Small Business Advocate Exposes Fortune 1000 Firm Masquerading as Small Business
Insight Public Sector, Inc. Pays Million Dollar Fine to Settle Federal False Claims Act Case
March 30, 2006
PETALUMA, Calif., March 30, 2006 /PRNewswire/ The Justice Department and the Offices of Inspector General of both the Small Business Administration and the General Services Administration have jointly announced that an agreement has been reached with Insight Public Sector, Inc. of Tempe, Arizona, to settle a Federal case against one of Insight's subsidiaries for misrepresenting itself as a small business in order to illegally receive government contracts. Insight will pay a one million dollar fine to settle the case.
American Small Business League President and founder Lloyd Chapman originally brought the complaint against the company to the SBA. Chapman alleged that the company, Comark Government & Education Services (CGES) had falsely certified itself as a "small business" to receive preference in government contracting. According to the SBA, the investigation determined that CGES had misrepresented its size status on its 1996 application. Insight acquired CGES in 2002 and withdrew the small business certification in 2005.
"I'm glad to see the government take some action to stop firms from illegally receiving Federal small business contracts, however, I think the fine is too small," stated Chapman. "This firm received millions of dollars in awards for several years by falsely claiming to be a small business. A one million dollar fine is a drop in the bucket for a Fortune 1000 firm. They should be permanently debarred from doing business with the government."
Chapman added, "CGES is just one of several companies that I turned over to the SBA Inspector General. Unfortunately, there are dozens of companies that are doing exactly the same thing. I will continue to work with the Department of Justice and the Inspector General to expose more fraud and abuse. I expect that this will be just the first of a large number of firms that will be penalized for misrepresenting themselves as a small business."
Under the False Claims Act, any individual that provides evidence that proves a company is guilty of fraudulent activity is eligible to receive between 15% and 25% of the fines collected by the government. Chapman said he would encourage anyone that has knowledge of this type of fraud to provide the information to the SBA Inspector General, the Justice Department or the Government Accountability Office.
Under section 16d of the Small Business Act, misrepresenting a firm's size status to receive contracts is punishable by up to 10 years in prison and debarment from doing business with the Federal government.
Seven Federal investigations have found billions of dollars in contracts that were reported as going to small businesses actually wound up in the hands of some of the largest firms in the nation. Fraud, vendor deception, and false certifications were among the reasons cited in the reports as to why large firms have received small business contracts.
About the ASBL
The American Small Business League was formed to promote and advocate policies that provide the greatest opportunity for small businesses - the 98% of U.S. companies with less than 100 employees. The ASBL is founded on the principle that small businesses, the backbone of a vital American economy, should receive the fair treatment promised by the Small Business Act of 1953. Representing small businesses in all fields and industries throughout the United States, the ASBL monitors existing policies and proposed policy changes by the Small Business Administration and other federal agencies that affect its members.