From the Windy City, we have an excellent example of a case with “Potential State False Claims Act case” written all over it.
It seems a one-time business partner of Mayor Richard Daley’s son was indicted for an alleged scheme to obtain work for a company he ran by using a “pass-through” minority-owned company.
The Chicago Tribune online has the full story.
Simply put, a “pass-through” scheme is a common type of false claims act case. As an important public policy matter, many federal, state and local government contracts have a provision giving minority-owned businesses a leg up in the competition for the work.
Some contractors choose to cheat, however, by pretending to be a minority-owned Enterprise in order to get the contract. There are a number of ways this can be done, including by finding a minority-owned Enterprise to serve only as a “front” for a non-minority owned business. The minority owned-company gets the contract, but the larger company does the work.
The above example is just one way this particular type of scam can work. Another excellent example of this type of case found in Ab-Tech Const., Inc. v. U.S., 31 Fed. Cl. 429 (Fed. Cl. 1994).
Ab-Tech is a classic from this line of cases, and it also demonstrates nicely the damages the government suffers by such schemes, and how serious the ramifications can be for those companies that choose to engage in unfair business practices. In Ab-Tech, each invoice (or payment voucher) submitted by the defendants was false and was a violation of the Federal False Claims Act.
To my knowledge, there have not been any claims similar to this one brought under the Virginia Fraud Against Taxpayers Act, but there should be lots of these types of cases out there.
And, of course, any individual with personal, first-hand information about this type of fraud on the government would stand to gain a healthy reward if they followed the qui tam process provided by in the Virginia Fraud Against Taxpayers Act.