s-26s)
18:286 Conspiracy to Submit False Claims
(27)
18:286 Conspiracy to Submit False Claims
(27s)
18:287 and 2 False Claims
(28-49)
18:287 False Claims
(28s-30s)
18:1031 Major Fraud
(31s-33s)
18:1031 and 2 Major Fraud
(50-71)

Outcome: 11/08/2019 225 Non-Appeal Transcript Request by United States of America as to James Allen Clark (1) for proceedings held on 10/31/2019- 11/6/2019 before Judge James S. Gwin. Court Reporter: Donnalee Cotone. Requested completion date: Realtime Unedited Transcript (Kakani, Om) (Entered: 11/08/2019)

Plaintiff's Experts:

Defendant's Experts:

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