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Defendants Indicted in $11 Million Veteran Set-Aside Fraud Scheme
SAN DIEGO, CA – In a shocking case of corporate greed, two local businessmen have been arraigned in federal court on charges of defrauding the government of over $11 million in veteran set-aside contracts.
Andrew Otero, 47, and Roger Ramsey, 44, owners of A&D General Contracting, Inc. and Action Telecom, Inc. respectively, were named in a fourteen-count indictment returned April 7 by a federal grand jury in San Diego.
The indictment alleges that the defendants participated in a conspiracy to defraud the government by forming a joint venture – Action-A&D, A Joint Venture – and falsely representing that Action and the JV qualified as service-disabled veteran-owned small businesses.
According to the indictment, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D. To appear qualified, Otero (on behalf of A&D) and Ramsey (on behalf of Action) initially executed an agreement to create the JV, which stated that Ramsey’s company (Action) would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.
However, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply “use the Disabled Veteran Status of Action Telecom” to bid on contracts. The side agreement also stated that A&D – not Action – would run the construction jobs. They also agreed that “A&D will keep 98% of every payment; Action Telecom will receive 2% of every payment.”
The indictment also alleges several examples of the conspirators deceiving government agencies about the true nature of the JV. For example, on two separate occasions, A&D submitted the JV Agreement to (and withheld the side agreement from) the government in response to requests for information about the joint venture – despite the fact that the side agreement said on its face that it superseded the original JV Agreement.
The indictment cites three contracts or task orders which the VA or ACE awarded to the JV, each worth over a million dollars, and one as high as $8.2 million. In addition to the conspiracy charge, all defendants were also charged with three counts of wire fraud relating to the payment of invoices on the three contracts or task orders, and with one or more counts of major government program fraud and false statements in connection with fraudulent certifications to the government.
Today’s indictment also contains forfeiture allegations, which would require the defendants to forfeit any profits derived from the fraudulent scheme.
Assistant U.S. Attorneys Rebecca S. Kanter (619-546-7304) and Aaron P. Arnzen (619-546-8384) are handling the case, which is being prosecuted by the U.S. Attorney’s Office for the Southern District of California.
Key Facts
- State: California
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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