Oregon Man Fined $200k for Fraudulently Claiming Disabled Veteran Status to Land Government Contracts

Posted by Jason Van Steenwyk

SDVOSB logoThe former owner and operator of Gray Bear Construction Company (“Gray Bear”) was sentenced to a $200,000 fine for fraudulently claiming status as a service-disabled small business owner for the purpose of landing government contracts in hospital construction. He must also perform 100 hours of service at a veterans organization.

In November 2012, Witty pleaded guilty to one count of false statements. He admitted he falsely represented to the VA that Gray Bear was a Service Disabled Veteran Owned Small Business (SDVOSB), even though Witty had never been certified as a service-disabled veteran. Witty admitted that as a result of his false representations, the VA awarded Gray Bear approximately $5,849,372 in SDVOSB set-aside contracts from August 2009 through May 2011, and that Gray Bear was not eligible to receive those contracts.

Inspector General George Opfer, Department of Veterans Affairs, stated that, “Mr. Witty is the 15th individual prosecuted during the past year for defrauding a VA program intended to provide preference to service-disabled entrepreneurs whose sacrifices on behalf of our Nation have earned them the right to compete for Federal set-aside contracts. We are diligently investigating others elsewhere who have similarly defrauded this program and expect additional prosecutions. We are committed to ensuring the integrity of all VA programs and will continue to diligently pursue those individuals who, by fraud and deceit, abuse these programs.”

Witty is no longer listed as a principal on the Gray Bear Construction Website. It still lists Service-Disabled Veteran-Owned Small Business on its certifications page, however.

Military Authority was able to speak with Greg Easley, the project manager for the company, who stated that the new owner, Darren Placek, is indeed a service-disabled veteran, and that Placek recently purchased a controlling interest in the company from Witty, though Easley was not aware of the precise nature of the transaction or the amount of ownership retained by either party.

Witty will not spend a single day in jail as a result of the fraud. However, a New York man convicted of the same crime will have a very different experience: John Raymond Anthony White was recently sentenced to 41 months in prison for falsely representing himself as a service-disabled veteran to procure federal contracts.

One big difference between the two cases: Witty admitted to his crime. White, in contrast, went to great lengths to deceive federal investigators, going so far as to attempt to recruit a genuine service-disabled veteran to pose as the owner.

The federal government routinely sets aside federal contracts for qualified small businesses that are owned and controlled by service-disabled veterans. Their preference status is generally greater than those enjoyed by minority-owned small businesses, veteran-owned small businesses, disabled-owned small-businesses and Section 8(a)-certified businesses. There is therefore incentive for businesses to represent themselves as service-disabled veteran small business owners, since these businesses often hold the ‘trump card’ in competitive situations for the award of federal contracts or sub-contracts. 


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