Kansas Contractor Defrauds Federal Government Out of $346M

A Kansas contractor has pled guilty to defrauding the federal government to the tune of $346M.  The U.S. Attorney’s Office for the Western District of Missouri made the announcement in June 2019. They told the courts that contractor, Matthew McPherson,  and his co-conspirators, had set up several companies, bidding on numerous federal projects. The guilty parties had received more than $346 million by earning over 200 federal set-aside contracts.

McPherson was working with an African American, Stephone Ziegler, who also suffered with a service-related injury. They were submitting bids for big construction jobs that they had no intention of fulfilling.

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Contractor Gets Greedy

The first company these two set up was called Zieson Construction. Ziegler served as the figurehead to this company. McPherson and his associates actually ran the company taking the money and then not providing the services. When their first company became too large to submit bids for construction projects, McPherson and Ziegler created a new company called Simcon. Both companies shared resources such as office space and equipment.

Give Back the Money!

McPherson has been ordered to forfeit $5.5 million in profits made off the companies. Ziegler has pled guilty to making false statements to U.S. Department of Veteran Affairs. He has not been sentenced. Prosecutors believe that Ziegler only served as a figurehead and had no knowledge about the daily operations of either company.

The two men argued that they did not intentionally defraud the government. They just weren’t able to hire good construction crews to do the work. There is some research that shows that contractors do sometimes try to fake their way through set-aside requirements regarding publicly funded contracts. Though the most common reason is greed, there may be instances where the contractor can’t find and hire properly skilled workers.

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Is This A Common Crime?

One company in NYC called Nichter Construction Inc. was indicted for making false statements about minority participation. In order to obtain a contract worth $350,000, the company claimed that it had at least 13 percent minority workers. The company won a government contract to renovate a psychiatric clinic in Buffalo.  They finally admitted that they didn’t have any minority workers, but had hired a minority contractor to say they had worked for Nichter. They now face $10,000 in fines for making false statements.

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