Florida Company and Owner Agree to Resolve Alleged False Claims Act Violations Regarding Historically Underutillized Business Zone Program
Source: Department of Justice, Office of Public Affairs, April 8, 2015
Orlando, Florida, based Air Ideal Inc. and its majority owner, Kim Amkraut, have agreed to pay the United States $250,000 to resolve allegations that they made false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced today. Under the settlement, the defendants must also pay five percent of Air Ideal’s gross revenues over the next five years.
“When companies falsely claim eligibility for government contracts set aside for HUBZone businesses, they not only misuse taxpayer funds, but they also deprive HUBZone communities of the benefits of the program,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “This settlement shows that there is a stiff price to pay for obtaining government contracts through false statements.”
“The HUBZone program is an important tool in the government’s effort to strengthen our economy by encouraging businesses to grow in underutilized and disadvantaged areas,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida. “We will not tolerate contractors who use deception to undermine its objectives and effectiveness.”
The purpose of the HUBZone program is to stimulate job growth in areas that have historically had low business investment. Under the HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company. HUBZone companies can then use this certification when bidding on government contracts. In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.
The United States’ complaint alleged that Air Ideal and Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone. The complaint further alleged that, in fact, this location was a “virtual office” where no Air Ideal employees worked, and that Air Ideal was actually located in a non-HUBZone location. Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement and other fabricated documents for its purported HUBZone office. The complaint further alleged that during the government’s investigation of this case, the defendants fabricated another version of its agreement for the virtual office and submitted that false document to the government.
The complaint alleged that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the U.S. Coast Guard, U.S. Army, U.S. Army Corps of Engineers and the U.S. Department of the Interior. Each of those contracts had been set aside for qualified HUBZone companies. The United States’ complaint asserted claims against Air Ideal and Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989.
“The OIG will aggressively investigate intentional misrepresentations made by individuals who lie in order to claim eligibility for SBA set-aside programs,” said Inspector General Peggy E. Gustafson of the SBA. “I want to thank the U.S. Department of Justice for its dedication to pursuing justice in this case.”
The settlement resolves allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by Patricia Hopson, who is employed in the construction industry. Under the act, a private citizen can sue on behalf of the United States and share in any recovery. The United States is entitled to intervene in the lawsuit, as it did here. As part of the resolution, Ms. Hopson will receive $42,500.
This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Middle District of Florida, in conjunction with the SBA’s Office of Inspector General (OIG) and Office of General Counsel, the Department of Homeland Security’s Office of Inspector General, and the Defense Criminal Investigative Service.
The case is U.S. ex rel. Hopson v. Air Ideal, Inc. and Kim Amkraut, No. 6:13-cv-775-Orl-37GJK (M.D. Fla.).
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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