A major commercial and industrial construction contractor has agreed to pay the government a $2 million penalty to resolve criminal fraud violations arising from the firm’s intentional overstating of developmental assistance provided to a disadvantaged small business as part of a Defense Department program.
According to the non-prosecution agreement between the government and Caddell, the company entered into an agreement with Mountain Chief — a certified Native American, woman-owned and economically-disadvantaged small business — in February 2003 to participate in the Defense Department’s Mentor-Protege Program. The program allows major contractors to contract with and provide developmental assistance to disadvantaged small businesses and are reimbursed by the department for related costs.
Mr. Breuer said Caddell and Mountain Chief participated in the programs in connection with two Defense Department construction contracts at Fort Bragg, N.C., each worth approximately $65 million and a department construction project at Fort Campbell, Ky., worth approximately $34 million.
He said that from February 2004 to March 2005, Caddell submitted more than 20 requests for payment that significantly overstated the amount of developmental assistance the company had provided Mountain Chief. In addition, he said, Caddell filed documents falsely stating Mountain Chief’s size and income, as well as the status of Mountain Chief’s technical capabilities and business infrastructure.
From April 2003 to October 2004, he said Caddell also submitted at least eight requests to the Defense Department for rebates based on services purportedly performed on subcontracts Caddell gave to Mountain Chief. He said Mountain Chief performed few, if any of these services, and the invoices were created solely to support Caddell’s applications for payment.
As part of the settlement, Caddell will pay a $2 million criminal penalty and must cooperate with the Justice Department for the two-year term of the agreement. The agreement recognizes Caddell’s voluntary disclosure; thorough self-investigation of the underlying conduct; and full cooperation with the department and remedial measures already undertaken and to be undertaken, including employment actions and improving reporting systems, corporate governance, and compliance training and oversight.
As a result, the department agreed not to prosecute Caddell for the improper pay requests, provided the company satisfies its ongoing obligations under the agreement.
In January, Daniel W. Chattin, 50, of Granite Bay, Calif., the son of Mountain Chief’s owner and a project manager and consultant for Mountain Chief, and Mark L. Hill, 57, of Montgomery, Ala., the program coordinator and a director of business development at Caddell, were indicted in Alabama on three counts of fraud in the same scheme. In addition, Mr. Hill was charged with one count of making a false statement to the Defense Department. Both are awaiting trial, which is scheduled to begin April 22, 2013.
The charges and allegations against Chattin and Hill are merely accusations, and they are considered innocent unless and until proven guilty.
The case is being handled by Assistant Chief Albert B. Stieglitz Jr. and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section.